AMENDMENT OF
AMERICAN EXPRESS COMPANY
SUPPLEMENTAL RETIREMENT PLAN
AMENDED AND RESTATED
EFFECTIVE MARCH 1, 1995
RESOLVED, that pursuant to Section 7(F) of the American Express Company
Supplemental Retirement Plan (the "Plan"), effective as of March 1, 1995,
the Plan is amended, effective as of February 28, 2000 (the "Effective
Date"), as follows:
1. Section VIII, Subsection A(c) is hereby deleted in its entirety and
replaced with a new Subsection A(c) to read as follows:
(c) The consummation of a reorganization, merger or consolidation,
in each case, unless, following such reorganization, merger or
consolidation, (i) more than 50% of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation (or any parent
thereof) and the combined voting power of the then outstanding
voting securities of such corporation (or any parent thereof)
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Shares and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation, in substantially
the same proportions as their ownership immediately prior to such
reorganization, merger or consolidation of such Outstanding
Company Common Shares and Outstanding Company Voting Shares, as
the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company, a
Subsidiary or such corporation resulting from such reorganization,
merger or consolidation or any parent or a subsidiary thereof, and
any Person beneficially owning, immediately prior to such
reorganization, merger or
consolidation, directly or indirectly, 25% or more of the
Outstanding Company Common Shares or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation (or any parent thereof) or
the combined voting power of the then outstanding voting
securities of such corporation (or any parent thereof) entitled to
vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation (or any parent thereof) were members of the
Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such
reorganization, merger or consolidation; or
2. Section VIII, Subsection A(d) is hereby deleted in its entirety and
replaced with a new Subsection A(d) to read as follows:
(d) The consummation of the sale, lease, exchange or other
disposition of all or substantially all of the assets of the
Company, unless such assets have been sold, leased, exchanged or
disposed of to a corporation with respect to which following such
sale, lease, exchange or other disposition more than 50% of,
respectively, the then outstanding shares of common stock of such
corporation (or any parent thereof) and the combined voting power
of the then outstanding voting securities of such corporation (or
any parent thereof) entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Shares and Outstanding Company Voting Securities
immediately prior to such sale, lease, exchange or other
disposition in substantially the same proportions as their
ownership immediately prior to such sale, lease, exchange or other
disposition of such Outstanding Company Common Shares and
Outstanding Company Voting Shares, as the case may be, (B) no
Person (excluding the Company and any
2
employee benefit plan (or related trust) of the Company or a
Subsidiary of such corporation or a subsidiary thereof and any
Person beneficially owning, immediately prior to such sale, lease,
exchange or other disposition, directly or indirectly, 25% or more
of the Outstanding Company Common Shares or Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly
or indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of such corporation (or any parent thereof)
and the combined voting power of the then outstanding voting
securities of such corporation (or any parent thereof) entitled to
vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of such
corporation (or any parent thereof) were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale, lease, exchange or
other disposition of assets of the Company; or
3. Section VIII, Subsection (B) is hereby deleted in its entirety and
replaced with a new Subsection (B) to read as follows:
(B)(I) Subsection (B) shall apply in the event of a Major
Transaction. A Major Transaction shall mean a transaction
described in either (1) or (2) below:
(1) The consummation of a reorganization, merger or consolidation,
in each case, if, following such reorganization, merger or
consolidation, more than 50% but not more than 60% of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation (or any parent thereof) and the combined voting
power of the then outstanding voting securities of such
corporation (or any parent thereof) entitled to vote generally
in the election of directors is then beneficially owned,
directly or indirectly, by all or
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substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Shares and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation, in substantially the same proportions as their
ownership immediately prior to such reorganization, merger or
consolidation of such Outstanding Company Common Shares and
Outstanding Company Voting Shares, as the case may be, but only
if:
(A) no Person (excluding the Company, any employee benefit plan
(or related trust) of the Company, a Subsidiary or such
corporation resulting from such reorganization, merger or
consolidation or any parent or a subsidiary thereof, and any
Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, 25% or more of the Outstanding Company Common
Shares or Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 25% or more
of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger
or consolidation (or any parent thereof) or the combined voting
power of the then outstanding voting securities of such
corporation (or any parent thereof) entitled to vote generally
in the election of directors; and
(B) at least a majority of the members of the board of
directors of the corporation resulting from such
reorganization, merger or consolidation (or any parent thereof)
were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board
providing for such reorganization, merger or consolidation.
(2) The consummation of the sale, lease, exchange or other
disposition of all or substantially all of the assets of the
Company to a corporation with respect to which following such
sale, lease, exchange or other disposition more than 50%
but not more than 60% of, respectively, the then outstanding
shares of common stock of such corporation (or any parent
thereof) and the combined voting power of the then outstanding
voting securities of such corporation (or
4
any parent thereof) entitled to vote generally in the election
of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Shares and Outstanding Company
Voting Securities immediately prior to such sale, lease,
exchange or other disposition in substantially the same
proportions as their ownership immediately prior to such sale,
lease, exchange or other disposition of such Outstanding
Company Common Shares and Outstanding Company Voting Shares, as
the case may be, but only if:
(A) no Person (excluding the Company and any employee benefit
plan (or related trust) of the Company or a Subsidiary of such
corporation or a subsidiary thereof and any Person beneficially
owning, immediately prior to such sale, lease, exchange or
other disposition, directly or indirectly, 25% or more of the
Outstanding Company Common Shares or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of such corporation (or any parent
thereof) and the combined voting power of the then outstanding
voting securities of such corporation (or any parent thereof)
entitled to vote generally in the election of directors; and
(B) at least a majority of the members of the board of
directors of such corporation (or any parent thereof) were
members of the Incumbent Board at the time of the execution of
the initial agreement or action of the Board providing for such
sale, lease, exchange or other disposition of assets of the
Company.
(II) If all or any portion of the payments or benefits to which
the Participant will be entitled under the Plan, either alone
or together with other payments or benefits which the
Participant receives or is entitled to receive directly or
indirectly from the
5
Company or any of its subsidiaries or any other person or
entity that would be treated as a payor of parachute payments
as hereinafter defined, under any other plan, agreement or
arrangement, would constitute a "parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto and
regulations or other guidance thereunder (except that "2.95"
shall be used instead of "3" under Section 280G(b)(2)(A)(ii) of
the Code or any successor provision thereto), such payment or
benefits provided to the Participant under this Plan, and any
other payments or benefits which the Participant receives or is
entitled to receive directly or indirectly from the Company or
any of its subsidiaries or any other person or entity that
would be treated as a payor of parachute payments as
hereinafter defined, under any other plan, agreement or
arrangement which would constitute a parachute payment, shall
be reduced (but not below zero) as described below to the
extent necessary so that no portion thereof would constitute
such a parachute payment as previously defined (except that
"2.95" shall be used instead of "3" under Section
280G(b)(2)(A)(ii) of the Code or any successor provision
thereto). Whether payments or benefits to the Participant would
constitute a "parachute payment", whether such payments or
benefits are to be reduced pursuant to the first sentence of
this paragraph, and the extent to which they are to be so
reduced, will be determined by the firm serving, immediately
prior to the Major Transaction, as the Company's independent
auditors, or if that firm refuses to serve, by another
qualified firm, whether or not serving as independent auditors,
designated by the Administration Committee under the American
Express Senior Executive Severance Plan (the "Firm"). The Firm
will be paid reasonable compensation by the Company for such
services. If the Firm concludes that its determination is
inconsistent with a final determination of a court or the
Internal Revenue Service, the Firm shall, based on such final
determination, redetermine whether the amount payable to the
Participant should have been reduced and, if applicable, the
amount of any such reduction. If the Firm determines that a lesser
6
payment should have been made to the Participant, then
an amount equal to the amount of the excess of the earlier
payment over the redetermined amount (the "Excess Amount") will
be deemed for all purposes to be a loan to the Participant made
on the date of the Participant's receipt of such Excess Amount,
which the Participant will have an obligation to repay to the
Company on the fifth business day after demand, together with
interest on such amount at the lowest applicable Federal rate
(as defined in Section 1274(d) of the Code or any successor
provision thereto), compounded semi-annually (the "Section 1274
Rate") from the date of the Participant's receipt of such
Excess Amount until the date of such repayment (or such lesser
rate (including zero) as may be designated by the Firm such
that the Excess Amount and such interest will not be treated as
a parachute payment as previously defined). If the Firm
determines that a greater payment should have been made to the
Participant, within five business days of such determination,
the Company will pay to the Participant the amount of the
deficiency, together with interest thereon from the date such
amount should have been paid to the date of such payment, at
the Section 1274 Rate (or such lesser rate (including zero) as
may be designated by the Firm such that the amount of such
deficiency and such interest will not be treated as a parachute
payment as previously defined). If a reduction is to be made
pursuant to this paragraph, the Firm will have the right to
determine which payments and benefits will be reduced, either
those under this Plan alone or such other payments or benefits
which the Participant receives or is entitled to receive
directly or indirectly from the Company or any of its
subsidiaries or any other person or entity that would be
treated as a payor of parachute payments as previously defined,
under any other plan, agreement or arrangement.
4. Section VIII is hereby amended by adding a new Subsection (C), read
as follows:
(C)(1) This Subsection (C) shall apply in the event of a Change in
Control, as defined herein.
7
(2) In the event that any payment or benefit received or to be
received by a Participant hereunder in connection with a
Change in Control or termination of such Participant's
employment (such payments and benefits, excluding Gross-Up
Payment (as hereinafter defined), being hereinafter referred
to collectively as the "Payments"), will be subject to the
excise tax referred to in Section 4999 of the Code (the
"Excise Tax"), then (i) in the case of a Participant who is
classified in Band 70 (or its equivalent) or above
immediately prior to such Change in Control (a "Tier 1
Employee"), the Company shall pay to such Tier 1 Employee,
within five days after receipt by such Tier 1 Employee of
the written statement referred to in paragraph (5) below, an
additional amount (the "Gross-Up Payment") such that the net
amount retained by such Tier 1 Employee, after deduction of
any Excise Tax on the Payments and any federal, state and
local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Payments and (ii) in
the case of a Participant other than a Tier 1 Employee, the
Payments shall be reduced to the extent necessary so that no
portion of the Payments is subject to the Excise Tax but
only if (A) the net amount of all Total Payments (as
hereinafter defined), as so reduced (and after subtracting
the net amount of federal, state and local income and
employment taxes on such reduced Total Payments), is greater
than or equal to (B) the net amount of such Total Payments
without any such reduction (but after subtracting the net
amount of federal, state and local income and employment
taxes on such Total Payments and the amount of Excise Tax to
which the Participant would be subject in respect of such
unreduced Total Payments); PROVIDED, HOWEVER, that the
Participant may elect in writing to have other components of
his or her Total Payments reduced prior to any reduction in
the Payments hereunder.
8
(3) For purposes of determining whether the Payments will be
subject to the Excise Tax, the amount of such Excise Tax and
whether any Payments are to be reduced hereunder: (i) all
payments and benefits received or to be received by the
Participant in connection with such Change in Control or the
termination of such Participant's employment, whether
pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person (as
such term is defined in Subparagraph 2 above) whose actions
result in such Change in Control or any Person affiliated
with the Company or such Person (all such payments and
benefits, excluding the Gross-Up Payment and any similar
gross-up payment to which a Tier 1 Employee may be entitled
under any such other plan, arrangement or agreement, being
hereinafter referred to as the "Total Payments"), shall be
treated as "parachute payments" (within the meaning of
section 280G(b)(2) of the Code) unless, in the opinion of
the Firm, such payments or benefits (in whole or in part) do
not constitute parachute payments, including by reason of
section 280G(b)(2)(A) or section 280G(b)(4)(A) of the Code;
(ii) no portion of the Total Payments the receipt or
enjoyment of which the Participant shall have waived at such
time and in such manner as not to constitute a "payment"
within the meaning of section 280G(b) of the Code shall be
taken into account; (iii) all "excess parachute payments"
within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the
opinion of the Firm, such excess parachute payments (in
whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of section
280G(b)(4)(B) of the Code) in excess of the Base Amount
(within the meaning of section 280G(b)(3) of the Code)
allocable to such reasonable compensation, or are otherwise
not subject to the Excise Tax; and (iv) the value of any
noncash benefits or any deferred payment or benefit shall be
determined by the Firm in accordance with the principles of
sections 280G(d)(3) and (4) of the Code and regulations or
other guidance thereunder. For purposes of determining the
amount of the Gross-Up Payment in respect of a Tier 1
Employee and whether any Payments in
9
respect of a Participant (other than a Tier 1 Employee) shall
be reduced, a Participant shall be deemed to pay federal
income tax at the highest marginal rate of federal income
taxation (and state and local income taxes at the highest
marginal rate of taxation in the state and locality of such
Participant's residence, net of the maximum reduction in
federal income taxes which could be obtained from deduction
of such state and local taxes) in the calendar year in which
the Gross-Up Payment is to be made (in the case of a Tier 1
Employee) or in which the Payments are made (in the case of
a Participant other than a Tier 1 Employee). The Firm will
be paid reasonable compensation by the Company for its
services.
(4) In the event that the Excise Tax is finally determined to be less
than the amount taken into account hereunder in calculating the
Gross-Up Payment, then an amount equal to the amount of the
excess of the earlier payment over the redetermined amount (the
"Excess Amount") will be deemed for all purposes to be a loan to
the Tier 1 Employee made on the date of the Tier 1 Employee's
receipt of such Excess Amount, which the Tier 1 Employee will
have an obligation to repay to the Company on the fifth business
day after demand, together with interest on such amount at the
lowest applicable Federal rate (as defined in Section 1274(d) of
the Code or any successor provision thereto), compounded
semi-annually (the "Section 1274 Rate") from the date of the Tier
1 Employee's receipt of such Excess Amount until the date of such
repayment (or such lesser rate (including zero) as may be
designated by the Firm such that the Excess Amount and such
interest will not be treated as a parachute payment as previously
defined). In the event that the Excise Tax is finally determined
to exceed the amount taken into account hereunder in calculating
the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time of
the Gross-Up Payment), within five business days of such
determination, the Company will pay to the Tier 1 Employee an
additional amount, together with interest thereon from the date
such additional amount should have been paid to the date of such
payment, at the Section
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1274 Rate (or such lesser rate (including zero) as may be
designated by the Firm such that the amount of such deficiency
and such interest will not be treated as a parachute payment as
previously defined). The Tier 1 Employee and the Company shall
each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the amount of
any Gross-Up Payment.
(5) As soon as practicable following a Change in Control, the Company
shall provide to each Tier 1 Employee and to each other
Participant with respect to whom it is proposed that Payments be
reduced, a written statement setting forth the manner in which
the Total Payments in respect of such Tier 1 Employee or other
Participant were calculated and the basis for such calculations,
including, without limitation, any opinions or other advice the
Company has received from the Firm or other advisors or
consultants (and any such opinions or advice which are in writing
shall be attached to the statement).
11
AMERICAN EXPRESS COMPANY
SUPPLEMENTAL RETIREMENT PLAN
AMENDED AND RESTATED
EFFECTIVE MARCH 1, 1995
RESOLVED, that pursuant to Section 7(F) of the American Express Company
Supplemental Retirement Plan (the "Plan"), effective as of March 1, 1995,
the Plan is amended, effective as of February 28, 2000 (the "Effective
Date"), as follows:
1. Section VIII, Subsection A(c) is hereby deleted in its entirety and
replaced with a new Subsection A(c) to read as follows:
(c) The consummation of a reorganization, merger or consolidation,
in each case, unless, following such reorganization, merger or
consolidation, (i) more than 50% of, respectively, the then
outstanding shares of common stock of the corporation resulting
from such reorganization, merger or consolidation (or any parent
thereof) and the combined voting power of the then outstanding
voting securities of such corporation (or any parent thereof)
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Shares and Outstanding Company Voting Securities immediately prior
to such reorganization, merger or consolidation, in substantially
the same proportions as their ownership immediately prior to such
reorganization, merger or consolidation of such Outstanding
Company Common Shares and Outstanding Company Voting Shares, as
the case may be, (ii) no Person (excluding the Company, any
employee benefit plan (or related trust) of the Company, a
Subsidiary or such corporation resulting from such reorganization,
merger or consolidation or any parent or a subsidiary thereof, and
any Person beneficially owning, immediately prior to such
reorganization, merger or
consolidation, directly or indirectly, 25% or more of the
Outstanding Company Common Shares or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such
reorganization, merger or consolidation (or any parent thereof) or
the combined voting power of the then outstanding voting
securities of such corporation (or any parent thereof) entitled to
vote generally in the election of directors and (iii) at least a
majority of the members of the board of directors of the
corporation resulting from such reorganization, merger or
consolidation (or any parent thereof) were members of the
Incumbent Board at the time of the execution of the initial
agreement or action of the Board providing for such
reorganization, merger or consolidation; or
2. Section VIII, Subsection A(d) is hereby deleted in its entirety and
replaced with a new Subsection A(d) to read as follows:
(d) The consummation of the sale, lease, exchange or other
disposition of all or substantially all of the assets of the
Company, unless such assets have been sold, leased, exchanged or
disposed of to a corporation with respect to which following such
sale, lease, exchange or other disposition more than 50% of,
respectively, the then outstanding shares of common stock of such
corporation (or any parent thereof) and the combined voting power
of the then outstanding voting securities of such corporation (or
any parent thereof) entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company
Common Shares and Outstanding Company Voting Securities
immediately prior to such sale, lease, exchange or other
disposition in substantially the same proportions as their
ownership immediately prior to such sale, lease, exchange or other
disposition of such Outstanding Company Common Shares and
Outstanding Company Voting Shares, as the case may be, (B) no
Person (excluding the Company and any
2
employee benefit plan (or related trust) of the Company or a
Subsidiary of such corporation or a subsidiary thereof and any
Person beneficially owning, immediately prior to such sale, lease,
exchange or other disposition, directly or indirectly, 25% or more
of the Outstanding Company Common Shares or Outstanding Company
Voting Securities, as the case may be) beneficially owns, directly
or indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of such corporation (or any parent thereof)
and the combined voting power of the then outstanding voting
securities of such corporation (or any parent thereof) entitled to
vote generally in the election of directors and (C) at least a
majority of the members of the board of directors of such
corporation (or any parent thereof) were members of the Incumbent
Board at the time of the execution of the initial agreement or
action of the Board providing for such sale, lease, exchange or
other disposition of assets of the Company; or
3. Section VIII, Subsection (B) is hereby deleted in its entirety and
replaced with a new Subsection (B) to read as follows:
(B)(I) Subsection (B) shall apply in the event of a Major
Transaction. A Major Transaction shall mean a transaction
described in either (1) or (2) below:
(1) The consummation of a reorganization, merger or consolidation,
in each case, if, following such reorganization, merger or
consolidation, more than 50% but not more than 60% of,
respectively, the then outstanding shares of common stock of
the corporation resulting from such reorganization, merger or
consolidation (or any parent thereof) and the combined voting
power of the then outstanding voting securities of such
corporation (or any parent thereof) entitled to vote generally
in the election of directors is then beneficially owned,
directly or indirectly, by all or
3
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Shares and Outstanding Company Voting Securities
immediately prior to such reorganization, merger or
consolidation, in substantially the same proportions as their
ownership immediately prior to such reorganization, merger or
consolidation of such Outstanding Company Common Shares and
Outstanding Company Voting Shares, as the case may be, but only
if:
(A) no Person (excluding the Company, any employee benefit plan
(or related trust) of the Company, a Subsidiary or such
corporation resulting from such reorganization, merger or
consolidation or any parent or a subsidiary thereof, and any
Person beneficially owning, immediately prior to such
reorganization, merger or consolidation, directly or
indirectly, 25% or more of the Outstanding Company Common
Shares or Outstanding Company Voting Securities, as the case
may be) beneficially owns, directly or indirectly, 25% or more
of, respectively, the then outstanding shares of common stock
of the corporation resulting from such reorganization, merger
or consolidation (or any parent thereof) or the combined voting
power of the then outstanding voting securities of such
corporation (or any parent thereof) entitled to vote generally
in the election of directors; and
(B) at least a majority of the members of the board of
directors of the corporation resulting from such
reorganization, merger or consolidation (or any parent thereof)
were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the Board
providing for such reorganization, merger or consolidation.
(2) The consummation of the sale, lease, exchange or other
disposition of all or substantially all of the assets of the
Company to a corporation with respect to which following such
sale, lease, exchange or other disposition more than 50%
but not more than 60% of, respectively, the then outstanding
shares of common stock of such corporation (or any parent
thereof) and the combined voting power of the then outstanding
voting securities of such corporation (or
4
any parent thereof) entitled to vote generally in the election
of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Shares and Outstanding Company
Voting Securities immediately prior to such sale, lease,
exchange or other disposition in substantially the same
proportions as their ownership immediately prior to such sale,
lease, exchange or other disposition of such Outstanding
Company Common Shares and Outstanding Company Voting Shares, as
the case may be, but only if:
(A) no Person (excluding the Company and any employee benefit
plan (or related trust) of the Company or a Subsidiary of such
corporation or a subsidiary thereof and any Person beneficially
owning, immediately prior to such sale, lease, exchange or
other disposition, directly or indirectly, 25% or more of the
Outstanding Company Common Shares or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding
shares of common stock of such corporation (or any parent
thereof) and the combined voting power of the then outstanding
voting securities of such corporation (or any parent thereof)
entitled to vote generally in the election of directors; and
(B) at least a majority of the members of the board of
directors of such corporation (or any parent thereof) were
members of the Incumbent Board at the time of the execution of
the initial agreement or action of the Board providing for such
sale, lease, exchange or other disposition of assets of the
Company.
(II) If all or any portion of the payments or benefits to which
the Participant will be entitled under the Plan, either alone
or together with other payments or benefits which the
Participant receives or is entitled to receive directly or
indirectly from the
5
Company or any of its subsidiaries or any other person or
entity that would be treated as a payor of parachute payments
as hereinafter defined, under any other plan, agreement or
arrangement, would constitute a "parachute payment" within the
meaning of Section 280G of the Internal Revenue Code of 1986,
as amended (the "Code") or any successor provision thereto and
regulations or other guidance thereunder (except that "2.95"
shall be used instead of "3" under Section 280G(b)(2)(A)(ii) of
the Code or any successor provision thereto), such payment or
benefits provided to the Participant under this Plan, and any
other payments or benefits which the Participant receives or is
entitled to receive directly or indirectly from the Company or
any of its subsidiaries or any other person or entity that
would be treated as a payor of parachute payments as
hereinafter defined, under any other plan, agreement or
arrangement which would constitute a parachute payment, shall
be reduced (but not below zero) as described below to the
extent necessary so that no portion thereof would constitute
such a parachute payment as previously defined (except that
"2.95" shall be used instead of "3" under Section
280G(b)(2)(A)(ii) of the Code or any successor provision
thereto). Whether payments or benefits to the Participant would
constitute a "parachute payment", whether such payments or
benefits are to be reduced pursuant to the first sentence of
this paragraph, and the extent to which they are to be so
reduced, will be determined by the firm serving, immediately
prior to the Major Transaction, as the Company's independent
auditors, or if that firm refuses to serve, by another
qualified firm, whether or not serving as independent auditors,
designated by the Administration Committee under the American
Express Senior Executive Severance Plan (the "Firm"). The Firm
will be paid reasonable compensation by the Company for such
services. If the Firm concludes that its determination is
inconsistent with a final determination of a court or the
Internal Revenue Service, the Firm shall, based on such final
determination, redetermine whether the amount payable to the
Participant should have been reduced and, if applicable, the
amount of any such reduction. If the Firm determines that a lesser
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payment should have been made to the Participant, then
an amount equal to the amount of the excess of the earlier
payment over the redetermined amount (the "Excess Amount") will
be deemed for all purposes to be a loan to the Participant made
on the date of the Participant's receipt of such Excess Amount,
which the Participant will have an obligation to repay to the
Company on the fifth business day after demand, together with
interest on such amount at the lowest applicable Federal rate
(as defined in Section 1274(d) of the Code or any successor
provision thereto), compounded semi-annually (the "Section 1274
Rate") from the date of the Participant's receipt of such
Excess Amount until the date of such repayment (or such lesser
rate (including zero) as may be designated by the Firm such
that the Excess Amount and such interest will not be treated as
a parachute payment as previously defined). If the Firm
determines that a greater payment should have been made to the
Participant, within five business days of such determination,
the Company will pay to the Participant the amount of the
deficiency, together with interest thereon from the date such
amount should have been paid to the date of such payment, at
the Section 1274 Rate (or such lesser rate (including zero) as
may be designated by the Firm such that the amount of such
deficiency and such interest will not be treated as a parachute
payment as previously defined). If a reduction is to be made
pursuant to this paragraph, the Firm will have the right to
determine which payments and benefits will be reduced, either
those under this Plan alone or such other payments or benefits
which the Participant receives or is entitled to receive
directly or indirectly from the Company or any of its
subsidiaries or any other person or entity that would be
treated as a payor of parachute payments as previously defined,
under any other plan, agreement or arrangement.
4. Section VIII is hereby amended by adding a new Subsection (C), read
as follows:
(C)(1) This Subsection (C) shall apply in the event of a Change in
Control, as defined herein.
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(2) In the event that any payment or benefit received or to be
received by a Participant hereunder in connection with a
Change in Control or termination of such Participant's
employment (such payments and benefits, excluding Gross-Up
Payment (as hereinafter defined), being hereinafter referred
to collectively as the "Payments"), will be subject to the
excise tax referred to in Section 4999 of the Code (the
"Excise Tax"), then (i) in the case of a Participant who is
classified in Band 70 (or its equivalent) or above
immediately prior to such Change in Control (a "Tier 1
Employee"), the Company shall pay to such Tier 1 Employee,
within five days after receipt by such Tier 1 Employee of
the written statement referred to in paragraph (5) below, an
additional amount (the "Gross-Up Payment") such that the net
amount retained by such Tier 1 Employee, after deduction of
any Excise Tax on the Payments and any federal, state and
local income and employment taxes and Excise Tax upon the
Gross-Up Payment, shall be equal to the Payments and (ii) in
the case of a Participant other than a Tier 1 Employee, the
Payments shall be reduced to the extent necessary so that no
portion of the Payments is subject to the Excise Tax but
only if (A) the net amount of all Total Payments (as
hereinafter defined), as so reduced (and after subtracting
the net amount of federal, state and local income and
employment taxes on such reduced Total Payments), is greater
than or equal to (B) the net amount of such Total Payments
without any such reduction (but after subtracting the net
amount of federal, state and local income and employment
taxes on such Total Payments and the amount of Excise Tax to
which the Participant would be subject in respect of such
unreduced Total Payments); PROVIDED, HOWEVER, that the
Participant may elect in writing to have other components of
his or her Total Payments reduced prior to any reduction in
the Payments hereunder.
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(3) For purposes of determining whether the Payments will be
subject to the Excise Tax, the amount of such Excise Tax and
whether any Payments are to be reduced hereunder: (i) all
payments and benefits received or to be received by the
Participant in connection with such Change in Control or the
termination of such Participant's employment, whether
pursuant to the terms of this Agreement or any other plan,
arrangement or agreement with the Company, any Person (as
such term is defined in Subparagraph 2 above) whose actions
result in such Change in Control or any Person affiliated
with the Company or such Person (all such payments and
benefits, excluding the Gross-Up Payment and any similar
gross-up payment to which a Tier 1 Employee may be entitled
under any such other plan, arrangement or agreement, being
hereinafter referred to as the "Total Payments"), shall be
treated as "parachute payments" (within the meaning of
section 280G(b)(2) of the Code) unless, in the opinion of
the Firm, such payments or benefits (in whole or in part) do
not constitute parachute payments, including by reason of
section 280G(b)(2)(A) or section 280G(b)(4)(A) of the Code;
(ii) no portion of the Total Payments the receipt or
enjoyment of which the Participant shall have waived at such
time and in such manner as not to constitute a "payment"
within the meaning of section 280G(b) of the Code shall be
taken into account; (iii) all "excess parachute payments"
within the meaning of section 280G(b)(l) of the Code shall
be treated as subject to the Excise Tax unless, in the
opinion of the Firm, such excess parachute payments (in
whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of section
280G(b)(4)(B) of the Code) in excess of the Base Amount
(within the meaning of section 280G(b)(3) of the Code)
allocable to such reasonable compensation, or are otherwise
not subject to the Excise Tax; and (iv) the value of any
noncash benefits or any deferred payment or benefit shall be
determined by the Firm in accordance with the principles of
sections 280G(d)(3) and (4) of the Code and regulations or
other guidance thereunder. For purposes of determining the
amount of the Gross-Up Payment in respect of a Tier 1
Employee and whether any Payments in
9
respect of a Participant (other than a Tier 1 Employee) shall
be reduced, a Participant shall be deemed to pay federal
income tax at the highest marginal rate of federal income
taxation (and state and local income taxes at the highest
marginal rate of taxation in the state and locality of such
Participant's residence, net of the maximum reduction in
federal income taxes which could be obtained from deduction
of such state and local taxes) in the calendar year in which
the Gross-Up Payment is to be made (in the case of a Tier 1
Employee) or in which the Payments are made (in the case of
a Participant other than a Tier 1 Employee). The Firm will
be paid reasonable compensation by the Company for its
services.
(4) In the event that the Excise Tax is finally determined to be less
than the amount taken into account hereunder in calculating the
Gross-Up Payment, then an amount equal to the amount of the
excess of the earlier payment over the redetermined amount (the
"Excess Amount") will be deemed for all purposes to be a loan to
the Tier 1 Employee made on the date of the Tier 1 Employee's
receipt of such Excess Amount, which the Tier 1 Employee will
have an obligation to repay to the Company on the fifth business
day after demand, together with interest on such amount at the
lowest applicable Federal rate (as defined in Section 1274(d) of
the Code or any successor provision thereto), compounded
semi-annually (the "Section 1274 Rate") from the date of the Tier
1 Employee's receipt of such Excess Amount until the date of such
repayment (or such lesser rate (including zero) as may be
designated by the Firm such that the Excess Amount and such
interest will not be treated as a parachute payment as previously
defined). In the event that the Excise Tax is finally determined
to exceed the amount taken into account hereunder in calculating
the Gross-Up Payment (including by reason of any payment the
existence or amount of which cannot be determined at the time of
the Gross-Up Payment), within five business days of such
determination, the Company will pay to the Tier 1 Employee an
additional amount, together with interest thereon from the date
such additional amount should have been paid to the date of such
payment, at the Section
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1274 Rate (or such lesser rate (including zero) as may be
designated by the Firm such that the amount of such deficiency
and such interest will not be treated as a parachute payment as
previously defined). The Tier 1 Employee and the Company shall
each reasonably cooperate with the other in connection with any
administrative or judicial proceedings concerning the amount of
any Gross-Up Payment.
(5) As soon as practicable following a Change in Control, the Company
shall provide to each Tier 1 Employee and to each other
Participant with respect to whom it is proposed that Payments be
reduced, a written statement setting forth the manner in which
the Total Payments in respect of such Tier 1 Employee or other
Participant were calculated and the basis for such calculations,
including, without limitation, any opinions or other advice the
Company has received from the Firm or other advisors or
consultants (and any such opinions or advice which are in writing
shall be attached to the statement).
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