AMERICAN EXPRESS ANNUAL INCENTIVE AWARD PLAN
ARTICLE I
PURPOSE
The purpose of this Plan is to provide added incentive for those
officers and key executives of American Express Company (the "Company") and
its subsidiaries who are in a position to make substantial contributions to
the earnings and growth of these companies and to reward them collectively
and individually for performance which contributes significantly toward
such earnings and growth. The companies participating in this Plan (the
"Participating Companies") include the Company and such other corporations
as may be taking part in this Plan from time to time pursuant to Article
VIII hereof.
ARTICLE II
ADMINISTRATION OF THE PLAN
This plan shall be administered by the Compensation and Benefits
Committee of the Board of Directors of the Company (the "Committee") as
constituted from time to time, unless and until the Board of Directors of
the Company provides otherwise.
The Committee shall be responsible for the general administration
of the Plan. It shall also be responsible for the interpretation of the
Plan and the determination of all questions arising hereunder. It shall
have power to establish, interpret, enforce, amend and revoke from time to
time such rules and regulations for the administration of the Plan and the
conduct of its business as it deems appropriate. The Committee shall also
have the power to delegate any of its authority under the Plan as allowed
by law. Any action taken by the Committee within the scope of its authority
shall be final and binding upon the Participating Companies, upon each and
every person who participates in the Plan and any successors in interest of
such persons, and any and all other persons claiming under or through any
such person.
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ARTICLE III
ANNUAL PERFORMANCE GOALS AND AWARD GUIDELINES
(a) As soon as practicable at the beginning of each calendar year, the
Committee shall determine the individual, division/group, Company, and/or other
appropriate performance goals, and award guidelines for such year. In fixing
such goals and guidelines, the Committee shall receive and consider the
recommendations of the chief executive officer of the Company who, in turn,
shall have received and considered the respective recommendations of other
appropriate officers and executives of the Company and the Participating
Companies.
(b) If the Committee finds, during the course of and with respect to any
year, that any of the performance goals and/or award guidelines determined as
herein above provided would not be justified for such year in the circumstances,
it may in its sole discretion fix such performance goals and/or award guidelines
for such year at such different levels as it deems appropriate.
ARTICLE IV
PARTICIPATION IN THE PLAN
(a) Those eligible to participate for any calendar year shall include
such key executives of the Participating Companies as shall be designated by the
Committee. In designating such persons the Committee shall receive and consider
the recommendations of the chief executive officer of the Company who, in turn,
shall have received and considered the respective recommendations of other
appropriate officers and executives of the Company and the Participating
Companies. However, the Committee shall have full authority to act in the matter
and its determination shall be in all respects final and conclusive. Further,
the Committee shall have full authority to delegate eligibility determination.
Participants shall be designated prior to the beginning of the year or as soon
as practicable thereafter, but new executives or executives whose duties and
responsibilities have been materially increased during the year may be
designated participants for such year at any time during the year. Designation
as a participant shall not of itself entitle a person to an award under the
Plan. The Committee has the sole discretion to consider an award (if any) for a
participant in the event of termination, retirement, disability, death, or other
individual circumstances. Participants must generally remain in continuous
active employment with the Company (or an Affiliate), through the end of the
performance period (year end) and up until the payment date, and shall also make
progress towards goals and fulfill Article VII. The Committee, upon
recommendations provided by management, will approve to what extent, if any,
payment of an award should be made if termination occurs after December 31, but
before an actual payment date. No member of the Committee shall be eligible to
participate in or receive awards or deferred payments of awards under the Plan.
(b) The Committee may, by rules and regulations of general or specific
application, establish one or more classes of awards, the payment of which
shall, in whole or in part, be deferred and made at such later time or times, in
a lump sum or in such installments, as the Committee shall prescribe, provided
that the participant shall have fulfilled the conditions specified in Article
VII hereof. At the time each year that an employee shall be designated as a
participant in the Plan, or as soon as practicable thereafter, the Committee, in
or without consultation with such employee, shall determine what proportion, if
any, of any award that may be made to him for such year shall be paid to him
immediately and what proportion shall consist of a class or classes of awards so
established by the Committee. If the Committee shall have failed to make such a
determination in the case of any participant for any year, the award to such
participant shall be paid in cash as soon as practicable after the award shall
be made.
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ARTICLE V
DETERMINATION OF INCENTIVE AWARDS
(a) As soon as practicable after the end of each calendar year, the
Committee shall fix the amount of each award. The Committee shall also have the
power to delegate to the chief executive officer of the Company the authority to
approve individual awards and award changes for employees below the Senior Vice
President level (below Band 70). Notwithstanding the previous sentence, the
Committee shall continue to approve annual awards for Senior Vice Presidents and
higher (Band 70 and above), and to approve the aggregate annual incentive awards
for all plan participants in Bands 35 and above, subject to adjustment for
delegated award changes after each February. In determining the aggregate annual
incentive awards, the Committee, may approve the establishment of maximum award
guidelines for employees of a participating company, division, business unit or
other designated group, based upon specified Company and other applicable
organizational performance goals subject to applicable past limitations. The
Committee shall also have the authority to approve payments upon retirement and
disability termination for Band 70 and above executives. In fixing such awards
the Committee shall receive and consider the recommendations of the chief
executive officer of the Company who, in turn, shall have received and
considered the respective recommendations of other appropriate officers and
executives of the Company and the Participating Companies, as to whether and to
what extent the individual, division/group, and/or Company performance goals
have been met for such year, and as to where in the range of award guidelines
each participant's performance falls. Individual awards shall then be calculated
based on the AIA award grid subject to available pool monies. If the employment
of a participant shall have terminated during a calendar year for any reason,
including, but without limitation, as the result of termination by a
Participating Company without cause, he, or, in the event of his death, his
widow, legal representatives, or such other person or persons, as the Committee
may in its discretion select, may (but need not) be granted such award, if any,
on such basis, as the Committee may in its discretion determine; provided,
however, that if within two years following the occurrence of a Change in
Control (as defined below in Article VI), a participant under the Plan
experiences a termination of employment that would otherwise entitle him to
receive the payment of severance benefits under the provisions of the severance
plan that are in effect and that he participates in as of the date of such
Change in Control, and is at Job Band 50 or higher on the date of such
termination of employment, then such participant in the Plan shall,
notwithstanding the provisions of Article III, be paid, within five days after
the date of such termination of employment, a prorata award under the Plan equal
to (i) (A) the average award paid or payable to such participant under the Plan
(or any other annual incentive award program of the Company or one of its
subsidiaries at the time of such prior payment) for the two years prior to the
Change in Control, or (B) if such participant has not received two such awards,
the most recent award paid or payable (or target amount so payable if such
participant has not previously received any such award) to such participant
under the Plan (or any other annual incentive award program of the Company or
one of its subsidiaries at the time of such prior payment), multiplied by (ii)
the number of full or partial months that have elapsed during the performance
year under the Plan at the time of such termination of employment divided by 12,
provided, further, that in the event such termination of employment occurs after
the end of the performance year under the Plan but before the payment date under
the Plan, then such participant shall also be paid, within five days after such
termination of employment, an award under the Plan equal to (X) the average
award paid or payable to such participant under the Plan (or any other annual
incentive award program of the Company or one of its subsidiaries at the time of
such prior payment) for the two years prior to the Change in Control, or (Y) if
such participant has not received two such awards, the most recent award paid or
payable (or target amount so payable, if such participant has not previously
received any such award) to such participant under the Plan (or any other annual
incentive award program of the Company or one of its subsidiaries at the time of
such prior payment).
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(b) The Committee, upon recommendations as provided by paragraph (a) of
this Article, may also make special awards to a limited number of participants
under the Plan. The chief executive officer may also authorize special awards
under the Plan, at any time or times during the year, provided that any special
awards authorized by the chief executive officer shall be reported to the
Committee at its next regular meeting. These special awards shall be made in
recognition of outstanding individual achievement.
(c) Except for awards payable as a result of a Change in Control Pursuant
to section (a) above, no award to a single participant or employee for any year
shall exceed (i) 200% of this total award guideline for such year, or (ii) 200%
of his base salary for such year.
(d) No award to any participant pursuant to paragraph (a) (other than an
award granted in the event of a Change in Control) or to any employee pursuant
to paragraph (b) of this Article shall become final, unless and until the same
has been approved by the Board of Directors of the Company.
ARTICLE VI
PAYMENT OF INCENTIVE AWARDS
(a) Each incentive award shall be paid as soon as practicable after the
amount of the award shall have been determined, or at such subsequent time or
times as the Committee shall determine. Such payment shall be made in cash
unless the Committee shall, at any time or from time to time, according to rules
and regulations of general application, provide for a different method of
payment, in whole or in part, of incentive awards. Such payment may be made (i)
by the issuance or transfer of securities or other property, including common
shares or other securities of American Express Company, another corporation or
of a regulated investment company or companies, subject to restrictions and
requirements to assure compliance with the conditions set forth in Article VII
hereof and elsewhere in the Plan and such other restrictions and requirements as
the Committee shall prescribe, (ii) by undertaking to issue or transfer such
securities or other property in the future, together with a sum or sums equal to
dividend equivalents and other income equivalents earned thereon from the date
of such undertaking until the date or dates of payment, (iii) in cash measured
by the value of such securities or other property, or of a portfolio comprised
of either securities or other property or both, together with dividend
equivalents and other income equivalents earned thereon from the date that such
measure has been established until the date or dates of payment, or (iv) by
undertaking to pay cash in the future together with such additional amounts of
income equivalents earned thereon until the date or dates of payment, such
additional amounts to be determined by a measure established by the Committee in
its discretion.
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(b) If any incentive award or installment thereof shall become payable by
reason of or following the death of a participant or former participant, such
award or installment shall be payable, at the same time or times and in the same
manner as if such participant or former participant were alive, to such
beneficiaries of the participant or former participant as he shall have
designated in the manner described herein. If such participant or former
participant shall have failed to designate any beneficiary, or if no such
beneficiary shall survive him, then such payments shall be made to his legal
representatives. With the approval of the Committee, a participant or former
participant may designate one or more beneficiaries by executing and delivering
to the Committee or its delegate written notice thereof at any time prior to his
death, and may revoke or change the beneficiaries designated therein without
their consent by written notices similarly executed and delivered to the
Committee at any time and from time to time prior to his death.
(c) Any company required to make payments under this Plan shall deduct
and withhold from any such payment all amounts which its officers believe in
good faith it is required to deduct or withhold pursuant to the laws of any
jurisdiction whatsoever or, in the event that any such payment shall be made in
securities, shall require that arrangements satisfactory to such company shall
be made for the payment of all such amounts before such securities are
delivered. No such company is required to pay any amount to the beneficiary or
legal representatives of any former participant until such beneficiary or legal
representatives shall have furnished evidence satisfactory to it of the payment
or provision for the payment of all estate, transfer, inheritance and death
taxes, if any, which may be payable with respect thereto.
(d) The obligation of any company under the Plan to make deferred
payments or awards when due is merely contractual and no amount credited to an
account of a participant or former participant on the books of any company shall
be deemed to be held in trust for such participant or former participant or for
his beneficiary or legal representatives. Nothing contained in the Plan shall
require any company under the Plan to segregate or earmark any cash or other
property. Any securities or other property held or acquired by any such company
specifically for use under the Plan or otherwise shall, unless and until
transferred in accordance with the terms and conditions of the Plan, be and at
all times remain the property of such company, irrespective of whether such
securities or other property are entered in a special account for the purpose of
the Plan, and such securities or other property shall at all times be and remain
available for any corporate purpose.
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(e) Upon a deferral of the payment of an incentive award, the terms of
such deferral and the payments thereunder shall be governed by the provision of
the deferral plan where such deferral has been made.
(f) For purposes of this Plan, "Change in Control" means the happening of
any of the following:
(I) Any individual, entity or group (a "Person") (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or more of either (A) the then
outstanding common shares of American Express Company (the "Outstanding Company
Common Shares") or (B) the combined voting power of the then outstanding voting
securities of American Express Company ("Company") entitled to vote generally in
the election of directors (the "Outstanding Voting Securities"); provided,
however, that such beneficial ownership shall not constitute a Change in Control
if it occurs as a result of any of the following acquisitions of securities: (W)
any acquisition directly from the Company, (X) any acquisition by the Company or
any corporation, partnership, trust or other entity controlled by the Company (a
"Subsidiary"), (Y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary or (Z) any
acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (A), (B) and (C) of subsection (iii) of this
Section (f) are satisfied. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the "Subject Person")
became the beneficial owner of 25% or more of the Outstanding Common Shares or
Outstanding Voting Securities as a result of the acquisition of Outstanding
Common Shares or Outstanding Voting Securities by the Company which, by reducing
the number of Outstanding Common Shares or Outstanding Voting Securities,
increases the proportional number of shares beneficially owned by the Subject
Person; provided, that if a Change in Control would be deemed to have occurred
(but for the operation of this sentence) as a result of the acquisition of
Outstanding Common Shares or Outstanding Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes the
beneficial owner of any additional Outstanding Common Shares or Outstanding
Voting Securities which increases the percentage of the Outstanding Common
Shares or Outstanding Voting Securities beneficially owned by the Subject
Person, then a Change n Control shall then be deemed to have occurred; or
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(II) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Incumbent Board, including
by reason of agreement intended to avoid or settle any such actual or threatened
contest or solicitation; or
(III) 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 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 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
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(IV) 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 (A) more than
50% of, respectively, the then outstanding shares of common stock of such
corporation 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 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
(V) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company:
(g) Major Transaction
(a) This Section (g) shall apply in the event of a Major Transaction. A
Major Transaction shall mean a transaction described in either (1) or (2) below.
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(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 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.
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(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 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.
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(b) If all or any portion of the payments or benefits to which the
Employee will be entitled under this Plan, either alone or together with other
payments or benefits which the Employee 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, 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
Employee under this Plan, and any other payments or benefits which the Employee
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 Employee 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 (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 Employee should
have been reduced and, if applicable, the amount of any such reduction. If the
Firm determines that a lesser payment should have been made to the Employee,
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 Employee made on the date of the Employee's receipt of such Excess
Amount, which the 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 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). If the Firm determines
that a greater payment should have been made to the Employee, within five
business days of such determination, the Company will pay to the Employee 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 Employee 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.
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(h) This Section (h) shall apply in the event of Change in Control, as
defined in Section (g) above.
(a) In the event that any payment or benefit received or to be received
by an Employee hereunder in connection with a Change in Control or termination
of such Employee'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 (the "Excise Tax") referred
to in Section 4999 of the Code, then (i) in the case of an Employee 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 (d) 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 Tier 1 Employee (in
the event clause (i) above does not apply) and in the case of any other
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 an Employee would be
subject in respect of such unreduced Total Payments); PROVIDED, HOWEVER, that
the Employee 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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(b) 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
an Employee in connection with such Change in Control or the termination of such
Employee's employment, whether pursuant to the terms of this Plan or any other
plan, arrangement or agreement with the Company, any Person (as such term is
defined in Section (g)) 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 accounting firm which was, immediately prior
to the Change in Control, the Company's independent auditor, or if that firm
refuses to serve, by another qualified firm, whether or not serving as
independent auditors, designated by the Administration Committee (the
"Auditor"), 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 Employee 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 Auditor, 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 Auditor 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 respect of a Employee
(other than a Tier 1 Employee) shall be reduced, the Employee 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 Employee'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 an Employee other than a Tier 1 Employee). The Auditor will be paid
reasonable compensation by the Company for its services.
13
(c) 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 Auditor 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 1274
Rate (or such lesser rate (including zero) as may be designated by the Auditor
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.
(d) As soon as practicable following a Change in Control, the Company
shall provide to each Tier 1 Employee and to each other Employee 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 Employee were calculated and the basis for such calculations, including,
without limitation, any opinions or other advice the Company has received from
the Auditor or other advisors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement).
14
ARTICLE VII
CONDITIONS AND FORFEITURES
(a) In addition to any other condition that may be imposed by the
Committee, the payment of all awards (or any part thereof) deferred under the
Plan shall be contingent on the following:
(1) The participant or former participant entitled thereto shall
refrain from engaging (A) in any business or other activity which,
in the judgment of the Committee, is competitive with any activity
of any Participating Company or any affiliate thereof, in which he
was engaged at any time during the last five years of his
employment by a Participating Company or any affiliate thereof, or
(B) in any business or other activity which is so competitive and
of which he shall have special knowledge as the result of having
been employed by the Participating Company or any affiliate
thereof; and from counseling or otherwise assisting any person,
firm or organization that is so engaged;
(2) He shall not furnish, divulge or disclose to any unauthorized
person, firm or other organization any trade secrets, information
or data with respect to any Participating Company or any affiliate
thereof, or any of their employees, that he shall have reason to
believe is confidential;
(3) He will make himself available for such consultation and advice
concerning matters with respect to which he was familiar while
employed by any Participating Company or affiliate as may
reasonably be requested, taking fairly into consideration his age,
health, residence and individual circumstances and the total
amount of the payments that he is receiving, and shall render such
assistance and cooperation (including testimony and depositions)
in respect of matters of which he shall have knowledge, as may
reasonably be requested in any action, proceeding or other
dispute, pending or prospective, to which any Participating
Company or affiliate may be a party or in which it may have an
interest. The participant or former participant shall have no
obligation to render any services after he shall have ceased to be
an employee of the Participating Companies and affiliates thereof,
except as may be required under this subparagraph, and the death
of the participant or former participant, or the failure to call
upon him for the rendition of services called for under this
subparagraph, shall not in any way affect the right of the
participant or former participant or his beneficiary or legal
representatives, as the case may be, to receive any unpaid portion
of any amounts payable to him;
15
(4) His employment by any Participating Company, subsidiary or any
affiliate thereof, shall not have terminated as a result of his
gross negligence, willful misconduct or poor performance and he
shall not, while employed by a Participating Company, subsidiary
or affiliate, have engaged in conduct which, had it been known at
the time, would have resulted, on grounds of gross negligence or
willful misconduct, in the termination of his employment by the
Participating Company, subsidiary or affiliate by which he had
been employed.
(b) If, in the judgment of the Committee, reasonably exercised, a
participant or former participant shall have failed at any time to comply with
any of the conditions set forth in paragraph (a) of this Article VII, the
obligation of the employing company to make further payments to such participant
or former participant or his beneficiary or legal representatives shall
forthwith terminate, provided that no installment or amount delivered or paid
prior to the date of any such determination by the Committee shall be required
to be repaid.
(c) No payment of any award under the Plan shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt so to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge the same shall be void. No payment of any award shall
be subject to any jurisdictional payment requirement upon death or termination.
No such payments shall be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the person entitled thereto,
except as specifically provided in rules or regulations established by the
Committee under the Plan; and in the event that any participant, former
participant or beneficiary under the Plan becomes bankrupt or attempts to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
such payment or a part thereof, then all such payments due him shall cease and
in that event, the Participating Company shall hold and apply the same to or for
his benefit or that of his spouse, children, or other dependents, or any of
them, in such manner and in such proportions as the Committee, with the approval
of the chief executive officer of such company, may deem proper.
16
ARTICLE VIII
PARTICIPATING COMPANIES
(a) Any subsidiary which (1) the Committee, based on the recommendations
of the chief executive officer of the Company, or (2) the Board of Directors of
the Company, has approved as a Participating Company may, with such approval,
become a Participating Company upon delivering to the Committee certified copies
of resolutions duly adopted by its Board of Directors to the effect that it (i)
adopts this Plan and (ii) consents to have the Plan administered by the
Committee as constituted from time to time.
(b) Any subsidiary which is a Participating Company may cease to be a
Participating Company at any time and shall cease to be one upon delivering to
the Committee certified copies of an appropriate resolution duly adopted by its
Board of Directors terminating its participation. If any Participating Company
hereunder ceases to be a subsidiary, such corporation may continue to be a
Participating Company hereunder only upon such terms and conditions as the
Company and such corporation shall agree upon in writing. In no event shall the
termination of a corporation's participation in this Plan relieve it of
obligations theretofore incurred by it under the Plan, except to the extent that
the same have been assumed by another corporation pursuant to paragraph (c) of
this Article VIII.
(c) Any corporation which succeeds to all or any part of the business or
assets of a Participating Company may, by appropriate resolution of its Board of
Directors, adopt this Plan and shall thereupon succeed to such rights and assume
such obligations hereunder as such corporation, such Participating Company and
the Company shall have agreed upon in writing.
(d) For the purposes of this Article VIII the term "subsidiary" shall
mean any corporation (other than the Company and any non-Participating Company
specifically designated by the Committee) in one or more unbroken chains of
corporations connected through stock ownership with the Company, if the Company
directly or indirectly through one or more such chains owns stock possessing
more than 50% of the total combined voting power of all classes of stock and
more than 50% of each class of non-voting stock of such corporation.
17
ARTICLE IX
GENERAL PROVISIONS
(a) No member of the Committee shall be liable for anything done or
omitted to be done by him or by any other member of the Committee in connection
with the Plan, unless such act or omission constitutes willful misconduct on his
part.
(b) The Board of Directors of the Company may amend this Plan in whole or
in part from time to time, and may terminate it at any time, without prior
notice to any interested party. The Board of Directors may delegate its
amendment power to such individual or individuals as it deems appropriate in its
sole discretion. The foregoing sentence to the contrary notwithstanding, for a
period of two years and one day following a Change in Control, neither the Board
of Directors nor the Committee may amend this Plan in a manner that is
detrimental to the rights of any participant of the Plan without his or her
written consent. No amendment or termination shall deprive any participant,
former participant, beneficiary or legal representatives of a former participant
of any right under this Plan as such right exists at the time of such amendment
or termination, nor increase the obligations of any company that is or has been
a Participating Company without its consent.
(c) Nothing in this Plan shall be construed as giving any person employed
by a company which is or has been a Participating Company the right to be
retained in the employ of such company or any right to any payment whatsoever,
except to the extent provided by the Plan. Each such company shall have the
right to dismiss any employee at any time with or without cause and without
liability for the effect which such dismissal might have upon him as a
participant under the Plan.
(c) The Plan shall not be deemed a substitute for any other employee
benefit or compensation plans or arrangements that may now or hereafter be
provided for employees. The Plan shall not preclude any group, division,
subsidiary or affiliate of the Company, whether or not a Participating Company,
from continuing or adopting one or more separate or additional such plans or
arrangements for all or a defined class of the employees of such group,
division, subsidiary or affiliate. Any payment under any such plan or
arrangement may be made independently of the Plan.
(d) By accepting any benefits under the Plan, each participant, each
beneficiary and each person claiming under or through him shall be conclusively
bound by any action or decision taken or made, or to be taken or to be made
under the Plan, by the Company, the Board of Directors of the Company, or the
Committee.
(e) The masculine pronoun means the feminine, the singular the plural,
and vice versa wherever appropriate.
(f) This Plan shall be governed by and construed in accordance with the
laws of the State of New York.
18
ARTICLE I
PURPOSE
The purpose of this Plan is to provide added incentive for those
officers and key executives of American Express Company (the "Company") and
its subsidiaries who are in a position to make substantial contributions to
the earnings and growth of these companies and to reward them collectively
and individually for performance which contributes significantly toward
such earnings and growth. The companies participating in this Plan (the
"Participating Companies") include the Company and such other corporations
as may be taking part in this Plan from time to time pursuant to Article
VIII hereof.
ARTICLE II
ADMINISTRATION OF THE PLAN
This plan shall be administered by the Compensation and Benefits
Committee of the Board of Directors of the Company (the "Committee") as
constituted from time to time, unless and until the Board of Directors of
the Company provides otherwise.
The Committee shall be responsible for the general administration
of the Plan. It shall also be responsible for the interpretation of the
Plan and the determination of all questions arising hereunder. It shall
have power to establish, interpret, enforce, amend and revoke from time to
time such rules and regulations for the administration of the Plan and the
conduct of its business as it deems appropriate. The Committee shall also
have the power to delegate any of its authority under the Plan as allowed
by law. Any action taken by the Committee within the scope of its authority
shall be final and binding upon the Participating Companies, upon each and
every person who participates in the Plan and any successors in interest of
such persons, and any and all other persons claiming under or through any
such person.
1
ARTICLE III
ANNUAL PERFORMANCE GOALS AND AWARD GUIDELINES
(a) As soon as practicable at the beginning of each calendar year, the
Committee shall determine the individual, division/group, Company, and/or other
appropriate performance goals, and award guidelines for such year. In fixing
such goals and guidelines, the Committee shall receive and consider the
recommendations of the chief executive officer of the Company who, in turn,
shall have received and considered the respective recommendations of other
appropriate officers and executives of the Company and the Participating
Companies.
(b) If the Committee finds, during the course of and with respect to any
year, that any of the performance goals and/or award guidelines determined as
herein above provided would not be justified for such year in the circumstances,
it may in its sole discretion fix such performance goals and/or award guidelines
for such year at such different levels as it deems appropriate.
ARTICLE IV
PARTICIPATION IN THE PLAN
(a) Those eligible to participate for any calendar year shall include
such key executives of the Participating Companies as shall be designated by the
Committee. In designating such persons the Committee shall receive and consider
the recommendations of the chief executive officer of the Company who, in turn,
shall have received and considered the respective recommendations of other
appropriate officers and executives of the Company and the Participating
Companies. However, the Committee shall have full authority to act in the matter
and its determination shall be in all respects final and conclusive. Further,
the Committee shall have full authority to delegate eligibility determination.
Participants shall be designated prior to the beginning of the year or as soon
as practicable thereafter, but new executives or executives whose duties and
responsibilities have been materially increased during the year may be
designated participants for such year at any time during the year. Designation
as a participant shall not of itself entitle a person to an award under the
Plan. The Committee has the sole discretion to consider an award (if any) for a
participant in the event of termination, retirement, disability, death, or other
individual circumstances. Participants must generally remain in continuous
active employment with the Company (or an Affiliate), through the end of the
performance period (year end) and up until the payment date, and shall also make
progress towards goals and fulfill Article VII. The Committee, upon
recommendations provided by management, will approve to what extent, if any,
payment of an award should be made if termination occurs after December 31, but
before an actual payment date. No member of the Committee shall be eligible to
participate in or receive awards or deferred payments of awards under the Plan.
(b) The Committee may, by rules and regulations of general or specific
application, establish one or more classes of awards, the payment of which
shall, in whole or in part, be deferred and made at such later time or times, in
a lump sum or in such installments, as the Committee shall prescribe, provided
that the participant shall have fulfilled the conditions specified in Article
VII hereof. At the time each year that an employee shall be designated as a
participant in the Plan, or as soon as practicable thereafter, the Committee, in
or without consultation with such employee, shall determine what proportion, if
any, of any award that may be made to him for such year shall be paid to him
immediately and what proportion shall consist of a class or classes of awards so
established by the Committee. If the Committee shall have failed to make such a
determination in the case of any participant for any year, the award to such
participant shall be paid in cash as soon as practicable after the award shall
be made.
2
ARTICLE V
DETERMINATION OF INCENTIVE AWARDS
(a) As soon as practicable after the end of each calendar year, the
Committee shall fix the amount of each award. The Committee shall also have the
power to delegate to the chief executive officer of the Company the authority to
approve individual awards and award changes for employees below the Senior Vice
President level (below Band 70). Notwithstanding the previous sentence, the
Committee shall continue to approve annual awards for Senior Vice Presidents and
higher (Band 70 and above), and to approve the aggregate annual incentive awards
for all plan participants in Bands 35 and above, subject to adjustment for
delegated award changes after each February. In determining the aggregate annual
incentive awards, the Committee, may approve the establishment of maximum award
guidelines for employees of a participating company, division, business unit or
other designated group, based upon specified Company and other applicable
organizational performance goals subject to applicable past limitations. The
Committee shall also have the authority to approve payments upon retirement and
disability termination for Band 70 and above executives. In fixing such awards
the Committee shall receive and consider the recommendations of the chief
executive officer of the Company who, in turn, shall have received and
considered the respective recommendations of other appropriate officers and
executives of the Company and the Participating Companies, as to whether and to
what extent the individual, division/group, and/or Company performance goals
have been met for such year, and as to where in the range of award guidelines
each participant's performance falls. Individual awards shall then be calculated
based on the AIA award grid subject to available pool monies. If the employment
of a participant shall have terminated during a calendar year for any reason,
including, but without limitation, as the result of termination by a
Participating Company without cause, he, or, in the event of his death, his
widow, legal representatives, or such other person or persons, as the Committee
may in its discretion select, may (but need not) be granted such award, if any,
on such basis, as the Committee may in its discretion determine; provided,
however, that if within two years following the occurrence of a Change in
Control (as defined below in Article VI), a participant under the Plan
experiences a termination of employment that would otherwise entitle him to
receive the payment of severance benefits under the provisions of the severance
plan that are in effect and that he participates in as of the date of such
Change in Control, and is at Job Band 50 or higher on the date of such
termination of employment, then such participant in the Plan shall,
notwithstanding the provisions of Article III, be paid, within five days after
the date of such termination of employment, a prorata award under the Plan equal
to (i) (A) the average award paid or payable to such participant under the Plan
(or any other annual incentive award program of the Company or one of its
subsidiaries at the time of such prior payment) for the two years prior to the
Change in Control, or (B) if such participant has not received two such awards,
the most recent award paid or payable (or target amount so payable if such
participant has not previously received any such award) to such participant
under the Plan (or any other annual incentive award program of the Company or
one of its subsidiaries at the time of such prior payment), multiplied by (ii)
the number of full or partial months that have elapsed during the performance
year under the Plan at the time of such termination of employment divided by 12,
provided, further, that in the event such termination of employment occurs after
the end of the performance year under the Plan but before the payment date under
the Plan, then such participant shall also be paid, within five days after such
termination of employment, an award under the Plan equal to (X) the average
award paid or payable to such participant under the Plan (or any other annual
incentive award program of the Company or one of its subsidiaries at the time of
such prior payment) for the two years prior to the Change in Control, or (Y) if
such participant has not received two such awards, the most recent award paid or
payable (or target amount so payable, if such participant has not previously
received any such award) to such participant under the Plan (or any other annual
incentive award program of the Company or one of its subsidiaries at the time of
such prior payment).
3
(b) The Committee, upon recommendations as provided by paragraph (a) of
this Article, may also make special awards to a limited number of participants
under the Plan. The chief executive officer may also authorize special awards
under the Plan, at any time or times during the year, provided that any special
awards authorized by the chief executive officer shall be reported to the
Committee at its next regular meeting. These special awards shall be made in
recognition of outstanding individual achievement.
(c) Except for awards payable as a result of a Change in Control Pursuant
to section (a) above, no award to a single participant or employee for any year
shall exceed (i) 200% of this total award guideline for such year, or (ii) 200%
of his base salary for such year.
(d) No award to any participant pursuant to paragraph (a) (other than an
award granted in the event of a Change in Control) or to any employee pursuant
to paragraph (b) of this Article shall become final, unless and until the same
has been approved by the Board of Directors of the Company.
ARTICLE VI
PAYMENT OF INCENTIVE AWARDS
(a) Each incentive award shall be paid as soon as practicable after the
amount of the award shall have been determined, or at such subsequent time or
times as the Committee shall determine. Such payment shall be made in cash
unless the Committee shall, at any time or from time to time, according to rules
and regulations of general application, provide for a different method of
payment, in whole or in part, of incentive awards. Such payment may be made (i)
by the issuance or transfer of securities or other property, including common
shares or other securities of American Express Company, another corporation or
of a regulated investment company or companies, subject to restrictions and
requirements to assure compliance with the conditions set forth in Article VII
hereof and elsewhere in the Plan and such other restrictions and requirements as
the Committee shall prescribe, (ii) by undertaking to issue or transfer such
securities or other property in the future, together with a sum or sums equal to
dividend equivalents and other income equivalents earned thereon from the date
of such undertaking until the date or dates of payment, (iii) in cash measured
by the value of such securities or other property, or of a portfolio comprised
of either securities or other property or both, together with dividend
equivalents and other income equivalents earned thereon from the date that such
measure has been established until the date or dates of payment, or (iv) by
undertaking to pay cash in the future together with such additional amounts of
income equivalents earned thereon until the date or dates of payment, such
additional amounts to be determined by a measure established by the Committee in
its discretion.
4
(b) If any incentive award or installment thereof shall become payable by
reason of or following the death of a participant or former participant, such
award or installment shall be payable, at the same time or times and in the same
manner as if such participant or former participant were alive, to such
beneficiaries of the participant or former participant as he shall have
designated in the manner described herein. If such participant or former
participant shall have failed to designate any beneficiary, or if no such
beneficiary shall survive him, then such payments shall be made to his legal
representatives. With the approval of the Committee, a participant or former
participant may designate one or more beneficiaries by executing and delivering
to the Committee or its delegate written notice thereof at any time prior to his
death, and may revoke or change the beneficiaries designated therein without
their consent by written notices similarly executed and delivered to the
Committee at any time and from time to time prior to his death.
(c) Any company required to make payments under this Plan shall deduct
and withhold from any such payment all amounts which its officers believe in
good faith it is required to deduct or withhold pursuant to the laws of any
jurisdiction whatsoever or, in the event that any such payment shall be made in
securities, shall require that arrangements satisfactory to such company shall
be made for the payment of all such amounts before such securities are
delivered. No such company is required to pay any amount to the beneficiary or
legal representatives of any former participant until such beneficiary or legal
representatives shall have furnished evidence satisfactory to it of the payment
or provision for the payment of all estate, transfer, inheritance and death
taxes, if any, which may be payable with respect thereto.
(d) The obligation of any company under the Plan to make deferred
payments or awards when due is merely contractual and no amount credited to an
account of a participant or former participant on the books of any company shall
be deemed to be held in trust for such participant or former participant or for
his beneficiary or legal representatives. Nothing contained in the Plan shall
require any company under the Plan to segregate or earmark any cash or other
property. Any securities or other property held or acquired by any such company
specifically for use under the Plan or otherwise shall, unless and until
transferred in accordance with the terms and conditions of the Plan, be and at
all times remain the property of such company, irrespective of whether such
securities or other property are entered in a special account for the purpose of
the Plan, and such securities or other property shall at all times be and remain
available for any corporate purpose.
5
(e) Upon a deferral of the payment of an incentive award, the terms of
such deferral and the payments thereunder shall be governed by the provision of
the deferral plan where such deferral has been made.
(f) For purposes of this Plan, "Change in Control" means the happening of
any of the following:
(I) Any individual, entity or group (a "Person") (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) becomes the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 25% or more of either (A) the then
outstanding common shares of American Express Company (the "Outstanding Company
Common Shares") or (B) the combined voting power of the then outstanding voting
securities of American Express Company ("Company") entitled to vote generally in
the election of directors (the "Outstanding Voting Securities"); provided,
however, that such beneficial ownership shall not constitute a Change in Control
if it occurs as a result of any of the following acquisitions of securities: (W)
any acquisition directly from the Company, (X) any acquisition by the Company or
any corporation, partnership, trust or other entity controlled by the Company (a
"Subsidiary"), (Y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any Subsidiary or (Z) any
acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in clauses (A), (B) and (C) of subsection (iii) of this
Section (f) are satisfied. Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the "Subject Person")
became the beneficial owner of 25% or more of the Outstanding Common Shares or
Outstanding Voting Securities as a result of the acquisition of Outstanding
Common Shares or Outstanding Voting Securities by the Company which, by reducing
the number of Outstanding Common Shares or Outstanding Voting Securities,
increases the proportional number of shares beneficially owned by the Subject
Person; provided, that if a Change in Control would be deemed to have occurred
(but for the operation of this sentence) as a result of the acquisition of
Outstanding Common Shares or Outstanding Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes the
beneficial owner of any additional Outstanding Common Shares or Outstanding
Voting Securities which increases the percentage of the Outstanding Common
Shares or Outstanding Voting Securities beneficially owned by the Subject
Person, then a Change n Control shall then be deemed to have occurred; or
6
(II) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that any individual becoming a director subsequent to the
date hereof whose election by the Company's shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Incumbent Board, including
by reason of agreement intended to avoid or settle any such actual or threatened
contest or solicitation; or
(III) 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 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 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
7
(IV) 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 (A) more than
50% of, respectively, the then outstanding shares of common stock of such
corporation 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 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
(V) Approval by the shareholders of the Company of a complete liquidation
or dissolution of the Company:
(g) Major Transaction
(a) This Section (g) shall apply in the event of a Major Transaction. A
Major Transaction shall mean a transaction described in either (1) or (2) below.
8
(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 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.
9
(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 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.
10
(b) If all or any portion of the payments or benefits to which the
Employee will be entitled under this Plan, either alone or together with other
payments or benefits which the Employee 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, 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
Employee under this Plan, and any other payments or benefits which the Employee
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 Employee 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 (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 Employee should
have been reduced and, if applicable, the amount of any such reduction. If the
Firm determines that a lesser payment should have been made to the Employee,
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 Employee made on the date of the Employee's receipt of such Excess
Amount, which the 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 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). If the Firm determines
that a greater payment should have been made to the Employee, within five
business days of such determination, the Company will pay to the Employee 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 Employee 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.
11
(h) This Section (h) shall apply in the event of Change in Control, as
defined in Section (g) above.
(a) In the event that any payment or benefit received or to be received
by an Employee hereunder in connection with a Change in Control or termination
of such Employee'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 (the "Excise Tax") referred
to in Section 4999 of the Code, then (i) in the case of an Employee 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 (d) 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 Tier 1 Employee (in
the event clause (i) above does not apply) and in the case of any other
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 an Employee would be
subject in respect of such unreduced Total Payments); PROVIDED, HOWEVER, that
the Employee may elect in writing to have other components of his or her Total
Payments reduced prior to any reduction in the Payments hereunder.
12
(b) 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
an Employee in connection with such Change in Control or the termination of such
Employee's employment, whether pursuant to the terms of this Plan or any other
plan, arrangement or agreement with the Company, any Person (as such term is
defined in Section (g)) 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 accounting firm which was, immediately prior
to the Change in Control, the Company's independent auditor, or if that firm
refuses to serve, by another qualified firm, whether or not serving as
independent auditors, designated by the Administration Committee (the
"Auditor"), 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 Employee 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 Auditor, 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 Auditor 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 respect of a Employee
(other than a Tier 1 Employee) shall be reduced, the Employee 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 Employee'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 an Employee other than a Tier 1 Employee). The Auditor will be paid
reasonable compensation by the Company for its services.
13
(c) 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 Auditor 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 1274
Rate (or such lesser rate (including zero) as may be designated by the Auditor
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.
(d) As soon as practicable following a Change in Control, the Company
shall provide to each Tier 1 Employee and to each other Employee 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 Employee were calculated and the basis for such calculations, including,
without limitation, any opinions or other advice the Company has received from
the Auditor or other advisors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement).
14
ARTICLE VII
CONDITIONS AND FORFEITURES
(a) In addition to any other condition that may be imposed by the
Committee, the payment of all awards (or any part thereof) deferred under the
Plan shall be contingent on the following:
(1) The participant or former participant entitled thereto shall
refrain from engaging (A) in any business or other activity which,
in the judgment of the Committee, is competitive with any activity
of any Participating Company or any affiliate thereof, in which he
was engaged at any time during the last five years of his
employment by a Participating Company or any affiliate thereof, or
(B) in any business or other activity which is so competitive and
of which he shall have special knowledge as the result of having
been employed by the Participating Company or any affiliate
thereof; and from counseling or otherwise assisting any person,
firm or organization that is so engaged;
(2) He shall not furnish, divulge or disclose to any unauthorized
person, firm or other organization any trade secrets, information
or data with respect to any Participating Company or any affiliate
thereof, or any of their employees, that he shall have reason to
believe is confidential;
(3) He will make himself available for such consultation and advice
concerning matters with respect to which he was familiar while
employed by any Participating Company or affiliate as may
reasonably be requested, taking fairly into consideration his age,
health, residence and individual circumstances and the total
amount of the payments that he is receiving, and shall render such
assistance and cooperation (including testimony and depositions)
in respect of matters of which he shall have knowledge, as may
reasonably be requested in any action, proceeding or other
dispute, pending or prospective, to which any Participating
Company or affiliate may be a party or in which it may have an
interest. The participant or former participant shall have no
obligation to render any services after he shall have ceased to be
an employee of the Participating Companies and affiliates thereof,
except as may be required under this subparagraph, and the death
of the participant or former participant, or the failure to call
upon him for the rendition of services called for under this
subparagraph, shall not in any way affect the right of the
participant or former participant or his beneficiary or legal
representatives, as the case may be, to receive any unpaid portion
of any amounts payable to him;
15
(4) His employment by any Participating Company, subsidiary or any
affiliate thereof, shall not have terminated as a result of his
gross negligence, willful misconduct or poor performance and he
shall not, while employed by a Participating Company, subsidiary
or affiliate, have engaged in conduct which, had it been known at
the time, would have resulted, on grounds of gross negligence or
willful misconduct, in the termination of his employment by the
Participating Company, subsidiary or affiliate by which he had
been employed.
(b) If, in the judgment of the Committee, reasonably exercised, a
participant or former participant shall have failed at any time to comply with
any of the conditions set forth in paragraph (a) of this Article VII, the
obligation of the employing company to make further payments to such participant
or former participant or his beneficiary or legal representatives shall
forthwith terminate, provided that no installment or amount delivered or paid
prior to the date of any such determination by the Committee shall be required
to be repaid.
(c) No payment of any award under the Plan shall be subject in any manner
to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, and any attempt so to anticipate, alienate, sell, transfer, assign,
pledge, encumber or charge the same shall be void. No payment of any award shall
be subject to any jurisdictional payment requirement upon death or termination.
No such payments shall be in any manner liable for or subject to the debts,
contracts, liabilities, engagements or torts of the person entitled thereto,
except as specifically provided in rules or regulations established by the
Committee under the Plan; and in the event that any participant, former
participant or beneficiary under the Plan becomes bankrupt or attempts to
anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any
such payment or a part thereof, then all such payments due him shall cease and
in that event, the Participating Company shall hold and apply the same to or for
his benefit or that of his spouse, children, or other dependents, or any of
them, in such manner and in such proportions as the Committee, with the approval
of the chief executive officer of such company, may deem proper.
16
ARTICLE VIII
PARTICIPATING COMPANIES
(a) Any subsidiary which (1) the Committee, based on the recommendations
of the chief executive officer of the Company, or (2) the Board of Directors of
the Company, has approved as a Participating Company may, with such approval,
become a Participating Company upon delivering to the Committee certified copies
of resolutions duly adopted by its Board of Directors to the effect that it (i)
adopts this Plan and (ii) consents to have the Plan administered by the
Committee as constituted from time to time.
(b) Any subsidiary which is a Participating Company may cease to be a
Participating Company at any time and shall cease to be one upon delivering to
the Committee certified copies of an appropriate resolution duly adopted by its
Board of Directors terminating its participation. If any Participating Company
hereunder ceases to be a subsidiary, such corporation may continue to be a
Participating Company hereunder only upon such terms and conditions as the
Company and such corporation shall agree upon in writing. In no event shall the
termination of a corporation's participation in this Plan relieve it of
obligations theretofore incurred by it under the Plan, except to the extent that
the same have been assumed by another corporation pursuant to paragraph (c) of
this Article VIII.
(c) Any corporation which succeeds to all or any part of the business or
assets of a Participating Company may, by appropriate resolution of its Board of
Directors, adopt this Plan and shall thereupon succeed to such rights and assume
such obligations hereunder as such corporation, such Participating Company and
the Company shall have agreed upon in writing.
(d) For the purposes of this Article VIII the term "subsidiary" shall
mean any corporation (other than the Company and any non-Participating Company
specifically designated by the Committee) in one or more unbroken chains of
corporations connected through stock ownership with the Company, if the Company
directly or indirectly through one or more such chains owns stock possessing
more than 50% of the total combined voting power of all classes of stock and
more than 50% of each class of non-voting stock of such corporation.
17
ARTICLE IX
GENERAL PROVISIONS
(a) No member of the Committee shall be liable for anything done or
omitted to be done by him or by any other member of the Committee in connection
with the Plan, unless such act or omission constitutes willful misconduct on his
part.
(b) The Board of Directors of the Company may amend this Plan in whole or
in part from time to time, and may terminate it at any time, without prior
notice to any interested party. The Board of Directors may delegate its
amendment power to such individual or individuals as it deems appropriate in its
sole discretion. The foregoing sentence to the contrary notwithstanding, for a
period of two years and one day following a Change in Control, neither the Board
of Directors nor the Committee may amend this Plan in a manner that is
detrimental to the rights of any participant of the Plan without his or her
written consent. No amendment or termination shall deprive any participant,
former participant, beneficiary or legal representatives of a former participant
of any right under this Plan as such right exists at the time of such amendment
or termination, nor increase the obligations of any company that is or has been
a Participating Company without its consent.
(c) Nothing in this Plan shall be construed as giving any person employed
by a company which is or has been a Participating Company the right to be
retained in the employ of such company or any right to any payment whatsoever,
except to the extent provided by the Plan. Each such company shall have the
right to dismiss any employee at any time with or without cause and without
liability for the effect which such dismissal might have upon him as a
participant under the Plan.
(c) The Plan shall not be deemed a substitute for any other employee
benefit or compensation plans or arrangements that may now or hereafter be
provided for employees. The Plan shall not preclude any group, division,
subsidiary or affiliate of the Company, whether or not a Participating Company,
from continuing or adopting one or more separate or additional such plans or
arrangements for all or a defined class of the employees of such group,
division, subsidiary or affiliate. Any payment under any such plan or
arrangement may be made independently of the Plan.
(d) By accepting any benefits under the Plan, each participant, each
beneficiary and each person claiming under or through him shall be conclusively
bound by any action or decision taken or made, or to be taken or to be made
under the Plan, by the Company, the Board of Directors of the Company, or the
Committee.
(e) The masculine pronoun means the feminine, the singular the plural,
and vice versa wherever appropriate.
(f) This Plan shall be governed by and construed in accordance with the
laws of the State of New York.
18