Document:

exv10w8

EXHIBIT 10.8

AMERICAN EXPRESS COMPANY

2007 INCENTIVE COMPENSATION PLAN

MASTER AGREEMENT

(As Amended and Restated Effective January 1, 2011)

 

     Nonqualified Stock Options, Restricted Stock Awards, and Restricted Stock Unit
Awards (“Awards”) are issued pursuant to the 2007 Incentive Compensation Plan (the “Plan”) of
American Express Company (the “Company”) at the discretion and subject to the administration of the
Compensation and Benefits Committee, or its successor (the “Committee”) of the Board of Directors
of the Company (the “Board”). Awards issued on or after April 23, 2007 shall contain the general
terms set forth in the applicable provisions of this Master Agreement. The specific terms of
individual Awards will be contained in the Award Schedule(s) delivered to participants in the Plan
(the “Participants”). All Awards shall be subject to the Plan and any administrative guidelines or
interpretations by the Committee under the Plan, the Plan and any such guidelines or
interpretations being incorporated into this Master Agreement by reference and made a part hereof.
As used herein, the term “shares” refers to the common shares of the Company having a par value of
$.20 per share, or the shares of any other stock of any other class into which such shares may
thereafter be changed.

Section I

MASTER AGREEMENT PROVISIONS RELATING TO

A GRANT OF NONQUALIFIED STOCK OPTION

     1. Sections I, IV, and V of this Master Agreement, together with an Award Schedule referring
to Section I of this Master Agreement, shall contain the terms of a specific Nonqualified Stock
Option (“Option”) issued to a Participant. Each Award Schedule shall specify the number of shares
subject to the Option, the Option Date of Grant, the Option Exercise Date(s), the Option Exercise
Price, and any additional terms applicable to the Option. Such additional terms may address any
matter deemed appropriate by the Committee or its delegate and may include terms not contained in
this Master Agreement and/or may delete terms contained in this Master Agreement. A stock
appreciation right is included herein only if specifically approved by the Committee and reflected
in an Award Schedule.

     2. Unless otherwise determined by the Committee and subject to the provisions of this Master
Agreement and the applicable provisions of the Plan, a Participant may exercise this Option as
follows:

     (a) No part of this Option may be exercised before the first Option Exercise Date
listed in the Award Schedule or after the expiration of ten years from the Date of Grant set
forth in the Award Schedule;

 

 

     (b) At any time or times on or after the first Option Exercise Date listed in the Award
Schedule, a Participant may exercise this Option as to any number of shares which, when
added to the number of shares as to which a Participant has theretofore exercised this
Option, if any, will not exceed 25% of the total number of shares covered hereby;

     (c) At any time or times on or after the second Option Exercise Date listed in the
Award Schedule, a Participant may exercise this Option as to any number of shares which,
when added to the number of shares as to which a Participant has theretofore exercised this
Option, if any, will not exceed 50% of the total number of shares covered hereby;

     (d) At any time or times on or after the third Option Exercise Date listed in the Award
Schedule, a Participant may exercise this Option as to any number of shares which, when
added to the number of shares as to which a Participant has theretofore exercised this
Option, if any, will not exceed 75% of the total number of shares covered hereby; and

     (e) At any time or times on or after the fourth Option Exercise Date listed in the
Award Schedule and thereafter through the expiration date of this Option, a Participant may
exercise this Option as to any number of shares which, when added to the number of shares as
to which the Participant has theretofore exercised this Option, if any, will not exceed the
total number of shares covered hereby.

This Option may not be exercised for a fraction of a share.

     3. A Participant may not exercise this Option and, if applicable, any stock appreciation right
included herein, unless all of the following conditions are met:

     (a) Legal counsel for the Company must be satisfied at the time of exercise that the
issuance of shares upon exercise will be in compliance with the Securities Act of 1933, as
amended, and applicable United States federal, state, local, and foreign laws;

     (b) The Participant must pay at the time of exercise the full purchase price for the
shares being acquired hereunder, by (i) paying in cash in United States dollars (which may
be in the form of a check), (ii) tendering shares owned by the Participant which have a fair
market value equal to the full purchase price for the shares being acquired, such fair
market value to be determined in such reasonable manner as may be provided from time to time
by the Committee or as may be required in order to comply with the requirements of any
applicable laws or regulations, (iii) if permitted by the Committee, by authorizing a third
party to sell, on behalf of the Participant, the appropriate number of shares otherwise
issuable to the Participant upon the exercise of this Option and to remit to the Company a
sufficient portion of the sale proceeds to pay the entire exercise price and any tax
withholding resulting from such exercise, or (iv) tendering a combination of the forms of
payment provided for in this Paragraph 3(b); and

     (c) The Participant must, at all times during the period beginning with the Date of
Grant of this Option and ending on the date of such exercise, have been
employed

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by the Company or an Affiliate (as defined in the Plan) or have been engaged
in a period of Related Employment (as defined in the Plan). However, if the Participant
ceases to be so employed or terminates a period of Related Employment by reason of the
Participant’s disability or Retirement (as such terms are defined in the Plan and
interpreted and administered by the Committee) while holding this Option which has not
expired and has not been fully exercised, the Participant may, at any time within five years
of the date of the onset of such disability (but in no event after the expiration of this
Option under Paragraph 2(a) above with respect to ten years from the Date of Grant) or in
the case of Retirement until the expiration of the Option under Paragraph 2(a) above,
exercise this Option with respect to the number of shares, after giving full effect to the
gradual vesting provisions of Paragraph 2 above, as to which the Participant could have
exercised this Option on the date of the onset of such disability or Retirement, or with
respect to such greater number of shares as determined by the Committee in its sole
discretion, and any remaining portion of this Option shall be canceled by the Company. In
the event the Participant’s employment by the Company and its Affiliates or Related
Employment terminates for reasons other than disability or Retirement as described in this
Paragraph 3(c) or death as described in Paragraph 4 below, this Option shall be canceled by
the Company; provided, however, if within two years following a Change in Control (as
defined in Section IV of this Master Agreement), a Participant is terminated under
circumstances that would entitle the Participant to severance under an applicable U.S.
severance plan (other than Constructive Termination, as defined in the applicable plan), the
Participant may, at any time within 90 days following such termination (but in no event
after the expiration of this Option under Paragraph 2(a) above with respect to ten years
from the Date of Grant), exercise this Option with respect to the number of shares as to
which the Participant could have exercised this Option on the date of such termination. For
any other Participant not covered by a U.S. severance plan, the 90-day extension period
shall apply if the Participant is terminated within two years following a Change in Control
and the Participant would have been entitled to severance under the applicable U.S.
severance plan had the Participant been a U.S. employee.

     4. Except as otherwise determined by the Committee, a Participant may not assign, transfer,
pledge, hypothecate, or otherwise dispose of this Option (and any stock appreciation right included
herein), except by will or the laws of descent and distribution, and this Option is exercisable
during the Participant’s lifetime only by the Participant. If the Participant or anyone claiming
under or through the Participant attempts to violate this Paragraph 4, such attempted violation
shall be null and void and without effect, and the Company’s obligation to make any further
payments (stock or cash) hereunder shall terminate. If at the time of the Participant’s death this
Option has not been fully exercised, the Participant’s estate or any person who acquires the right
to exercise this Option by bequest or inheritance or by reason of the Participant’s death may, at
any time within five years after the date of the Participant’s death (but in no event after the
expiration of this Option under Paragraph 2 (a) above with respect to ten years from the Date of
Grant or the time period described in Paragraph 3(c) above with respect to disability), exercise
this Option with respect to the number of shares, after giving full effect to the gradual vesting
provisions of Paragraph 2 above, as to which the Participant could have exercised this Option at
the time of the Participant’s death, or with respect to such greater number of shares as determined
by the Committee in its sole discretion. The applicable requirements of Paragraph 3 above must be
satisfied at the time of such exercise.

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     5. In the event that the Company or any of its Affiliates is a participant in a corporate
merger, consolidation, or other similar transaction, neither the Company nor such Affiliate shall
be obligated to cause any other participant in such transaction to assume this Option or to
substitute a new option for this Option.

     6. (a) If approved by the Committee and subject to the conditions specified in Paragraph 6(b)
below, within such time or times as this Option shall be exercisable in whole or in part and to the
extent that it shall then be exercisable in accordance with Paragraph 2 above, the Participant (or
any person acting under Paragraph 4 above) may surrender unexercised this Option or any portion
thereof which is then exercisable to the Company and receive from the Company in exchange therefor
that number of shares having an aggregate value equal to 100% of the excess of the value of one
share over the Option Exercise Price per share heretofore specified times the lesser of (i) the
number of shares as to which this Option then is exercisable or (ii) the number of shares as to
which this Option is surrendered to the Company. This right to surrender unexercised this Option
or any portion thereof which is then exercisable is referred to herein as a “stock appreciation
right.” No fractional shares shall be delivered, but in lieu thereof a cash adjustment shall be
made.

     (b) If granted by the Committee, the stock appreciation right may be exercised only if,
and to the extent that,

     (i) this Option is at the time exercisable, and

     (ii) on the date of exercise (1) this Option will, in accordance with Paragraph
2(a) above, expire within 30 days, or (2) the Participant has ceased to be an
employee of the Company or an Affiliate thereof or terminated a period of Related
Employment by reason of the Participant’s disability or Retirement (as defined in
the Plan), or (3) the Participant has died.

Notwithstanding Paragraph 6(b)(ii) above, but subject to the conditions of Paragraph 6(b)(i)
above, (1) the ability to exercise a stock appreciation right may be further limited to the
extent determined by the Committee as necessary or desirable to comply with applicable
provisions of United States federal, state, local, or foreign law or regulation, and (2) if
the Participant is on the date of exercise an executive officer of the Company as that term
is defined in the Securities Exchange Act of 1934, as amended, and the rules thereunder (an
“Insider”), the stock appreciation right may be exercised only with respect to a maximum of
50% of the shares subject to this Option granted hereunder, unless otherwise determined by
the Committee.

     (c) The Committee may elect from time to time in its sole discretion to settle the
obligation arising out of the exercise of the stock appreciation right, by the payment of
cash equal to the aggregate value of the shares it otherwise would be obligated to deliver
or partly by the payment of cash and partly by the delivery of shares.

     (d) For all purposes under this Paragraph 6, the value of a share shall be the fair
market value thereof, as determined by the Committee, on the last business day preceding the
date of the election to exercise the stock appreciation right, provided that if notice of
such election is received by the Committee more than three business days after

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the date of such election (as such date of election is stated in the notice of
election), the Committee may, but need not, determine the value of a share as of the day
preceding the date on which the notice of election is received.

     7. It shall be a condition to the obligation of the Company to furnish shares upon exercise of
this Option or settlement of a stock appreciation right by delivery of shares and/or cash (a) that
the Participant (or any person acting under Paragraph 4 above) pay to the Company or its designee,
upon its demand, in accordance with Paragraph 17(f) of the Plan, such amount as may be demanded for
the purpose of satisfying its obligation or the obligation of any of its Affiliates or other person
to withhold United States federal, state, local, or foreign income, employment or other taxes
incurred by reason of the exercise of this Option or the settlement of the stock appreciation right
or the transfer of shares thereupon, (b) whether the settlement of the stock appreciation right is
to be made by delivery of shares or by the payment of cash, that the Participant (or any person
acting under Paragraph 4 above) execute such forms as the Committee shall prescribe for the purpose
of evidencing the surrender of this Option in whole or in part, as the case may be, and (c) that
the Participant (or any person acting under Paragraph 4 above) provide the Company with any forms,
documents, or other information reasonably required by the Company in connection with the grant.
The Company shall have the right to deduct or cause to be deducted from any payment made in
settlement of a stock appreciation right any United States federal, state, local, or foreign
income, employment or other taxes that it determines are required by law to be withheld with
respect to such payment. If the amount requested for the purpose of satisfying the withholding
obligation is not paid, the Company may refuse to furnish shares upon exercise of this Option or
shares and/or cash upon settlement of the stock appreciation right.

Section II

MASTER AGREEMENT PROVISIONS RELATING TO

AWARDS OF RESTRICTED STOCK

     1. Sections II, IV, and V of this Master Agreement, together with an Award Schedule referring
to Section II of this Master Agreement, shall contain the terms of a specific Restricted Stock
Award (“RSA”) issued to a Participant. Each Award Schedule shall specify the number of shares
awarded, the Award Date, the Expiration Date, and any additional terms applicable to the Award.
Such additional terms may address any matter deemed appropriate by the Committee or its delegate
and may include terms not contained in this Master Agreement and/or may delete terms contained in
this Master Agreement.

     2. An RSA consists of the number of shares specified in an Award Schedule and is subject to
the provisions of the Plan. In addition, the following terms, conditions and restrictions apply to
RSAs issued under the Plan:

     (a) Except as otherwise determined by the Committee, such shares cannot be sold,
assigned, transferred, pledged, hypothecated, or otherwise disposed of (except that
Participants may designate a beneficiary as provided herein) on or before the Expiration
Date and prior to the subsequent issuance to a Participant (or, in the event of a
Participant’s death, the Participant’s designated beneficiary) of a certificate or an
uncertificated book entry position for such shares free of any legend or other transfer

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restriction relating to the terms, conditions, and restrictions provided for in the
Award Schedule or this Master Agreement. If a Participant or anyone claiming under or
through such Participant attempts to violate this Paragraph 2(a), such attempted violation
shall be null and void and without effect, and the Company’s obligation to make any further
payments or deliveries (in stock or cash) hereunder shall terminate.

     (b) An RSA shall be evidenced by a share certificate or an uncertificated book entry
position maintained by the Company’s transfer agent and registrar.

     (c) If (i) a Participant’s continuous employment with the Company and its Affiliates
(as defined in the Plan) shall terminate for any reason on or before the Expiration Date,
except for a period of Related Employment (as defined in the Plan), and except as provided
in Paragraph 2(d) below or (ii) within the period following the Expiration Date as
determined by the Committee, a Participant (or such Participant’s designated beneficiary)
has not paid to the Company or such Affiliate or other person an amount equal to any United
States federal, state, local, or foreign income, employment or other taxes which the Company
determines is required to be withheld in respect of such shares, or fails to provide such
information as is described in Paragraph 4 below, then, unless the Committee determines
otherwise, the Participant’s RSA or portion thereof shall be automatically terminated,
cancelled, and rendered null and void as of the Expiration Date without any action on the
part of the Company, and the Company shall be deemed to have exercised its repurchase option
without the requirement of any payment, and shall be entitled to the return from such
Participant (or the Participant’s designated beneficiary or the Secretary of the Company) of
any share certificate(s) issued in respect of the Award or the cancellation of any book
entry memo position maintained by the Company’s transfer agent and registrar with respect to
a Participant’s RSA.

     (d) On or before the Expiration Date, the Committee shall have the authority, in its
sole discretion, to determine whether and to what extent, the termination provisions of
Paragraph 2(c) shall cease to be effective with respect to a Participant’s Award in the
following situations:

     (i) a Participant shall die or have a termination of employment or Related
Employment by reason of disability or Retirement (as such terms are defined in the
Plan and interpreted and administered by the Committee); or

     (ii) in such circumstances as the Committee, in its sole discretion, shall deem
appropriate if, since the Award Date, a Participant has been in the continuous
employment of the Company or an Affiliate or has undertaken Related Employment.

     (e) The share certificate, if any, issued in respect of a RSA shall be held in escrow
by the Secretary of the Company during the period up to and including the date determined by
the Committee pursuant to Paragraph 2(c) above, unless otherwise determined by the
Committee.

     3. In the event of any change in the outstanding shares of the Company by reason of any stock
split, stock dividend, split-up, split-off, spin-off, recapitalization, merger,

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consolidation, rights offering, reorganization, combination, subdivision or exchange of shares,
sale by the Company of all or part of its assets, distribution to shareholders other than a normal
cash dividend, or other extraordinary or unusual event, or in the event a Participant (or the
Participant’s designated beneficiary) receives any shares, securities, or other property in respect
of the shares which have been awarded to a Participant (including, but not limited to, by way of a
dividend or other distribution on such shares), any such shares, securities, or other property
received by a Participant (or a Participant’s designated beneficiary) in respect of the shares
awarded to such Participant shall, other than upon a Change In Control as defined in Section IV of
this Master Agreement, be subject to the Company’s right to receive or cancel such shares,
securities, or other property from such Participant (or such Participant’s designated beneficiary),
as provided in Paragraph 2(c) above and the other terms, conditions, and restrictions specified
herein to the extent that, and in such manner as, the Committee shall determine. Any such
determination by the Committee under this Paragraph 3 shall be final, binding, and conclusive.

     4. If the Company, in its sole discretion, shall determine that the Company or an Affiliate or
other person has incurred or will incur any obligation to withhold any United States federal,
state, local, or foreign income, employment, or other taxes by reason of making of the Award to a
Participant, the transfer of shares to a Participant (or the Participant’s designated beneficiary)
pursuant thereto or the lapse or release of the termination provisions contained in Paragraph 2(c)
above with respect to a Participant’s Award or any other restrictions upon such shares, such
Participant (or such Participant’s designated beneficiary) will, promptly upon demand therefor by
the Company, pay to the Company or such Affiliate or other person any amount demanded by it for the
purpose of satisfying such liability. If the amount so demanded is not promptly paid or if such
Participant (or such Participant’s designated beneficiary) shall fail to promptly provide the
Company with any and all forms, documents, or other information reasonably required by the Company
in connection with the Award, the Company or its designee may refuse to permit the transfer of such
shares and may, without further consent by or notice to such Participant (or such Participant’s
designated beneficiary), cancel the Award and the shares otherwise issuable under the Award.

Section III

MASTER AGREEMENT PROVISIONS RELATING TO

AWARDS OF A RESTRICTED STOCK UNIT

     1. Sections III, IV, and V of this Master Agreement, together with an Award Schedule referring
to Section III of this Master Agreement, shall contain the terms of a specific Restricted Stock
Unit (“RSU”) issued to a Participant. Each Award Schedule shall specify the number of shares to be
awarded, the RSU Date, the Expiration Date, and any additional terms applicable to the Award. Such
additional terms may address any matter deemed appropriate by the Committee or its delegate and may
include terms not contained in this Master Agreement and/or may delete terms contained in this
Master Agreement.

     2. Subject to the provisions of the Plan and the following terms, conditions and restrictions
herein set forth, the Company will issue to a Participant a certificate for the number of shares
specified in an Award Schedule as promptly as practicable following January 1 of the calendar year
immediately following the calendar year that includes the last day of the period of

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four years from the RSU Date (the “Restricted Period”), but in no event later than 90 days
thereafter:

     (a) Except as otherwise determined by the Committee, rights under this RSU may not be
sold, assigned, transferred, pledged, hypothecated, or otherwise disposed of, except by will
or the laws of descent and distribution, on or before the last day of the Restricted Period
and prior to the subsequent issuance to a Participant (or, in the event of a Participant’s
death, the Participant’s designated beneficiary) of a certificate for such shares free of
any legend or other transfer restriction relating to the terms, conditions, and restrictions
provided for in this Master Agreement. If a Participant or anyone claiming under or through
a Participant attempts to violate this Paragraph 2(a), such attempted violation shall be
null and void and without effect, and the Company’s obligations hereunder shall terminate.

     (b) If (i) a Participant’s continuous employment with the Company and its Affiliates
(as defined in the Plan) shall terminate for any reason on or before the last day of the
Restricted Period, except for a period of Related Employment (as defined in the Plan), and
except as provided in Paragraph 2(c) below, or (ii) within the period following the last day
of the Restricted Period as determined by the Committee, a Participant (or such
Participant’s designated beneficiary) has not paid to the Company or such Affiliate or other
person an amount equal to any United States federal, state, local, or foreign income,
employment, or other taxes which the Company determines is required to be withheld in
respect of such shares, or fails to provide such information as is described in Paragraph 4
below, then, unless the Committee determines otherwise, this RSU or portion thereof shall be
automatically terminated, cancelled, and rendered null and void as of the last day of the
Restricted Period without any action on the part of the Company.

     (c) If a Participant shall, on or before the last day of the Restricted Period, die or
have a termination of employment or Related Employment by reason of disability or Retirement
(as such terms are defined in the Plan and interpreted and administered by the Committee),
or by reason of such other circumstances as the Committee, in its sole discretion, shall
deem appropriate, after a Participant has been, since the RSU Date, in the continuous
employment of the Company or an Affiliate or have undertaken Related Employment, the
Committee, in its sole discretion, shall determine whether and to what extent, if any, the
Company’s right as specified in Paragraph 2(b) above (and in any and all other terms,
conditions, and restrictions imposed hereby) shall lapse and cease to be effective. The
Company’s right specified in Paragraph 2(b) above shall be exercisable at such time as to
the remaining shares, if any.

     (d) From time to time during the Restricted Period, the Company shall pay to a
Participant an amount of cash equal to the regular quarterly cash dividend paid by the
Company on a number of shares equal to the number of shares remaining to be issued to a
Participant hereunder less any applicable United States federal, state, local, or foreign
income, employment, or other taxes that the Company determines are required to be withheld
therefrom. Such payment shall be made as soon as practicable following the applicable
dividend payment date, but in no event later than 60 days thereafter. The Company’s
obligation to make such payment shall cease with respect to any shares at

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such time as the Company’s right becomes exercisable with respect thereto pursuant to
Paragraph 2(b) or 2(c) above.

     3. If the Company, in its sole discretion, shall determine that the Company or an Affiliate or
other person has incurred or will incur any obligation to withhold any United States federal,
state, local, or foreign income, employment or other taxes by reason of the issuance or operation
of this RSU, a Participant (or, in the event of a Participant’s death, the legal representatives of
a Participant’s estate) will, promptly upon demand therefor by the Company, pay to the Company or
such Affiliate or other person, in accordance with Paragraph 17(f) of the Plan, any amount demanded
by it for the purpose of satisfying such obligation. If the amount so demanded is not promptly
paid or if a Participant (or, in the event of a Participant’s death, the legal representatives of a
Participant’s estate) shall fail to promptly provide the Company with any and all forms, documents,
or other information reasonably required by the Company in connection with this RSU, the Company or
its designee may refuse to permit the transfer of any shares and the distribution of any proceeds
and may, without further consent by or notice to a Participant (or, in the event of a Participant’s
death, the legal representatives of a Participant’s estate) cancel its agreement to issue to a
Participant any shares and cancel any shares otherwise issuable hereunder.

Section IV

MASTER AGREEMENT COMMON PROVISIONS RELATING TO

MORE THAN ONE FORM OF AWARD

     1. Notwithstanding anything in this Master Agreement to the contrary (but subject to those
provisions in Paragraph 3 or 4 below which could reduce payments hereunder as a result of Section
280G of the Internal Revenue Code of 1986, as amended (the “Code”)), upon a Change in Control (as
applicable to a particular award), the award holder shall immediately be:

     (a) with respect to any Option issued pursuant to the Option provisions of this Master
Agreement, 100% vested in the total number of shares covered thereby such that they shall be
fully exercisable;

     (b) with respect to any RSA issued pursuant to the RSA provisions of this Master
Agreement, 100% vested in the total number of shares covered thereby such that they shall no
longer be subject to any transfer restrictions imposed by this Master Agreement; and

     (c) with respect to any RSU issued pursuant to the RSU provisions of this Master
Agreement, entitled to receive the total number of shares covered thereby such that they
shall no longer be subject to any restrictions on issuance imposed by this Master Agreement,
and:

     (1) if the Change in Control qualifies as a “change in ownership,” a “change in
effective control,” or a “change in ownership of a substantial portion of the
assets” of the Company (each as defined by Section 409A of the Code and the Treasury
Regulations promulgated and other official guidance issued thereunder (collectively,
“Section 409A”)), then the shares underlying such RSU

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shall be issued to the Participant immediately upon the occurrence of the
Change in Control, but in no event later than five days thereafter; or

     (2) if the Change in Control does not so qualify, then the shares underlying
such RSU shall be issued to the Participant as soon as administratively practicable
following January 1 of the calendar year immediately following the calendar year
that includes the last day of the original Restricted Period, but in no event later
than 90 days thereafter.

The Committee may not amend or delete this Section IV of this Master Agreement in a manner that is
detrimental to the award holder, without his written consent.

     2. A “Change in Control” means the happening of any of the following:

     (a) Any individual, entity, or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a
“Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 25% or more of either (i) the then outstanding common shares of the
Company (the “Outstanding Company Common Shares”) or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in the election
of directors (the “Outstanding Company 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: (A) any acquisition directly from the
Company; (B) any acquisition by the Company or any corporation, partnership, trust, or other
entity controlled by the Company (a “Subsidiary”); (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary;
(D) any acquisition by an underwriter temporarily holding Company securities pursuant to an
offering of such securities; (E) any acquisition by an individual, entity, or group that is
permitted to, and actually does, report its beneficial ownership on Schedule 13-G (or any
successor schedule), provided that, if any such individual, entity or group subsequently
becomes required to or does report its beneficial ownership on Schedule 13D (or any
successor schedule), then, for purposes of this subsection, such individual, entity, or
group shall be deemed to have first acquired, on the first date on which such individual,
entity, or group becomes required to or does so report, beneficial ownership of all of the
Outstanding Company Common Stock and Outstanding Company Voting Securities beneficially
owned by it on such date; or (F) any acquisition by any corporation pursuant to a
reorganization, merger, or consolidation if, following such reorganization, merger, or
consolidation, the conditions described in clauses (i), (ii), and (iii) of Paragraph 2(c)
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 Company Common Shares or Outstanding Company Voting Securities as a
result of the acquisition of Outstanding Company Common Shares or Outstanding Company Voting
Securities by the Company which, by reducing the number of Outstanding Company Common Shares
or Outstanding Company 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

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the operation of this sentence) as a result of the
acquisition of Outstanding Company
Common Shares or Outstanding Company Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the beneficial owner of any
additional Outstanding Company Common Shares or Outstanding Company Voting Securities which
increases the percentage of the Outstanding Company Common Shares or Outstanding Company
Voting Securities beneficially owned by the Subject Person, then a Change in Control shall
then be deemed to have occurred; or

     (b) Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof whose
election, or nomination for 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 Board,
including by reason of agreement intended to avoid or settle any such actual or threatened
contest or solicitation; or

     (c) The consummation of a reorganization, merger, statutory share exchange,
consolidation, or similar corporate transaction involving the Company or any of its direct
or indirect Subsidiaries (each a “Business Combination”), in each case, unless, following
such Business Combination, (i) the Outstanding Company Common Shares and the Outstanding
Company Voting Securities immediately prior to such Business Combination, continue to
represent (either by remaining outstanding or being converted into voting securities of the
resulting or surviving entity or any parent thereof) more than 50% of
the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting
securities entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from Business Combination (including, without limitation, a
corporation that, as a result of such transaction, owns the Company or all or substantially
all of the Company’s assets either directly or through one or more subsidiaries), (ii) no
Person (excluding the Company, any employee benefit plan (or related trust) of the Company,
a Subsidiary or such corporation resulting from such Business Combination or any parent or
subsidiary thereof, and any Person beneficially owning, immediately prior to such Business
Combination, 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 Business Combination (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 Business Combination (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 Business Combination; or

11

 

     (d) The consummation of the sale, lease, exchange, or other disposition of all or
substantially all of the assets of the Company, unless such assets have been sold, leased,
exchanged, or disposed of to a corporation with respect to which following such
sale, lease, exchange, or other disposition (i) 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, (ii) no Person (excluding the
Company and any employee benefit plan (or related trust)) of the Company or a Subsidiary or
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 (iii) 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

     (e) Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.

     3. This Paragraph 3 shall apply in the event of a Change in Control.

     (a) In the event that any payment or benefit received or to be received by a
Participant hereunder in connection with a Change in Control or termination of such
Participant’s employment (hereinafter referred to collectively as the “Payments”), will be
subject to the excise tax referred to in Section 4999 of the Code (the “Excise Tax”), then
the Payments shall be reduced to the extent necessary so that no portion of the Payments is
subject to the Excise Tax but only if (A) the net amount of all Total Payments (as
hereinafter defined), as so reduced (and after subtracting the net amount of federal, state,
and local income and employment taxes on such reduced Total Payments), is greater than or
equal to (B) the net amount of such Total Payments without any such reduction (but after
subtracting the net amount of federal, state, and local income and employment taxes on such
Total Payments and the amount of Excise Tax to which the Participant would be subject in
respect of such unreduced Total Payments); provided, however, that the Participant may elect
in writing to have other components of his or her Total Payments reduced prior to any
reduction in the Payments hereunder.

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 the Participant in connection with such
Change in Control or the termination of such Participant’s
employment, whether pursuant to the terms of this Master Agreement or any other plan,
arrangement, or agreement with the Company, any Person (as such term is defined in Paragraph
2(a) above) whose actions result in such Change in Control or any Person affiliated with the
Company or such Person (collectively, 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 Committee (the “Firm”), such payments
or benefits (in whole or in part) do not constitute parachute payments, including by reason
of Section 280G(b)(2)(A) or Section 280G(b)(4)(A) of the Code; (ii) no portion of the Total
Payments the receipt or enjoyment of which the Participant shall have waived at such time
and in such manner as not to constitute a “payment” within the meaning of Section 280G(b) of
the Code shall be taken into account; (iii) all “excess parachute payments” within the
meaning of Section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax
unless, in the opinion of the Firm, such excess parachute payments (in whole or in part)
represent reasonable compensation for services actually rendered (within the meaning of
Section 280G(b)(4)(B) of the Code) in excess of the Base Amount (within the meaning of
Section 280G(b)(3) of the Code) allocable to such reasonable compensation, or are otherwise
not subject to the Excise Tax; and (iv) the value of any noncash benefits or any deferred
payment or benefit shall be determined by the Firm in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code and regulations or other guidance thereunder. For
purposes of determining whether any Payments in respect of a Participant shall be reduced, a
Participant shall be deemed to pay federal income tax at the highest marginal rate of
federal income taxation (and state and local income taxes at the highest marginal rate of
taxation in the state and locality of such Participant’s residence, net of the maximum
reduction in federal income taxes which could be obtained from deduction of such state and
local taxes) in the calendar year in which the Payments are made. The Firm will be paid
reasonable compensation by the Company for its services.

     (c) As soon as practicable following a Change in Control, but in no event later than 30
days thereafter, the Company shall provide to each Participant with respect to whom it is
proposed that Payments be reduced, a written statement setting forth the manner in which the
Total Payments in respect of such Participant were calculated and the basis for such
calculations, including, without limitation, any opinions or other advice the Company has
received from the Firm or other advisors or consultants (and any such opinions or advice
which are in writing shall be attached to the statement).

     4. The terms of any Option, RSA, or RSU (including terms under this Master Agreement or any
Award Schedule) may be amended from time to time by the Committee in its sole discretion in any
manner that it deems appropriate (including, but not limited to, acceleration of the date of
payments thereunder); provided, however, that no such amendment shall adversely affect in a
material manner any right of a Participant under such Option, RSA, or RSU without

13

 

the written
consent of such Participant; provided, however, that the Committee shall not have the authority to
amend any Option held by any executive officer of the Company as defined in Rule 3(b)(7) under the
Securities Exchange Act of 1934, as amended, so that the amount of compensation an executive
officer could receive is not based solely on an increase in the value of shares, or to otherwise
amend any Award issued to such executive officer if the
amendment would cause compensation payable thereunder to be nondeductible under Section 162(m)
of the Code (or any successor provision) or regulations thereunder assuming such executive officer
is a covered employee for purposes of such Section. Notwithstanding the foregoing, the Committee
shall not amend the terms of any Option, RSA, or RSU (including terms under this Master Agreement
or any Award Schedule), to the extent such amendment would cause a violation of Section 409A.

     5. If and to the extent permitted by the Committee, and subject to the provisions of the Plan,
a Participant may, by completing the form provided by the Corporate Secretary for such purpose and
returning it to the Corporate Secretary’s Office in New York City, name a beneficiary or
beneficiaries to receive any payment or exercise any rights to which such Participant may become
entitled under an Award in the event of such Participant’s death. To the extent permitted by the
Corporate Secretary, a Participant may change his or her designated beneficiary or beneficiaries
from time to time by submitting a new form to the Corporate Secretary’s Office in New York City, to
the extent permitted by law (for example, unless such Participant has made a prior irrevocable
designation). If a Participant does not designate a beneficiary, or if no designated beneficiary
is living on the date any amount becomes payable under an Award, such payment will be made to the
legal representatives of such Participant’s estate, which will be deemed to be the Participant’s
designated beneficiary under the Award.

     6. If the Company, in its sole discretion, shall determine that the listing upon any
securities exchange or registration or qualification under any United States federal, state, local,
or foreign law of any shares to be delivered pursuant to an Award is necessary or desirable,
delivery of such shares shall not be made in shares until such listing, registration, or
qualification shall have been completed. Until a certificate for some or all of the shares subject
to an RSU is issued to a Participant, a Participant shall have no rights as a shareholder of the
Company and, in particular, shall not be entitled to vote such shares or to receive any dividend or
other distribution paid in respect thereof.

     7. Notwithstanding anything to the contrary contained herein, the Committee, in its sole
discretion, may approve and the Company may issue Options, RSAs, or RSUs that are not governed by
the provisions contained in this Master Agreement.

     8. Any action taken or decision made by the Company, the Board, or the Committee or its
delegates arising out of or in connection with the construction, administration, interpretation, or
effect of any provision of the Plan or this Master Agreement shall lie within its sole and absolute
discretion, as the case may be, and shall be final, conclusive, and binding on the Participant and
all persons claiming under or through the Participant. By receipt of such Awards or other benefit
under the Plan, the Participant and each person claiming under or through the Participant shall be
conclusively deemed to have indicated acceptance and ratification of, and consent to, any action
taken under the Plan or this Master Agreement, by the Company, the Board or the Committee or its
delegates.

14

 

     9. The validity, construction, interpretation, administration, and effect of the Plan and its
rules and regulations, and rights relating to the Plan, and to any Award issued under this Master
Agreement, shall be governed by the substantive laws, but not the choice of law rules, of the State
of New York, in the United States of America.

     10. The Committee may rescind, without further notice to the Participant, any Award issued to
the Participant under the Plan in duplicate, or in error, as determined in the sole discretion of
the Committee.

     11. The Options and RSAs subject to this Master Agreement are intended to be exempt from
Section 409A and the RSUs subject to this Master Agreement are intended to comply with Section
409A, and the Plan, this Master Agreement, and the applicable Award Schedules shall be administered
and interpreted consistent with such intent and the American Express Section 409A Compliance
Policy, as amended from time to time, and any successor policy thereto (the “409A Policy”).

Section V

MASTER AGREEMENT

DETRIMENTAL CONDUCT PROVISIONS

     1. Applicability. Unless the Committee expressly determines otherwise, the provisions
of this Section V of this Master Agreement shall apply to all Awards issued under the Plan.

     2. Detrimental Conduct. If a current or former employee of, or other individual that
provides or has provided services for the Company (the “Employee”) engages in Detrimental Conduct,
Awards previously issued to such Employee may be canceled, rescinded, or otherwise restricted and
the Company can recover any payments received by, and stock delivered to, the Employee in
accordance with the terms of Paragraph 3. For purposes of this Section V, “Detrimental Conduct”
shall mean the conduct described in Paragraphs 2(a) through 2(g).

     (a) Noncompete. For a one-year period after the last day of active employment if the
Employee is a Band 70 or above employee, or for a six-month period after the last day of
active employment if the Employee is a Band 50 or 60 employee, and during the Employee’s
employment with the Company, the Employee shall not be employed by, provide advice to, or
act as a consultant for any Competitor. The Company has defined Competitor for certain
lines of business, departments or job functions by establishing a specific standard and/or
by name as set forth in the Company’s Competitor List(s). An Employee’s personal list of
competitors will be the sum of:

     (1) either (i) all competitors derived from the column titled Standard on the
Competitor List for the lines of business and departments (as listed on the
Competitor List under the Line of Business column) that the Employee provided
services to or managed during the two-year period preceding the date the Employee’s
active employment with the Company terminates, or (ii) if the job function the
Employee is employed in at the time his or her active employment with the Company
terminates is listed on the Competitor List under the Line of

15

 

Business column, the
competitors cited for that job function under the Standard column of the Competitor
List; and

     (2) the Entities (as that term is defined in Paragraph 8) listed on the
Competitor List under the column titled Business Unit-Wide Competitors for the
business units, i.e., AEB or TRS, the Employee provided services to or managed
during the two-year period preceding the date his or her active employment with the
Company terminates. If any line(s) of business the Employee provided services to or
managed during the two-year period preceding the date his or her active employment
with the Company terminates is not listed on the Competitor List then, with respect
to such line(s) of business, the Employee shall not be employed by, provide advice
to, or act as a consultant for (i) an Entity’s line of business that competes with
those line(s) of business and (ii) the Entities listed on the Competitor List under
the column titled Business Unit-Wide Competitors for the business units the Employee
provided services to or managed during the two-year period preceding the date the
Employee’s active employment with the Company terminates. Except for Business
Unit-Wide Competitors, the prohibition against being employed by, providing advice
to, or acting as a consultant for a Competitor is limited to the line(s) of business
of the Competitor that compete with the line(s) of business of the Company that the
Employee provided services to or managed. With respect to Business Unit-Wide
Competitors, the Employee agrees not to be employed by, provide advice to, or act as
a consultant for such Entities in any line of business because these Entities
compete with several of the Company’s lines of business. The Company can revise the
Competitor List at its discretion at any time and from time to time and as revised
will become part of this Section V; a copy of the current Competitor List will be
available through the Corporate Secretary’s Office. Notwithstanding anything in
this Section V to the contrary, the Company shall not make any addition to the
Competitor List for a period of two years following the date of a Change in Control
(as defined in Section IV of this Plan Master Agreement, and as amended from time to
time, or any successor thereto).

     (b) Nondenigration. For a one-year period after an Employee’s last day of active
employment (the “Restricted Period”) and during his or her employment with the Company, an
Employee or anyone acting at his or her direction may not denigrate the Company or the
Company’s employees to the media or financial analysts. During the Restricted Period an
Employee may not (i) provide information considered proprietary by the Company to the media
or financial analysts or (ii) discuss the Company with the media or financial analysts,
without the explicit written permission of the Executive Vice President of Corporate Affairs
and Communications. This Paragraph shall not be applicable to any truthful statement
required by any legal proceeding.

     (c) Nonsolicitation of Employees. During the Restricted Period, an Employee may not
employ or solicit for employment any employee of the Company. In addition, during the
Restricted Period an Employee may not advise or recommend to any other person that he or she
employ or solicit for employment, any person employed by the Company for the purpose of
employing that person at an Entity at which the Employee is

16

 

or intends to be (i) employed,
(ii) a member of the Board of Directors, or (iii) providing consulting services.

     (d) Nonsolicitation of Customers. During the Restricted Period, an Employee may not
directly or indirectly solicit or enter into any arrangement with any Entity which is, at
the time of such solicitation, a significant customer of the Company for the purpose
of engaging in any business transactions of the nature performed or contemplated by the
Company. This Paragraph shall apply only to customers whom the Employee personally serviced
while employed by the Company or customers the Employee acquired material information about
while employed by the Company.

     (e) Misconduct. During his or her employment with the Company, an Employee may not
engage in any conduct that results in termination of his or her employment for Misconduct.
For purposes of this Section V, “Misconduct” is (i) material violation of the American
Express Company Code of Conduct, (ii) criminal activity, (iii) gross insubordination, or
(iv) gross negligence in the performance of duties.

     (f) Confidential Information. During the Restricted Period and during his or her
employment with the Company, an Employee may not misappropriate or improperly disclose
confidential information or trade secrets of the Company and its businesses, including but
not limited to information about marketing or business plans, possible acquisitions or
divestitures, potential new products or markets, and other data not available to the public.

     (g) Other Detrimental Conduct. During the Restricted Period, an Employee may not take
any actions that the Company reasonably deems detrimental to its interests. To the extent
practicable, the Company will request an Employee to cease and desist or rectify the conduct
prior to seeking any legal remedies under this Paragraph, and will only seek legal remedies
if the Employee does not comply with such request. This Paragraph shall not be applied to
conduct that is otherwise permitted by Paragraphs 2(a) through 2(f). For example, if an
Employee leaves the Company’s employment to work for an Entity that is not a Competitor
under Paragraph 2(a), the Company will not claim that employment with that Entity violates
Paragraph 2(g). Notwithstanding anything in this Section V to the contrary, this Paragraph
2(g) shall not be applicable to an Employee from and after his or her last day of active
employment, if his or her active employment terminates for any reason (other than for
Misconduct, as defined in Paragraph 2(e) above) within two years following a Change in
Control (as such term is defined in Section IV of this Master Agreement, as amended from
time to time, or any successor thereto).

     3. Remedies.

     (a) Repayment of Financial Gain. If an Employee fails to comply with the requirements
of Paragraphs 2(a) through 2(g) and is at Band 70 or above at the time his or her active
employment with the Company terminates, the Company may cancel any outstanding Awards and
recover from the Employee (i) the amount of any gain realized on Options and stock
appreciation rights exercised, as of the date exercised, (ii) any payments received for
Portfolio Grant Awards or other Awards and (iii) stock whose restrictions lapsed (or the
value of the stock at the time the restrictions lapsed) pursuant to

17

 

an RSA, RSU Award, or
other Awards, during the last two years the Employee was employed by the Company. If an
Employee fails to comply with the requirements of Paragraphs 2(a) through 2(g) and is at
Band 50 or 60 at the time his or her active employment with the Company terminates, the
Company may cancel any outstanding Awards and recover from the Employee the amount of any
gain realized on Options and stock appreciation rights exercised, as of the date exercised,
which were exercised during
the last six months the Employee was employed by the Company. If an Employee fails to
comply with the requirements of Paragraphs 2(a) through 2(g), the Employee must and agrees
to repay the Company in accordance with the terms of this Paragraph, and the Company shall
be entitled, to the extent and in the manner permitted by the 409A Policy, to set off
against the amount of any such repayment obligation any amount owed, from any source, to the
Employee by the Company.

     (b) Other Remedies. The remedy provided pursuant to Paragraph 3(a) shall be without
prejudice to the Company’s right to recover any losses resulting from a violation of this
Section V and shall be in addition to whatever other remedies the Company may have, at law
or equity, for violation of the terms of this Section V.

     4. Approval to Exercise Options. If an Employee is a Band 70 or above employee and
elects to exercise more than 40% of his or her outstanding vested Options in any 90-day period,
such Employee will need the written approval of the Chief Executive Officer or President of
American Express Company or their delegate. If an Employee is a member of the Global Leadership
Team (“GLT”) and elects to exercise more than 25% of his or her outstanding vested Options in any
90-day period, such Employee will need the written approval of the Chief Executive Officer or
President of American Express Company or, if he or she is the Chief Executive Officer or President
of American Express Company, the written approval of the Committee. If an Employee is a Band 50 or
60 employee and elects to exercise more than 40% of his or her outstanding vested Options in any
90-day period, such Employee will need the written approval of the Executive Officer who manages
the area he or she works in. The standard for determining whether to approve an Employee’s request
to exercise options will be whether he or she is complying and will comply with the requirement of
Paragraphs 2(a) through 2(g). If an Employee’s request for approval is denied, he or she may
submit a second request after 90 days have elapsed from the submission date of a completed Notice
of Exercise of Employee Stock Option form (“Form”) on the first request. An Employee will have 30
trading days (exclusive of blackout periods due to “window” closings) from the date he or she
receives written approval to exercise up to the full number of options requested in the Form.

     5. Compensation Band Changes. If the Company changes its current system of
classifying employees in compensation bands and management tiers, the references to Bands 50, 60
and 70, Executive Officers, and GLT members in this Section V will be construed to mean the
compensation level(s) and management tiers in the new or revised system that, in the Company’s
discretion, most closely approximates these bands and management tiers under the current system.

     6. Involuntary Terminations. This Section V will not apply to employees of the
Company who enter into a severance agreement with the Company or other involuntary terminations as
determined by the Company (excluding terminations covered by Paragraph 2(e)).

18

 

     7. Court Modification. If any term of this Section V is determined by a court of
competent jurisdiction not to be enforceable in the manner set forth in this Section V, such term
shall be enforceable to the maximum extent possible under applicable law, and such court shall
reform such term to make it enforceable.

     8. Definition of Entity. As used in this Section V, the word Entity or Entities shall
mean any corporation, partnership, association, joint venture, trust, government, governmental
agency or authority, person, or other organization or entity.

     9. Waivers. The failure of the Company to enforce at any time any term of this
Section V shall not be construed to be a waiver of such term or of any other term. Any waiver or
modification of the terms of this Section V will only be effective if reduced to writing and signed
by both the Employee and the President or Chief Executive Officer of the Company.

* * * * *

19exv10w24

EXHIBIT 10.24

AMENDMENT OF

AMERICAN EXPRESS COMPANY

KEY EXECUTIVE LIFE INSURANCE PLAN

RESOLVED, that pursuant to Section 10.01 of the American Express Company Key Executive Life
Insurance Plan (the “Plan”), the Plan is amended effective as of January 1, 2011 (the “Effective
Date”), as follows:

	 	1.	 	Article VII, Section 7.02, Subsection (d)(iii) is hereby amended by adding a
new Subsection (d)(iii) to read as follows:

(d)(iii)(A) This Section (d)(iii) shall apply in the event of a Change in
Control, as defined in Section 2.19 hereof.

(B) In the event that any payment or benefit received or to be
received by a Participant hereunder in connection with a Change in Control
or termination of such Participant’s employment (hereinafter referred to
collectively as the “Payments”), will be subject to the excise tax referred
to in Section 4999 of the Code (the “Excise Tax”), then the Payments shall
be reduced to the extent necessary so that no portion of the Payments is
subject to the Excise Tax but only if (a) the net amount of all Total
Payments (as hereinafter defined), as so reduced (and after subtracting the
net amount of federal, state, and local income and employment taxes on such
reduced Total Payments), is greater than or equal to (b) the net amount of
such Total Payments without any such reduction (but after subtracting the
net amount of federal, state, and local income and employment taxes on such
Total Payments) and the amount of Excise Tax to which the Participant would
be subject in respect of such unreduced Total Payments; provided, however,
that the Participant may elect in writing to have other components of his or
her Total Payments reduced prior to any reduction in the Payments hereunder.

(C) 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: (a) all payments and benefits received or to be
received by the Participant in connection with such Change in Control or the
termination of such Participant’s employment, whether pursuant to the terms
of this Agreement or any other plan, arrangement, or agreement with the
Company, any Person (as such term is defined in Section 1.22 above) whose
actions result in such Change in Control or any Person affiliated with the
Company or such Person (collectively, “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 Committee (the “Firm”), such payments or
benefits (in whole or in part) do not constitute parachute payments,
including by reason of Section 280G(b)(2)(A) or Section 280G(b)(4)(A) of the
Code; (b) no portion of the Total Payments the receipt or enjoyment of
which the Participant shall have waived at such time and in such manner as
not to constitute a “payment” within the meaning of Section 280G(b) of the
Code shall be taken into account; (c) all “excess parachute payments” within
the meaning of Section 280G(b)(l) of the Code shall be treated as subject to
the Excise Tax unless, in the opinion of the Firm, such excess parachute
payments (in whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of Section 280G(b)(4)(B) of
the Code) in excess of the Base Amount (within the meaning of Section
280G(b)(3) of the Code) allocable to such reasonable compensation, or are
otherwise not subject to the Excise Tax; and (d) the value of any noncash
benefits or any deferred payment or benefit shall be determined by the Firm
in accordance with the principles of Sections 280G(d)(3) and (4) of the Code
and regulations or other guidance thereunder. For purposes of determining
whether any Payments in respect of a Participant shall be reduced, a
Participant shall be deemed to pay federal income tax at the highest
marginal rate of federal income taxation (and state and local income taxes
at the highest marginal rate of taxation in the state and locality of such
Participant’s residence, net of the maximum reduction in federal income
taxes which could be obtained from deduction of such state and local taxes)
in the calendar year in which the Payments are made. The Firm will be paid
reasonable compensation by the Company for its services.

(D) As soon as practicable following a Change in Control, but in no event later than 30 days
thereafter, the Company shall provide to each Participant with respect to whom it is proposed that
Payments be reduced, a written statement setting forth the manner in which the Total Payments in
respect of such Participant were calculated and the basis for such calculations, including, without
limitation, any opinions or other advice the Company has received from the Firm or other advisors or
consultants (and any such opinions or advice which are in writing shall be attached to the
statement).

2

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