Document:

Exhibit
10.1

2007 Pay-for-Performance

Deferral Program

Document

This is the official
governing plan document for the 2007-Pay-for-Performance Deferral Program.  To the

extent that the terms of any summary program description, guide or brief
conflict with the terms of this

document, the terms of this document shall control.

 

 

American Express Company

2007 PAY-FOR-PERFORMANCE
DEFERRAL PROGRAM DOCUMENT

Table of Contents

	
  

  	
   

  	
  Page

  
	
  ·  Introduction

  	
   

  	
  3-5

  
	
  ·  Timing of Request

  	
   

  	
  6

  
	
  ·  Initial Deferred Amount

  	
   

  	
  6

  
	
  ·  Period of Deferral

  	
   

  	
  6

  
	
  ·  “Retirement”

  	
   

  	
  7

  
	
  ·  Six-Month Delay

  	
   

  	
  7

  
	
  ·  Deferral Bookkeeping Account

  	
   

  	
  7

  
	
  ·  “Interest” Equivalents on Deferred Amount

  	
   

  	
  7

  
	
  ·  ROE Rate Schedule for 2007 Program

  	
   

  	
  8

  
	
  ·  Payout Provisions

  	
   

  	
  9-11

  
	
  ·  U.S. Federal/State/Local Income Tax

  	
   

  	
  11

  
	
  ·  U.S. Social Security Tax

  	
   

  	
  12

  
	
  ·  Irrevocability of Deferral Requests;
  Hardship Withdrawals

  	
   

  	
  13

  
	
  ·  Some Caveats

  	
   

  	
  13

  
	
  ·  Additional Details on Initial Deferred
  Amount

  	
   

  	
  14

  
	
  ·  Effect of Deferred Amounts on Pension
  Calculations

  	
   

  	
  15

  
	
  ·  Impact of Deferral on U.S. Section 401(k)
  Plans  and Other Benefit Plans

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  Appendix A — Deferral Election Forms

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ·  Worksheet for 2007 Pay-for-Performance
  Deferral Program  (required for any
  deferral request using the paper forms)

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  ·  Election Form for 2007 Annual Incentive
  Award (otherwise payable on or about February 2008)

  	
   

  	
  19-20

  
	
   

  	
   

  	
   

  
	
  ·  Election Form for 2007 Base Salary
  (otherwise payable in 2007)

  	
   

  	
  21-22

  
	
   

  	
   

  	
   

  
	
  ·  Election Form for PG-XVII Award Granted in
  2/06 (otherwise payable on or about February 2009)

  	
   

  	
  23-24

  
	
   

  	
   

  	
   

  
	
  ·  Comprehensive Designation of Beneficiary
  Form  (optional for any deferral
  request)

  	
   

  	
  25-26

  
	
   

  	
   

  	
   

  
	
  Appendix B — “Change in Control”

  	
   

  	
  27-29

  

 

 2
 

 

American Express Company

2007 PAY-FOR-PERFORMANCE
DEFERRAL PROGRAM DOCUMENT

Introduction

These are the
basic guidelines of the Compensation and Benefits Committee of the Board of
Directors of American Express Company (the “Committee”) concerning requests for
deferred payment of:

·                  any cash award related to the 2007
performance year (a “2007 Annual Incentive Award”) otherwise payable on or
about February 2008, under the American Express Annual Incentive Award Plan or
any successor plan or plans (an “Incentive Plan”);(a)

·                  2007
base salary otherwise payable in 2007 under the AXP Salary Deferral Plan or any
successor plan or plans (a “Deferral Plan”); and

·                  any
eventual payout under the Portfolio Grant-XVII Award granted on or about 2006
and otherwise payable on or about February 2009 (“PG-XVII Award”) under the
American Express Company 1998 Incentive Compensation Plan, as amended and
restated (the “1998 Plan”).(b)

A deferral of your 2007 Annual Incentive Award, 2007
base salary and/or PG-XVII Award is part of the 2007 Pay-for-Performance
Deferral Program (the “2007 Program”).

Eligible employees will be notified about the 2007
Program.  Generally, you are eligible if
you are an “active” (as defined below) senior level employee (band 50 or above)
who participates in the applicable Incentive Plan and:  (i) is subject to U.S. income taxes; or (ii)
is designated by the Company as an eligible U.S. Dollar-Paid Expatriate who is
a U.S. Citizen or U.S. Greencard holder. 
If you are an eligible employee and the Company offers you the
opportunity to participate in the 2007 Program, then you may request deferred
payment of a 2007 Annual Incentive Award, 2007 base salary and/or PG-XVII Award
subject to the provisions of this document, the applicable Incentive Plan, the
applicable Deferral Plan and the 1998 Plan.

(a)          The
Committee may include other incentive programs or awards in its sole
discretion.  References in this document
to “2007 Annual Incentive Award” and “Incentive Plan” shall include such other
incentive arrangements determined by the Committee.

(b)         The Committee may include other Performance
Grants in its sole discretion. 
References in this document to “PG-XVII” shall include such other
Performance Grants determined by the Committee.

 3
 

 

You must be an “active” employee (i.e., providing
services to the Company or an approved subsidiary) on December 31, 2006 and
during the remainder of 2007 to participate in the 2007 Program.  Employees who become newly eligible during
2007 and are offered the opportunity to participate in the 2007 Program by the
Company may request deferred payment of their post-election 2007 base salary
and the post-election portion of their 2007 Annual Incentive Award if they have
not previously participated in an account-balance deferred compensation
arrangement of the Company (as defined for purposes of Section 409A of the
Internal Revenue Code) and they make their request to defer no later than 30
days after their first day of eligibility (e.g., date of employment for new
hires).  If your employee status changes
to “inactive” during the year for any reason, including, but not limited to,
severance, or if your employment terminates (for any reason, including, but not
limited to, retirement, disability or death), all deferral elections will
become immediately void except for any amounts already deferred prior to such
change in status.

If you elect to defer a portion of your base salary
and your employee status changes to “inactive” (as described above) during the
year, your bi-weekly base salary deductions will be discontinued and previous
deductions will be credited to your account. 
In the case of a leave of absence, the bi-weekly base salary deductions
in effect prior to the leave will resume when you return from leave to “active”
status.  Your initial deferral amount for
the purposes of the 2007 Program, therefore, will be reduced.

Modification or
Termination of 2007 Program

Any terms and features of, and benefits and rights
under, the 2007 Program and your deferral election may be interpreted, modified
or terminated by the Committee in its sole discretion in any manner and at any
time without your prior consent or notice (including, but not limited to,
alignment with legislative and regulatory developments) provided that such
interpretation, modification or termination shall not cause deferred amounts to
fail to meet the requirement for favorable tax treatment pursuant to the
Section 409A of the Internal Revenue Code, applicable regulations thereunder,
and other IRS guidance (“Section 409A”).

Despite the guidance issued to date, several issues
under Section 409A remain unclear and future guidance is expected.  Accordingly, any terms and features of, and
rights and benefits under, the 2007 Program and your deferral election may be
interpreted, modified or terminated by the Committee in its sole discretion in
any manner and at any time without your prior consent or notice (including, but
not limited to, deferring the payment date) in an effort to cause deferred
amounts to meet the requirements for favorable tax treatment pursuant to the
Section 409A.

The ROE Schedule Rate applied to your deferred
balance may be changed, prospectively or retroactively, in the sole discretion
of the Committee without your prior consent or notice.  In addition, the ROE Target Range applicable
under the ROE Rate Schedule is subject to adjustment by the Company.

 4
 

 

Administrative Changes for 2007

·                  Under transition guidance on the application
of Section 409A, the Company is providing the opportunity to defer PG-XVII
Awards (payable in February 2009) at this time under the 2007 Program.  While this is election is one year earlier
than our usual practice, certain features of PG-XVII preclude deferral
elections after December 31, 2006.

·                  The Company is continuing the online
enrollment process for deferral elections under the 2007 Program.  In addition, the Company is allowing
employees (other than employees who reside in community property states) to
make on-line beneficiary designations during the online enrollment period.  Employees who reside in community property
states will be required to manually submit paper forms because such states
require spousal consent.

 5
 

 

Timing of Request

Your request for deferral must be received on or before Sunday, December 31, 2006
and is irrevocable as of 11:59 PM EST on December 31, 2006.  If your
request for deferral form is not received by this date, the deferral election
will not be effective. 
However, employees who become newly eligible during 2007 may request
deferred payment of their post-election 2007 base salary and the post-election
portion of their 2007 Annual Incentive Award if they make their request to
defer no later than 30 days after their first day of eligibility (e.g., date of
employment for a new hire).

Initial Deferred Amount

You can request to defer from one or more of the
following sources provided you defer a minimum of $5,000 from each source you
select:

·                  any 2007 Annual Incentive Award that
would otherwise be payable for 2007 performance (e.g., otherwise payable on or
about February 2008);

·                  2007 base salary; and/or

·                  PG-XVII Award otherwise payable on or about
February 2009.

The combined amounts that you elect to defer from
your 2007 Annual Incentive Award, 2007 base salary and/or PG-XVII Award is your
“Initial Deferred Amount.”  Your maximum Initial Deferred
Amount is 100% of your annual base salary as of the later of December 31, 2006 or the date
that you become eligible to participate. 
However, the maximum total amount which employees who become newly
eligible may elect to defer from their 2007 base salary is 100% of their
post-election 2007 base salary.

Important additional details on the “Initial
Deferred Amount” are shown on page 14 of this document.

Period of Deferral

You
may request that payment(s) be deferred until one of the following (see also
the section on “Payout Provisions” on pages 9 to 11 of this document):

·                  a
specific date, at least five years from date of deferral (i.e., February 1,
2013 for 2007 Annual Incentive Award and 2007 base salary deferrals; February
1, 2014 for PG-XVII deferrals) or later; or

·                  your
retirement (as defined below); or

·                  a specified date after your retirement (but
not later than 10 years after retirement).

Your
payment request is subject to the conditions described in this document.

 6
 

 

“Retirement”

“Retirement” means the date your employment
terminates following your attainment of age 55 and 10 actual or deemed years of
service with American Express Company or its affiliates.  You will be considered to have terminated
your employment as of your actual date of separation, and the Company will
commence distribution of your 2007 deferrals using such date (subject to a
six-month delay).

Six-Month Delay

Pursuant to the Section 409A, payments to certain
employees following retirement or termination must be delayed by six
months.  Given the difficulty in
identifying affected participants, and to ensure compliance with this
requirement and to protect participants from possible penalties under the
Section 409A, the Company will delay payments following retirement or
termination to all participants by six months. 
Therefore, regardless of your
election or as otherwise stated in this document, payments to all participants
following retirement or termination will be delayed by six months.  (See “Payout
Provisions” on pages 9 to 11 of this document.)

Deferral Bookkeeping Account

A bookkeeping account will be established and
maintained (for purposes of this document the “Deferral Bookkeeping Account”)
in your name and will initially be credited with your Initial Deferred Amount
as of the applicable date (i.e., when amount would otherwise have been
paid).  “Interest” equivalents will be
credited on the Initial Deferred Amount and thereafter on the balance of the
Deferred Bookkeeping Account, as adjusted annually.

“Interest” Equivalents on Deferred Amount

The deferred balance is credited with “interest”
equivalents based on a schedule established by the Committee (the “ROE Schedule
Rate”), which is based on the Company’s annual return on equity (“ROE”), as
reported, subject to adjustment for major accounting changes as determined by
the Committee in its sole discretion (see schedule on following page).  The ROE
Schedule Rate applied to your deferred balance may be changed, prospectively or
retroactively, in the sole discretion of the Committee without your prior
consent or notice.

 7
 

 

ROE Rate Schedule for the

2007 Pay-for-Performance Deferral Program

	
  ROE

  	
   

  	
  ROE Schedule Rate

  
	
  Below ROE Target
  Range

  	
   

  	
  Moody’s
  A Corporate Bond Yield Rate

  
	
  Within ROE
  Target Range

  	
   

  	
  9%

  
	
  Above ROE Target Range

  	
   

  	
  11%

  

 

“ROE”
means American Express Company’s consolidated annual Return on Equity as
reported by the Company, subject to adjustment for significant accounting
changes as determined by the Committee in its sole discretion.

“ROE Target Range” for a
given year means the announced ROE target range of the Company in effect on December
31 of such year.  

The ROE Schedule Rate
applied to your deferred balance may be changed, prospectively or
retroactively, in the sole discretion of the Committee without your prior
consent or notice.

“Moody’s A Corporate Bond
Yield Rate” for a given year means the average corporate bond rate for the
relevant year as announced by Moody’s Investor Services for borrowers rated
“A.”

Example

The Company announced an ROE
target range of 33% to 36% in November of 2006. 
Assuming such ROE target range remains in effect through December 31,
2008, then a participant’s 2007 deferred amounts would be credited with
interest equivalents for 2008 as follows:

	
  If Company’s 2008 ROE is:

  	
   

  	
  Then 2008 ROE Schedule Rate

  
	
  Below 33%

  	
   

  	
  Moody’s A Corporate
  Bond Yield Average Rate for 2008

  
	
  33% to 36%

  	
   

  	
  9%

  
	
  Above 36%

  	
   

  	
  11%

  

 

 8
 

 

Payout Provisions

You
may request that the payment of the amount credited to your Deferral
Bookkeeping Account begin:

·                  on the first day of a specific month and
year, at least five years from date of deferral (i.e., February 1, 2013 for
2007 Annual Incentive Award and 2007 base salary deferrals; February 1, 2014
for PG-XVII deferrals) or later; or

·                  upon your retirement; or

·                  on the first day of a specific month and year
after retirement (but no later than 10 years after retirement).

Payments
may be made in a lump sum or in 2 to 15 approximately equal annual
installments.  Commencement of payment is
subject to a six-month delay.

If you choose a
lump sum payment,
interest equivalents for the year in which payment occurs will be credited
through the payment date using the ROE Schedule Rate for the prior year.  If you
choose annual installments, the balance remaining after each
installment payment will continue to be credited with interest equivalents
based on the ROE Schedule Rate in effect under the Program for that year, or as
otherwise determined by the Committee. 
(In the latter case, references in this document to “ROE Schedule Rate”
and related value calculations would refer to such other rate or calculation as
determined by the Committee.)

Generally, each annual installment payment is
calculated using an “annuity due” formula, which assumes, for calculation
purposes, that the applicable ROE Schedule Rate remains constant for the remainder
of the elected payment schedule.  Your
annual payments could vary from year to year if the actual ROE Schedule Rate
differs from the assumed rate. The first installment payment will be made on
the first day of the first month that is at least six-months following the
elected payment date or event, or as administratively feasible thereafter, and
the interest equivalents for that year will be credited through the payment
date using the ROE Schedule Rate for the prior year.  Thus, the crediting rate applied for a
payment with a date of December 1 will reflect the ROE Schedule Rate of the
year beginning 23 months earlier, and the crediting rate applied for a payment
with a date of January 1 will reflect the ROE Schedule Rate of the year
beginning 12 months earlier.  The
remaining installment payments will be made on or about March 31st of each year
thereafter with each payment credited using the ROE Schedule Rate for the prior
year.

Retirement or Disability

If
your employment by American Express Company and its affiliates terminates at
any time by reason of “retirement” (as defined above) or by reason of “disability”
(as defined for purposes of Section 409A), the amount credited to your Deferral
Bookkeeping Account will be paid out based upon the time and in the manner you
have elected (but not later than 10 years following retirement, and subject to
a six-month delay), with interest equivalents credited as described above.

 9
 

 

Death

If
you die before payment begins or installment payments are completed, your designated
beneficiary (see Beneficiary Designation Form in the Appendix) or the legal
representatives of your estate (if you do not designate a beneficiary or if
your designated beneficiary does not survive you) will receive a lump sum as
soon as practicable after your death, of the balance of your Deferral
Bookkeeping Account, with interest equivalents for the year of death credited
using the ROE Schedule Rate for the prior year.

Other
Termination

If your employment by American Express Company and
its affiliates terminates for any reason other than retirement, disability or
death, your Deferral Bookkeeping Account will be paid out in a lump sum as soon
as practicable after termination of employment (subject to a six-month delay)
with interest equivalents credited for the entire period of deferral as
described below:

·                  for terminations prior to the end of the
minimum five-year deferral period, the lesser of:  (i) the Initial Deferred Amount credited
annually at the ROE Schedule Rate; or (ii) the Initial Deferred Amount credited
annually with the rate of return on the applicable Moody’s A Corporate Bond
Rate, with credits through your termination date (for information on the
deferral period, see page 6 of this document); or

·                  for terminations on or after the minimum
five-year deferral period, the Initial Deferred Amount credited annually using
the ROE Schedule Rate, with credits through your termination date.

Change in Control

Regardless of the payout method you choose, payment
of your Deferral Bookkeeping Account may be accelerated upon a “Change in
Control” of American Express Company. 
Generally, subject to governing documents, a “Change in Control”
includes the acquisition of beneficial ownership by certain persons of 25% or
more of the Company’s common shares or all outstanding voting securities of the
Company, the current Board members of the Company cease to constitute a
majority thereof or certain reorganizations, mergers, consolidations,
liquidations or sales of all or substantially all of the Company’s assets.  The timing of the payout, and the definition
of a “Change in Control” are governed by the provisions of the applicable
annual and long-term incentive plans, Appendix B and Committee actions. Refer
to these documents for additional information. 
To the extent required by Section 409A, payment shall only be
accelerated if the “Change of Control” event constitutes a change in the
ownership of the Company, a change in the effective control of the Company, or
a change in the ownership of a substantial portion of the assets of the
Company, each as defined for purposes of Section 409A.

 10

 

Certain Other Limitations

Notwithstanding anything herein to the contrary, if
at the time that payment would otherwise be made to you under the Program, (i)
you are an executive officer (within the meaning of Rule 3b-7 (or any successor
rule) under the Securities Exchange Act of 1934, as amended, of the Company (an
“Executive Officer”), or (ii) payment would be subject to the limitations of
Section 162(m) of the Internal Revenue Code of 1986, as amended (or any
successor provision), such that your employer would lose some or all of the
federal income tax deduction for such payment, then such payment to you shall
be further deferred (unless otherwise determined by the Committee in its sole
discretion) until the first taxable year in which (x) you are no longer an
Executive Officer and (y) you are no longer subject to the limitations in
clause (ii) above, with appropriate interest equivalents being credited to your
Deferral Bookkeeping Account under the Program during the additional period of
deferral.

U.S. Federal/State/Local Income Tax

You are strongly
urged to consult with your own personal financial, legal and tax advisors on
these and any other tax consequences.

Recent Federal
Administrative Guidance:  As previously mentioned, Congress passed legislation the American
Jobs Creation Act of 2004 (the “AJCA”), which enacted Section 409A of the
Internal Revenue Code (“Section 409A”). 
Section 409A generally
became effective in 2005 and made significant changes to the area of
nonqualified deferred compensation.  Section
409A principally affects standards for deferral elections and
distributions.  Failure to satisfy the
requirements of Section 409A will result in the imposition of taxes, back
interest, and an additional 20% penalty. 
In addition, the Company is now required to annually report deferred
amounts on a participant’s W-2 or 1099 for the year deferred, even if not currently includable in income for
federal tax purposes.

In
order to comply with the new rules, the Committee may, in its sole discretion
in any manner and at any time without your prior consent or notice, decide to
administer, operate, or amend the Program in conformity with Section 409A in an
effort to maintain the effectiveness of deferral elections.  See the section “Modification or Termination
of 2007 Program” on page 4 of this document.

If
under Section 409A or future legislative or administrative guidance your
deferral elections are deemed to be ineffective or if the U.S. Internal Revenue
Service (“IRS”) otherwise does not give effect to your deferral election,
either when made, or at a later date, this may result in the Initial Deferred
Amount being included in your income in the year it is otherwise payable, and
the inclusion of interest equivalents in your income in the year such interest
equivalents are credited.  These income
amounts would be subject to current tax and tax withholding and you would also
have to pay interest on any underpayment of tax together with an additional 20%
penalty on compensation which is required to be included in income.

 11
 

 

U.S. Social Security Tax

For U.S. Social Security (FICA) tax purposes, your
Initial Deferred Amount will be subject to FICA tax in the year that your 2007
Annual Incentive Award, 2007 base salary and/or PG-XVII Award would otherwise
be payable, as if the deferral had not taken place.  Thus, you will be subject to FICA tax on the
Initial Deferral Amounts.  As background,
FICA tax consists of two components:  (i)
old-age, survivors and disability insurance tax assessed at 6.2% on
compensation up to $97,500 for 2007; and (ii) Medicare tax assessed at a rate
of 1.45% on all applicable compensation. 
You should leave enough “net pay” in one or more of:  your 2007 Annual Incentive Award; 2007 base
salary and/or PG-XVII Award, to cover the total FICA tax amounts that will be
taken at the time of deferral as well as all other pre- and post-tax
deductions.

In addition, “premium interest” earned on deferred
compensation balances will be subject to FICA tax when vested.  “Premium interest” consists of the excess of
a program’s annual ROE Schedule Rate over a benchmark rate.  The highest rate approved by the IRS at this
time is the Moody’s Average Corporate Bond Yield, which the Company will use to
calculate premium interest subject to FICA. 
Therefore, for example, if the ROE Schedule Rate for 2007 were 11% and
the Moody’s rate for that year were 6%, the 5% premium interest credited would
be subject to FICA when vested.

Under the 2007 Program, interest equivalents vest
when the five-year employment/deferral period is completed for each deferral
amount you elect or when you become “retirement” eligible (definition under the
Program of at least 55 years of age with at least 10 years of service).  As each five-year employment/deferral period
following a deferral election is completed, the credited interest equivalents
applicable to that election vest and the premium portion then becomes subject
to FICA, to be withheld in March of the vesting year (e.g., premium interest
equivalents credited under the 2007 Program for a 2007 Annual Incentive Award
deferral will become subject to FICA tax withholding in March of 2013).  However, in the year you become retirement
eligible, all unvested interest equivalents for all deferral elections vest,
and the premium portion then becomes subject to FICA tax, to be withheld in
March of the following year (e.g., if an employee becomes retirement eligible
in 2008, the premium interest equivalents credited under the 2007 Program will
become subject to FICA tax withholding in March of 2009).

The two
foregoing sections are not intended and should not be construed as tax
advice.  You are strongly urged to review
all aspects of a possible deferral with your own tax advisor, including all
U.S. federal, state or local and foreign tax consequences, in light of your
individual circumstances.  If you are
working outside the U.S. and/or are subject to foreign tax laws, it is
particularly important that you review a possible deferral with your tax
advisor.

 12
 

 

Irrevocability of Deferral Requests; Hardship
Withdrawals

A request for deferred payment of your 2007 Annual
Incentive Award, 2007 base salary and/or PG-XVII Award is irrevocable.  You may not ask for different terms.  An exception to this rule is possible,
subject to the provisions of this document and applicable Deferral Document,
only if the occurrence of an “unforeseeable emergency” (as defined for purposes
of Section 409A) is demonstrated to, and approved by, the Committee.  Any withdrawal can never be returned to your
Deferral Bookkeeping Account and will be subject to U.S. income tax and other
taxes in the year it is received by you, as described in more detail
above.  Under these standards, hardship
withdrawals will only be allowed under rare and unusual circumstances and
should not be relied upon for financial planning purposes.

Some Caveats

Since the request to defer payment of your 2007
Annual Incentive Award, 2007 base salary and/or PG-XVII Award, once approved,
is irrevocable, the decision to do so requires careful personal financial planning.  Please carefully
review your planned deferral with your personal financial, legal and tax
planning advisors prior
to making such a request.  Among the
considerations may be:  the impact on
your participation in U.S. benefit plans (see pages 15 to 16 of this document);
your cashflow needs; and planning for stock option exercises or stock purchases
(e.g., to achieve your stock ownership guideline level, if you have been
notified of participation in that program).

The Program is
unfunded and all payments are made out of the general assets of your
employer.  Your employer is not required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any amount under the Program.  Payments under the Program are neither
subordinate nor superior to the claims of your employer’s general
creditors.  Amounts deferred under the
Program may be used for any corporate purpose by your employer; you and anyone
claiming under or through you will, of course, have no interest in any such
corporate assets or in any proceeds therefrom.

As a condition to your deferral of your 2007 Annual
Incentive Award, 2007 base salary and/or PG-XVII Award, it is understood and
agreed that you will provide complete and valid information, signatures and
consents on all documents, and you will take such other actions that American
Express Company or its affiliates determines may be necessary or desirable.

It is understood that a deferral election does not
constitute a contract or an agreement, express or implied, of your continued
employment by American Express Company or its affiliates for any period of
time.

All deferrals are subject to the provisions of this
document, the applicable Incentive Plan document, the applicable Deferral Plan
document, the 1998 Plan document, and the PG-XVII Award agreement.  You should carefully review the applicable
plan documents before making
your deferral decision.  Your applicable
Incentive Plan document, Deferral Plan document and the 1998 Plan document are
available upon request.

You should also consider, in consultation with your
advisors, the impact of Section 409A and the possibility of future legislative
or interpretive changes in the tax law, which might affect the taxation of
deferred amounts and/or the interest equivalents credited thereon.

 13
 

 

Additional Details on Initial Deferred Amount

	
  2007 Annual Incentive Award

  	
   

  	
  2007 Base Salary

  	
   

  	
  PG-XVII Award

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  If your actual
  2007 Annual Incentive Award otherwise payable on or about February 2008 is
  less than the 2007 Annual Incentive Award deferral portion of your elected
  Initial Deferred Amount, your entire 2007 Annual Incentive Award would be
  deferred, and the 2007 Annual Incentive Award deferral portion of your
  elected Initial Deferred Amount for the purposes of the 2007 Program would be
  reduced accordingly.

  	
   

  	
  The 2007 salary deferral portion of your elected
  Initial Deferred Amount will be deducted in equal installments from your 2007
  paychecks, starting where administratively possible with the first paycheck
  after January 22, 2007. Interest equivalents on your base salary deferral
  will be credited annually based on the amount of time deferred.

  	
   

  	
  If your actual PG-XVII Award value available for
  deferral is less than the PG-XVII deferral portion of your elected Initial
  Deferred Amount, your entire PG-XVII Award would be deferred, and the PG-XVII
  deferral portion of your elected Initial Deferred Amount for the purposes of
  the 2007 Program would be reduced accordingly.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (Note: if part
  of your 2007 Annual Incentive Award is paid on an accelerated basis in late
  2007, the Company will determine the amount of the 2007 Annual Incentive
  Award deferral portion of your elected Initial Deferred Amount to be taken
  from the amount paid in late 2007 and the amount paid in February 2008.
  However, interest equivalents on all deferred amounts will be
  credited/debited beginning on the February 2008 payment date. It is possible
  that in these and other circumstances, less than all of the 2007 Annual
  Incentive Award deferral portion of your elected Initial Deferred Amount will
  actually be deferred, and the 2007 Annual Incentive Award deferral portion of
  your elected Initial Deferred Amount for the purposes of the 2007 Program
  would be reduced accordingly.)

  	
   

  	
  When you are deciding how much base salary, if any,
  to elect to defer, you should take into account these factors: 

  

  Before-tax deductions 

  After deducting from your biweekly base salary the
  biweekly deferral amount (i.e., the 2007 salary deferral portion of your
  elected Initial Deferred Amount divided by the number of paychecks remaining
  after January 22, 2007), the remaining base salary amount must at least cover
  your before-tax deductions for all employee benefit plans, such as the
  Medical, Dental, Dependent Care and Health Care Reimbursement Plans
  participation. If your “net pay” is insufficient to cover before-tax
  deductions, the Company retains the right to reduce the 2007 salary deferral
  portion of your elected Initial Deferred Amount in its sole discretion.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  After-tax deductions 

  You must leave enough “net pay” (i.e., after all
  before-tax benefit deductions, deferrals and taxes) in each paycheck to cover
  your after-tax deductions (e.g., FICA/Medicare tax on deferrals and other
  items such as tax on dividends, life insurance, long term disability, other
  benefits, United Way, etc.). If your “net pay” is insufficient to cover
  after-tax deductions, the Company retains the right to reduce your deferral
  election(s) in its sole discretion.

  	
   

  	
   

  

 

 14
 

 

Effect of Deferred Amounts on Pension
Calculations

	
  2007 Annual Incentive Award

  	
   

  	
  2007 Base Salary

  	
   

  	
  PG-XVII Award

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Under current
  IRS rules, deferred amounts cannot be included for purposes of computing
  benefits under a qualified, defined benefit pension plan (e.g., the American
  Express Retirement Plan). However, if you are eligible under the American
  Express Supplemental Retirement Plan, which is an unfunded, non-qualified
  plan, the 2007 Annual Incentive Award deferral portion of your elected
  Initial Deferred Amount may be treated as pensionable compensation under that
  plan for the year in which it would otherwise have been paid.

  	
   

  	
  Under current IRS rules, deferred amounts cannot be
  included for purposes of computing benefits under a qualified, defined
  benefit pension plan (e.g., the American Express Retirement Plan). However,
  if you are eligible under the American Express Supplemental Retirement Plan,
  which is an unfunded, non-qualified plan, the 2007 salary deferral portion of
  your Initial Deferred Amount may be treated as pensionable compensation under
  that plan for the year in which it would otherwise have been paid.

  	
   

  	
  Not applicable. 

  

  (Payout under the PG-XVII Award is not included for purposes of computing
  benefits under any pension or non-qualified plan.)

  

 

 15
 

 

IMPACT OF
DEFERRAL ON

U.S. SECTION
401(K) PLANS AND OTHER BENEFIT PLANS

	
  2007 Annual Incentive

  Award

  	
   

  	
  2007 Base Salary

  	
   

  	
  PG-XVII Award

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Not applicable.

  	
   

  	
  If you currently contribute to a U.S. qualified
  Section 401(k) defined contribution plan (e.g., the American Express
  Incentive Savings Plan), your designated “percent of base salary” for that
  purpose will be applied to your biweekly base salary after it has been
  reduced by the 2007 salary deferral portion of your elected Initial Deferred
  Amount (on a biweekly basis) of the 2007 Program. Thus, the total amount you
  can contribute to the U.S. Section 401(k) plan and your employer’s
  contribution, if any, could both be reduced if you choose to defer base salary
  under the 2007 Program. In addition, your share of the employer’s U.S. ISP
  Profit Sharing and Stock Contribution will be based on the base salary after
  reduction for deferrals. However, if you are eligible under the U.S. American
  Express Supplemental Retirement Plan, which is an unfunded, non-qualified
  plan, the 2007 salary deferral portion of your elected Initial Deferred
  Amount may be treated as eligible compensation for purposes of certain
  Company allocations (e.g., with respect to certain employer contributions
  that cannot be made under the qualified American Express Incentive Savings
  Plan) in the year the base salary would otherwise have been paid. Also, the
  Initial Deferred Amount and any interest equivalents from this 2007 Program
  that are paid to you in the future cannot be used as a basis for
  contributions to the Section 401(k) plan in the year of receipt.

  	
   

  	
  Not applicable.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Any applicable benefits under U.S. life insurance
  and long-term disability programs are based on annual base salary, and
  therefore, should not be affected by an election to defer under this base
  salary part of the 2007 Program.

  	
   

  	
   

  

 

 16
 

 

APPENDIX A

Deferral Election Forms

These forms may be used as an alternative to
the online election process. If you have completed the online enrollment, and
received a confirmation, you should not submit these forms. If you complete
both the online process and the paper forms, the later submission will govern.

·                  Worksheet for 2007 Pay-for-Performance
Deferral Program

(required for any deferral request using the paper form process)

·                  Election Form for 2007 Annual Incentive Award

(otherwise payable on or about February 2008)

·                  Election Form for 2007 Base Salary

(otherwise payable in 2007)

·                  Election Form
for PG-XVII Award Granted in 2/06

(otherwise payable on or about February 2009)

·                  Comprehensive
Designation of Beneficiary Form

(optional for any deferral request)

 

 17
 

 

American Express
Company

WORKSHEET FOR

2007
PAY-FOR-PERFORMANCE

DEFERRAL PROGRAM

Completion
and return of this form is required for your deferral election.

	
  1.

  	
  Print
  Full Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Annual Base Salary(as
  of 12/31/06 or a later start date for a new hire):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Deferral
  Amounts Elected From:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  2007 Annual
  Incentive Award (otherwise payable on or about February 2008)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  2007 Base Salary
  (otherwise payable in 2007)*

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Portfolio
  Grant-XVII Award Value (otherwise payable on or about February 2009)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Total (a,b,c) (minimum $5,000 from each source
  (a,b,c) you select to a maximumof 100% of base salary shown on line 2 from all three
  sources combined)

  	
   

  	
  $

  

 

 

	
   

  	
   

  	
   

  	
   

  
	
  Signature

  	
   

  	
  Date

  	
   

  

 

*                 If you elect to defer your base salary, please keep in mind your base
salary after deducting for your deferral amount must at least cover your
before-tax contributions for all employee plans.  In addition, please refer to pages 15 to 16
of this document to ensure you understand the impact of deferrals on your 401(k)
contributions and other benefit plans.

Any
terms and features of, and rights and benefits under, the 2007
Pay-for-Performance Deferral Program Document and your deferral election may be
interpreted, modified or terminated by the Committee in its sole discretion in
any manner and at any time without your prior consent or notice (including, but
not limited to, deferring the payment date and alignment with legislative and
regulatory developments) provided that such interpretation, modification or
termination shall not cause deferred amounts to fail to meet the requirement
for favorable tax treatment pursuant to Section 409A, applicable regulations
thereunder, and other IRS guidance. I
understand that the ROE Schedule Rate applied to my deferred balance may be
changed, prospectively or retroactively, in the sole discretion of the
Committee without my prior consent or notice, and that the ROE target range is
subject to adjustment by the Company.

 18
 

 

American
Express Company

DEFERRED
PAYMENT REQUEST FORM

FOR ANY AWARD
FOR 2007 PERFORMANCE UNDER

THE AMERICAN EXPRESS COMPANY

ANNUAL INCENTIVE AWARD PLAN

(TO THE EXTENT APPLICABLE TO YOU,
INCLUDING

ANY SUCCESSOR PLAN, THE “INCENTIVE PLAN”)

(AS
PART OF THE 2007 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM)

If
you are requesting deferred payment, please fill in the appropriate
information, and sign, date and return this form promptly as indicated below.

To:          The Compensation and Benefits
Committee of the Board of Directors of

American Express Company

Subject to the
provisions of the applicable Incentive Plan or any successor plan, and

the 2007 Program Document, I hereby request that any award for services
rendered

for performance year 2007 be paid to me as indicated on this form.

Print Full Name:

Initial Deferred Amount:

I
hereby elect to defer the payment of a total of:  $                              
of my 2007 Annual Incentive Award otherwise payable on or about February 2008
under the Incentive Plan.  If my actual
2007 Annual Incentive Award is less than my elected deferral amount, the 2007
Annual Incentive Award portion of my Initial Deferred Amount would then be
equal to my actual 2007 Annual Incentive Award amount.  (Minimum
deferral under the 2007 Pay-for-Performance Deferral Program is $5,000, taken separately from
any one source; maximum
deferral from all sources combined (annual incentive award, base salary, and/or
Portfolio Grant-XVII Award) is equal to 100% of your annual base salary.)  Please
also complete and return the  “Worksheet.”

Period of Deferral:

	
  Please begin deferred payment(s) on: (check and fill in only one choice)

  
	
   

  
	
  o

  	
   

  	
  First day of a specific month
  and year (i.e., February 1, 2013 or later):
                                       ;or

  
	
   

  	
   

  	
   

  	
  (month, year)

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  My retirement date (i.e., the date my employment
  terminates following my attainment of age 55 and 10 actual or deemed years of
  service with American Express Company or its affiliates); or

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  First day of a specific month and year after
  retirement:                                          
  years after retirement (not to exceed 10 years after retirement).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Note: payments following
  retirement are subject to a six-month delay (see page 7 of this document).

  

 

 19
 

 

Payment
Method:

	
  The deferred payment(s) should be paid as
  follows:

  
	
   

  
	
  Check and fill in only one choice.

  
	
   

  
	
  o

  	
   

  	
  Lump sum;or

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  Paid in the following number of annual installments
  (not to exceed 15):                              .

  

 

I have read my applicable Incentive Plan document and the 2007 Program
Document, and understand and agree that:

x          This
request is irrevocable.

x          Any terms and features of, and rights and
benefits under, the 2007 Pay-for-Performance Deferral Program Document and my
deferral election may be interpreted, modified or terminated by the
Compensation and Benefits Committee of the Board of Directors of American
Express Company (the “Committee”), in its sole discretion in any manner and at
any time without my prior consent or notice (including, but not limited to,
deferring the payment date and alignment with legislative and regulatory
developments) provided that such interpretation, modification or termination
shall not cause deferred amounts to fail to meet the requirement for favorable
tax treatment pursuant to Section 409A, applicable regulations thereunder, and other
IRS guidance. I understand that the ROE
Schedule Rate applied to my deferred balance may be changed, prospectively or
retroactively, in the sole discretion of the Committee without my prior consent
or notice, and that the ROE target range is subject to adjustment by the
Company.

x          Deferred
amounts are subject to the conditions and provisions of my applicable Incentive
Plan document or any successor plan, and to the 2007 Deferral Document.

	
  Print Full Name:

  	
   

  
	
   

  	
   

  
	
  Social Security Number:

  	
   

  
	
   

  	
   

  
	
  Business Unit, Location,
  Telephone:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
    Date:

  	
   

  
							

 

This
form must be received on or
before Sunday, December 31, 2006. Forms received after December
31, 2006 cannot be
considered.

Note:  Fax
will be accepted, however, original must be sent immediately following.

Fax number: (212)
640-0345

 20

 

American Express
Company

SALARY
DEFERRAL PLAN DEFERRED PAYMENT

REQUEST FORM
FOR 2007 BASE SALARY

(AS PART OF THE 2007 PAY-FOR-PERFORMANCE
DEFERRAL PROGRAM)

If
you are requesting deferred payment, please fill in the appropriate
information, and sign, date and return this form promptly as indicated below.

To:          The Compensation and Benefits
Committee of the Board of Directors of

American Express Company

Subject to all applicable provisions of the Salary Deferral Plan and the 2007
Program,

I hereby request that my 2007 base salary be paid to me on a deferred basis as

indicated on this form.

Print Full Name:

Initial Deferred Amount:

I
hereby elect to defer the payment of a total of:  $                           
of my 2007 base salary (otherwise payable in 2007), after deduction of any
applicable before-tax benefit deductions, in equal installments from my 2007
paychecks, starting with the paycheck for services beginning on or about
January 22, 2007 (e.g., February 2, 2007 paycheck).  (Minimum
deferral under the 2007 Pay-for-Performance Deferral Program is $5,000, taken separately from
any one source; maximum
deferral from all sources combined (annual incentive award, base salary, and/or
Portfolio Grant-XVII Award) is equal to 100% of your annual base salary).  Please
also complete and return the “Worksheet.”

Period of Deferral:

Please begin deferred
payment(s) on: (check and fill in only one
choice)

	
  o

  	
   

  	
  First day of a specific month and year (i.e.,
  February 1, 2013 or later):                                   ;or

  
	
   

  	
   

  	
   

  	
  (month, year)

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  My retirement date (i.e., the date my employment
  terminates following my attainment of age 55 and 10 actual or deemed years of
  service with American Express Company or its affiliates);or

  
	
   

  	
   

  	
   

  
	
  o

  	
   

  	
  First day of a specific month and year after
  retirement:                                              
  years after retirement (not to exceed 10 years after retirement).

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Note:  payments following retirement are subject
  to a six-month delay (see page 7 of this document).

  

 

 21
 

 

Payment Method:

The
deferred payment(s) should be paid as follows:

Check
and fill in only one choice.

o    Lump
sum; or

o            Paid in the following number of annual
installments (not to exceed 15):                                 .

I
have read the Salary Deferral Plan and the 2007 Program Document, and
understand and agree that:

x          This
request is irrevocable.

x          Any terms and features of, and rights and
benefits under, the 2007 Pay-for-Performance Deferral Program Document and your
deferral election may be interpreted, modified or terminated by the
Compensation and Benefits Committee of the Board of Directors of American
Express Company (the “Committee”), in its sole discretion in any manner and at
any time without your prior consent or notice (including, but not limited to,
deferring the payment date and alignment with legislative and regulatory
developments) provided that such interpretation, modification or termination
shall not cause deferred amounts to fail to meet the requirement for favorable
tax treatment pursuant to Section 409A, applicable regulations thereunder, and
other IRS guidance.  I understand that the ROE Schedule Rate
applied to my deferred balance may be changed, prospectively or retroactively,
in the sole discretion of the Committee without my prior consent or notice, and
that the ROE target range is subject to adjustment by the Company.

x          Deferred
amounts are subject to the provisions of the Salary Deferral Plan and the 2007
Deferral Document.

 

	
  Print Full Name:

  	
   

  
	
   

  	
   

  
	
  Social Security Number:

  	
   

  
	
   

  	
   

  
	
  Business Unit, Location,
  Telephone:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
    Date:

  	
   

  
							

 

This
form must be received on or
before Sunday, December 31, 2006.  Forms received after December
31, 2006 cannot be
considered.

Note:  Fax
will be accepted, however, original must be sent immediately following.

Fax number: (212)
640-0345

 22
 

 

American
Express Company

PORTFOLIO GRANT AWARD

DEFERRED PAYMENT REQUEST FORM

FOR “PG-XVII AWARD”

(AS PART OF
THE 2007 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM)

If
you are requesting deferred payment, please fill in the appropriate
information, and sign, date and return this form promptly as indicated below.

To:          The Compensation and Benefits
Committee of the Board of Directors of

American Express Company

Subject to all applicable provisions of the American Express 1998 Incentive
Compensation Plan (the “1998 Plan”) and the 2007 Program, I hereby request that
the performance/portfolio grant (“PG”) Award issued under the 1998 Incentive
Compensation Plan on or about February 2006 which will be valued based on
2006-2008 performance (known as the “PG-XVII Award”) be paid to me as indicated
on this form.

Print Full Name:

Initial Deferred Amount:

I
hereby elect to defer the payment of a total of:  $                     
of my PG-XVII Award (otherwise payable on or about February 2009).  If my actual PG-XVII Award value is less than
my elected deferral amount, the PG-XVII Award portion of my Initial Deferred
Amount would then be equal to my actual PG-XVII Award amount.  (Minimum
deferral under the 2007 Pay-for-Performance Deferral Program is $5,000  taken separately from
any one source, maximum
deferral from all sources combined (annual incentive award, base salary, and/or
PG-XVII Award) is equal to 100% of your annual base salary).  Please also
complete and return the “Worksheet.”

Period of Deferral:

Please begin deferred
payment(s) on: Check and fill in only one
choice.

	
  o

  	
  First day of a specific month and year (i.e.,
  February 1, 2014 or later):  

  
	
                                                                                                                                              ; or

  
	
   

  	
   

  	
  (month, year)

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  o

  	
  My retirement date (i.e., the date my employment
  terminates following my attainment of age 55 and 10 actual or deemed years of
  service with American Express Company or its affiliates); or

  
	
   

  	
   

  
	
  o

  	
  First day of a specific month and year after
  retirement:                                 
  years after retirement (not to exceed 10 years after retirement).

  
	
   

  	
   

  
	
   

  	
  Note: payments following
  retirement are subject to a six-month delay (see page 7 of this doicument).

  

 

 23
 

 

Payment Method:

The
deferred payment(s) should be paid as follows:

Check
and fill in only one choice.

o    Lump
sum; or

o            Paid in the following number of annual
installments (not to exceed 15):                              .

I have read the 1998 Plan, the PG-XVII Award letter and the 2007
Program Document, and understand and agree that:

x          This
request is irrevocable.

x          Any terms and features of, and rights and benefits
under, the 2007 Pay-for-Performance Deferral Program Document and your deferral
election may be interpreted, modified or terminated by the Compensation and
Benefits Committee of the Board of Directors of American Express Company (the “Committee”),
in its sole discretion in any manner and at any time without your prior consent
or notice (including, but not limited to, deferring the payment date and
alignment with legislative and regulatory developments) provided that such
interpretation, modification or termination shall not cause deferred amounts to
fail to meet the requirement for favorable tax treatment pursuant to Section
409A, applicable regulations thereunder, and other IRS guidance. I understand that the ROE Schedule Rate
applied to my deferred balance may be changed, prospectively or retroactively,
in the sole discretion of the Committee without my prior consent or notice, and
that the ROE target range is subject to adjustment by the Company.

x          Deferred amounts are subject to the
conditions and provisions of the 1998 Plan, the PG-XVII Award agreement and the
2007 Deferral Document.

 

	
  Print Full Name:

  	
   

  
	
   

  	
   

  
	
  Social Security Number:

  	
   

  
	
   

  	
   

  
	
  Business Unit, Location,
  Telephone:

  	
   

  
	
   

  	
   

  
	
  Signature:

  	
   

  	
    Date:

  	
   

  
							

 

This
form must be received on or
before Sunday, December 31, 2006. Forms received after December
31, 2006 cannot be
considered.

Note:  Fax
will be accepted, however, original must be sent immediately following.

Fax number: (212)
640-0345

 24
 

 

American
Express Company

COMPREHENSIVE
DESIGNATION OF BENEFICIARY

(Note:  if you
have previously submitted a Comprehensive Designation of Beneficiary Form, you
do not need to submit a new form unless you are making a change.)

This beneficiary designation
revokes all prior designations, if any, made by me under all deferral programs,
including all prior Pay-for-Performance Deferral Programs, the American Express
Company 1985 Career Investment Option Agreement, and the American Express
Company 1990 Deferral Program.  It also
applies to deferrals to be made under the 2007 Pay-for-Performance Deferral
Program and any subsequent deferral agreements which I may enter into with
American Express Company or one of its subsidiaries.  All of such past, present and future arrangements or agreements will be
referred to collectively as the “Agreements.” In accordance with the terms of
the Agreements, which govern the dispensation of all deferred compensation
arrangements which I have entered into, am entering into, or will enter into, I
hereby revoke all prior beneficiary designations, if any, made by me under the
Agreements.  I hereby designate the
following as the beneficiary or beneficiaries of all accounts payable under
such Agreements by reason of my death. 
Subject to the provisions of the Agreements, the following designation
of beneficiary will remain in effect unless specifically revoked by me in writing.  If no beneficiary survives me, such payments
shall be paid to the legal representative of my estate.

Primary
Beneficiary

x          If two primary beneficiaries are designated and one primary beneficiary
predeceases me, such payment will be payable to the primary beneficiary who
survives me.

x          If three or more primary beneficiaries are designated and if any
primary beneficiary predeceases me, the primary beneficiaries living at my
death shall share equally in that which would otherwise have been payable to
such deceased primary beneficiaries.

x          If there are no primary beneficiaries living at my death, please see
secondary beneficiary election below.

	
  Full Name

  of Beneficiary

  	
   

  	
  Relationship

  to Participant

  	
   

  	
  

  Full Address

  	
   

  	
  Percentage Share

  of Payments

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Secondary
Beneficiary (to take effect if no primary beneficiary survives me):

x          If
two secondary beneficiaries are designated and one secondary beneficiary
predeceases me, such payment will be payable to the secondary beneficiary who
survives me.

x          If three or more secondary beneficiaries are designated and if any
secondary beneficiary predeceases me, the secondary beneficiaries living at my
death shall share equally in that which would otherwise have been payable to
such deceased secondary beneficiaries.

	
  Full Name

  of Beneficiary

  	
   

  	
  Relationship

  to Participant

  	
   

  	
  

  Full Address

  	
   

  	
  Percentage Share

  of Payments

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
    

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 25
 

 

 

	
  

  	
   

  	
   

  
	
  Participant’s Signature

  	
  Date

  	
   

  	
  Spouse’s Signature (if needed)*

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Full Name of Participant

  	
   

  	
  Print Full Name of Spouse

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature of Witness

  	
  Date

  	
   

  	
  Signature of Witness

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Print Full Name of Witness

  	
   

  	
  Print Full Name of Witness

  

 

*                      Spouse’s signature is required if the
participant resides in a community property state (including, but not limited
to, Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas or
Washington).

The above Beneficiary Designation is hereby
acknowledged and placed on file

this                       
day of                           ,
20     .

Plan Administrator

	
  By:

  	
   

  

 

Please return the original, executed form to: 200
Vesey St., New York, NY 10285, Mail Drop: 01-35-09, USA.

Note: Signing this Beneficiary Designation will
cause all prior designations, if any, made by me to no longer be in effect.

 26
 

 

APPENDIX B

“Change in Control”

Except as otherwise provided in an applicable
governing document, “Change in Control” means the happening of any of the
following:

(a)                                  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 (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: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company or any corporation, partnership, trust or other entity
controlled by the Company (a “Subsidiary”), (iii) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any Subsidiary or (iv) 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 subsection (c) of this “Change in Control” Section 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
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 July 1, 1994,
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

 27
 

 

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
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

(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 (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 

 28
 

 

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

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

 29Exhibit
10.2

 

	
  

  	
   

  	
  Department:

  Executive Office

  	
   

  	
  Policy Number:

  
	
   

  	
  Date Issued:

  11-17-2006

  	
   

  	
  Supersedes Number: 

  Original

  
	
   

  	
  Prepared By: 

  General Counsel/VP Human Resources

  
	
   

  	
  Approved By:

  
	
   

  	
  TriMas Compensation Committee

  
	
  Title:  EXECUTIVE
  SEVERANCE/CHANGE OF CONTROL POLICY

  	
   

  
						

 

Scope:                                                            This
policy applies to the following Executive Officers (“Executives”) of TriMas
Corporation (“TriMas” or the “Company”): President/Chief Executive Officer;
Chief Financial Officer; Vice President - Human Resources; Vice President —
Finance and Treasurer; Corporate Secretary and General Counsel; the Reporting
Segment Presidents, where such positions exist (but, not the business unit
presidents); and such other officers as may be determined by the TriMas Board
of Directors (the “Board”).

Purpose:                                               To
detail what compensation and benefits, if any, are due to an Executive upon an
Executive’s separation of employment with the Company.

Policy:                                                          Executive
is an at-will employee whose employment may be terminated by Executive or
TriMas at any time for any reason. Upon termination, this policy shall govern
the rights and responsibilities of the parties. 
In connection with this policy, Executive will devote full business time
and efforts to the performance of Executive’s duties and responsibilities for
the Company; provided that this policy does not preclude Executive from
engaging in charitable and community affairs or managing any passive investment
(i.e., an investment with respect to which Executive is in no way involved with
the management or operation of the entity in which Executive has invested) to
the extent that such activities do not conflict with the Executive’s duties;
and further provided,  that Executive
shall not, without the prior approval of the Board, serve as a director or
trustee of any other corporation, association or entity, or own more than two
percent (2%) of the equity of any publicly traded entity

1. Termination
Without Cause or for Good Reason

If the Executive’s employment is terminated by the
Company for any reason other than Cause, Disability or Death, or if employment
is terminated by Executive for Good Reason then the Company shall provide the
Executive the following severance benefits:

       A. President / Chief Executive Officer

(A)      Base salary continuation for
twenty-four (24) months at Executive’s annual base salary rate in effect on the
date of termination, subject to all applicable withholding and reporting
requirements, and paid in accordance with usual Company payroll practices;

(B)        Payment of accrued, but
unused vacation;

(C)        Annual Value Creation Plan
(AVCP) bonus payments equal to one (1) year’s bonus at Executive’s target bonus
level in effect on the date of termination. 
The AVCP payments will be paid in equal installments over the
twenty-four month period subject to applicable withholding and reporting
requirements.  In addition, Executive
shall receive the AVCP bonus payment for the most recently completed bonus term
if a  bonus has been declared for
Executive but not paid, and a pro rata bonus for the year of termination
through the termination date based on Executive’s target bonus level;

(D)       Any unvested equity awards
Executive may have received under the 2002 Long Term Equity Incentive Plan
shall immediately vest upon the termination date and otherwise be exercisable
consistent with the terms of such plan. Any unvested  equity awards Executive may have received
under any subsequently issued equity plan shall immediately vest upon termination
in an amount equal to the number of awards that would have vested as of  the next occurring

 1
 

 

 

anniversary date of such equity award adjusted pro
rata in accordance with the termination date, and otherwise be exercisable
consistent with the terms of such plan;

(E)         Continuation of medical
benefits under Company group benefits (including health, dental, vision, EAP
and prescription plans), as defined by the plan documents, until the earlier of
twenty-four (24) months following Executive’s termination of employment or date
in which Executive becomes eligible to receive any medical benefits under any
plan or program of any other employer; provided Executive timely elects to
continue health care coverage under COBRA and subject to the Company’s COBRA
policies. Executive will be responsible for payment of the COBRA premium equal
to the employee portion of the premium that Executive would have paid if
Executive continued to be a Company employee and Company will pay the employer
portion.   At Company’s discretion,
Company may purchase individual medical policies or pay any remaining portion
of a premium cost under this item through a lump sum or in monthly payments,
provided that Company’s premium obligation shall not exceed the employer
portion of the COBRA premium equivalent in any given month;

(F)         Executive level
outplacement services until the earlier of twelve (12) months following
Executive’s termination of employment or date on which Executive is employed by
a subsequent employer; and

(G)  Except for
the benefits stated above, Executive’s participation in all other Company
benefits shall cease as of the 
termination date and otherwise be governed by the terms of the plans, if
any, applicable to such benefits.

B.    Executives,
Excluding President /Chief Executive Officer

(A)      Base salary continuation for
twelve (12) months at Executive’s annual base salary rate in effect on the date
of termination, subject to all applicable withholding and reporting
requirements and  shall be paid in
accordance with usual Company payroll practices;

(B)        Payment of accrued, but
unused vacation;

(C)        Annual Value Creation Plan
(AVCP) bonus payments equal to one (1) year bonus at Executive’s target bonus
level in effect on the date of termination. 
The AVCP payments will be paid in equal installments over the twelve
month period subject to applicable withholding and reporting requirements.  In addition, Executive shall receive the AVCP
bonus payment for the most recently completed bonus term if a  bonus has been declared for Executive but not
paid, and a pro rata bonus for the year of termination through the termination
date based on Executive’s target bonus level;

(D)       Any unvested equity awards
Executive may have received under the 2002 Long Term Equity Incentive Plan
shall immediately vest upon the termination date and otherwise be exercisable
consistent with the terms of such plan. Any unvested  equity awards Executive may have received
under any subsequently issued equity plan shall immediately vest upon
termination in an amount equal to the number of awards that would have vested
as of  the next occurring anniversary
date of such equity award adjusted pro rata in accordance with the termination
date, and otherwise be exercisable consistent with the terms of such plan;

(E)         Continuation of medical
benefits under Company group benefits (including health, dental, vision, EAP
and prescription plans), as defined by the plan documents, until the earlier of
twelve (12) months following Executive’s termination of employment or date in
which Executive becomes eligible to receive any medical benefits under any plan
or program of any other employer; provided the Executive timely elects to
continue health care coverage under COBRA and subject to the Company’s COBRA
policies. Executive will be responsible for payment of the COBRA premium equal
to the employee portion of the premium that Executive would have paid if
Executive continued to be a Company employee and Company will pay the employer
portion.   At Company’s discretion,
Company may purchase individual medical policies or pay any remaining portion
of a premium cost under this item through a lump sum or in monthly payments,
provided that Company’s premium obligation shall not exceed the employer
portion of the COBRA premium equivalent in any given month;

(F)         Executive level
outplacement services until the earlier of twelve (12) months following the
Executive’s termination of employment or date on which the Executive is
employed by a subsequent employer; and

 2
 

 

 

(G)        Except for the benefits
stated above, Executive’s participation in all other Company benefits shall
cease as of the  termination date and
otherwise be governed by the terms of the plans, if any, applicable to such
benefits.

For purposes of this policy, “Good Reason” means:

·                                          A
material and permanent diminution in Executive’s duties or responsibilities;

·                                          A
material reduction in aggregate value of base salary and bonus opportunity or
material reduction in aggregate value of other benefits provided to Executive
by the Company; or

·                                          A
permanent reassignment of Executive to another primary office, or relocation of
the Company office of more than 35 miles distance from current office location.

Executive must notify the Company of Executive’s  intention to invoke termination for Good
Reason within one hundred twenty (120) days after the Executive has knowledge
of such event and provide the Company fifteen (15) days opportunity for cure or
such event shall not constitute Good Reason under this policy.  Executive may not invoke termination for Good
Reason if Cause exists at the time of such termination.

2. Voluntary Termination by Executive

If Executive terminates
employment with the Company without Good Reason, then the Company shall pay
Executive his accrued base salary through the date of termination; earned but
unused vacation compensation and the AVCP award for the most recently completed
year if an award has been declared for such year but not paid.  The accrued salary and vacation time shall be
paid the next normal payroll following termination of employment and the AVCP
award paid in accordance with the terms of the plan. Except for the benefits
stated above, Executive’s participation in all other Company benefits shall
cease as of the  termination date and
otherwise be governed by the terms of the plans, if any, applicable to such
benefits.

3. Termination for Cause

If the Company terminates Executive with Cause or if Executive
terminates employment with the Company without Good Reason, then the Company
shall pay Executive his accrued base salary through the date of termination,
plus earned but unused vacation compensation. 
Executive shall not be entitled to payment of any AVCP award, whether
declared and unpaid for any prior year, 
for any portion of the year in which the termination occurs or
otherwise.  The accrued salary and
vacation time shall be paid within ten (10) days of termination of
employment.  For purposes of this
policy,  “Cause” shall mean:

·                                          Executive’s
conviction of or plea of guilty or nolo contendere to
a crime constituting a felony under the laws of the United States or any
jurisdiction in which the Company conducts business;

·                                          Executive’s
willful and continued misconduct in the performance of his duties to the
Company;

·                                          Executive’s
willful and continued failure to follow directions of the Board  (or direct reporting executive); or

·                                          Executive’s
willful and/or continued neglect of duties (other than incapacity due to
physical or mental illness).

Cause shall only arise following ten (10) days written notice from the
Company which specifically identifies the failure or neglect and the
continuance of the failure or neglect during the notice

 3
 

 

period.  Failure of the Company
to notify Executive after an occurrence will not preclude the Company from
notifying Executive of a subsequent and like event.

4. Termination Following a Change of Control

If Executive’s employment with the Company terminates by reason of a
Qualifying Termination (as defined in this section) within three (3) years
after a Change in Control, then, in place of any other severance payment or
other consideration and subject to all legal requirements, Company shall
provide Executive the following separation benefits:

(A)      Lump sum equal to base
salary for thirty six (36) months at Executive’s annual base salary rate in
effect on the date of termination, subject to all applicable withholding and
reporting requirements;

(B)        Lump sum for Annual Value
Creation Plan bonus payments equal to three (3) years’ bonus at the target
bonus level in effect on the date of termination, subject to applicable
withholding and reporting requirements. 
In addition, Executive shall receive the AVCP bonus payment for the most
recently completed bonus term if a  bonus
has been declared for Executive but not paid, and a pro rata bonus for the year
of termination through the termination date based on Executive’s target bonus
level;

(C)        Any unvested equity awards
Executive may have received under any equity incentive plan shall immediately
vest upon termination date and otherwise be exercisable consistent with the terms
of such plan;

(D)       Continuation of medical
benefits under Company group benefits (including health, dental and
prescription plans), as defined by the plan documents, until the earlier of
thirty six (36) months following Executive’s termination of employment or date
in which Executive becomes eligible to receive any medical benefits under any
plan or program of any other employer; provided Executive timely elects to
continue health care coverage under COBRA and subject to the Company’s COBRA
policies.  At Company’s discretion,
Company may purchase individual medical policies or pay any remaining portion
of a premium cost under this item through a lump sum or in monthly payments,
provided that Company’s premium obligation shall not exceed the employer portion
of the COBRA premium equivalent in any given month;

(E)         Executive level
outplacement services until the earlier of twelve (12) months following the
Executive’s termination of employment or date on which the Executive is
employed by a subsequent employer; and

(F)  Except for the benefits stated
above, Executive’s participation in all other Company benefits shall cease as
of the  termination date and otherwise be
governed by the terms of the plans, if any, applicable to such benefits.

Qualifying Termination shall be defined for purposes of this policy a
termination of Executive’s employment with the Company for any reason other
than:

·                                          Death;

·                                          Disability;

·                                          Cause
(as defined in this policy); or

·                                          A
termination by Executive without Good Reason, (as defined in this policy).

For purposes of this policy, “Change of Control” shall be defined as
follows:

(i)                               “Change
of Control,” with the two exceptions described below, shall have the same
meaning as in the Indenture dated as of June 6, 2002 among the Company, each of
the Guarantors named therein and the Bank of New York, as Trustee, relating to
the 9 7/8% Senior Subordinated Notes due 2012 of Company, as in effect on the
adoption of the Policy and regardless of whether or not such notes or Indenture
are hereinafter discharged, defeased or repaid (the “Indenture”); and all
defined terms used in such definition of Change of Control shall have the

 4
 

 

 

                                          meanings
ascribed thereto under the Indenture as well; provided that no acquisition by
any employee benefit plan (or related trust) sponsored or maintained by Company
or any of its subsidiaries shall result in a Change of Control hereunder.

(ii)                            Paragraph
(2) of the Change of Control definition in the Indenture regarding liquidation
or dissolution shall be excluded from the definition applied herein to conform
with Section 409A of the Internal Revenue Code of 1986, as amended (“Code”).

(iii)                         To
conform with Code Section 409A, the following provision shall control over the “Continuing
Director” provision set forth in paragraph (4) of the Change of Control
definition in the Indenture:  A Change of
Control shall occur on the first day on which a majority of the members of the
Board of Directors (“Board”) are not continuing Directors.  As of the date of determination, a “Continuing
Director” means any member of the Board who (a) has been a member of the Board
throughout the immediately preceding twelve (12) months, or (b) was nominated
for election, or elected to the Board with the approval of the Continuing
Directors who were members of the Board at the time of such nomination or
election, or designated as a Director under the Stockholders Agreement.

5. Disability

If Executive is determined to be disabled under
Section 223(d) of the Social Security Act, or any successor provision, and
Executive is entitled to receive a disability benefit under such Act, or if
Executive is unable to engage in any substantial activity due to medically
determinable physical or medical impairment expected to result in death or to
last for a continuous period of not less than twelve (12) months, or if due to
any medically determinable physical or mental impairment expected to result in
death or last for a continuous period not less than twelve (12) months, Executive
has received income replacement benefits for a period of not less than three
(3) months under a Company-sponsored accident and health plan, Company’s
obligation to make payments shall, except for earned but unpaid base salary and
AVCP bonus awards, cease on the first to occur of (i) the date that is six (6)
months after such termination or (ii) the date Executive becomes entitled to
benefits under a Company-provided long-term disability program.  Executive’s outstanding equity awards shall
become 100% vested in the event of a disability termination hereunder.  Company may only terminate Executive on
account of Disability after giving due consideration to whether reasonable
accommodations can be made under which Executive is able to fulfill Executive’s
job related duties.  The commencement
date and expected duration of any physical or mental condition that prevents
Executive from performing job related duties shall be determined by a medical
doctor selected by Company.  Company may,
in its discretion, require written confirmation from a physician of Disability
during any extended absence. Except for the benefits stated above, Executive’s
participation in all other Company benefits shall cease as of the date above on
which Company’s obligation to make payments ceases and otherwise be governed by
the terms of the plans, if any, applicable to such benefits.

6. Death 

If Executive’s employment terminates due to Executive’s death, all
obligations of Company to make any further payments, other than an obligation
to pay any accrued but unpaid base salary to the date of death and any accrued
but unpaid bonuses under AVCP to the date of death, shall terminate upon
Executive’s death.  Executive’s
outstanding equity awards shall become 100% vested in the event Executive’s
employment is terminated due to death. In accordance with Company guidelines,
Executive’s qualified dependents shall continue to receive medical benefits
under Company group benefits (including health, dental, vision, EAP and
prescription plans), as defined by the plan documents, for a period of
thirty-six (36) months; provided a timely election to

 5
 

 

 

continue health care coverage under COBRA is made and subject to
Company’s COBRA policies. Executive’s qualified dependents will be responsible
for payment of the COBRA premium equal to the employee portion of the premium
that Executive would have paid if Executive continued to be a Company employee
and Company will pay the employer portion.  
At Company’s discretion, Company may purchase individual medical
policies or pay any remaining portion of a premium cost under this item through
a lump sum or in monthly payments, provided that Company’s premium obligation
shall not exceed the employer portion of the COBRA premium equivalent in any
given month. Except for the benefits stated above, Executive’s participation in
all other Company benefits shall cease as of the date of death and otherwise be
governed by the terms of the plans, if any, applicable to such benefits.

7. Non-Competition; Non-Solicitation; Confidentiality

In consideration of the benefits provided under this
policy, Executive shall comply with the following:

(a)                                  Acceptance
of employment under this Policy and performance relative to this Policy are not
in violation of any restrictions or covenants under the terms of any other
agreements to which Executive is a party.

(b)                                 Executive
acknowledges and recognizes the highly competitive nature of the business of
Company and accordingly agrees that, in consideration of this Policy, the
rights conferred hereunder, and any payment hereunder, while Executive  is employed by Company and for the duration
of (i) any severance payments provided hereunder to Executive following the
termination of Executive’s employment with Company, or (ii) twenty four (24)
months following the termination of Executive’s employment with the Company if
no severance payment is payable hereunder upon such termination (“Non-Compete
Term”), Executive shall not engage, either directly or indirectly, as a
principal for Executive’s own account or jointly with others, or as a
stockholder in any corporation or joint stock association, or as a partner or
member of a general or limited liability entity, or as an employee, officer,
director, agent, consultant or in any other advisory capacity in any business
other than Company or its subsidiaries which designs, develops, manufacturers,
distributes, sells or markets the type of products or services sold,
distributed or provided by Company or its subsidiaries during the one (1) year
period prior to the date of employment termination (the “Business”); provided
that nothing herein shall prevent Executive from owning, directly or
indirectly, not more than five percent (5%) of the outstanding shares of, or
any other equity interest in, any entity engaged in the Business and listed or
traded on a national securities exchanges or in an over-the-counter securities
market.

(c)                                  During
the Non-Compete Term, Executive shall not (i) directly or indirectly employ or
solicit, or receive or accept the performance of services by, any active
employee of Company or any of its subsidiaries who is employed primarily in
connection with the Business, except in connection with general, non-targeted
recruitment efforts such as advertisements and job listings, or directly or indirectly
induce any employee of Company to leave Company, or assist in any of the
foregoing, or (ii) solicit for business (relating to the Business) any person
who is a  customer or former customer of
Company or any of its subsidiaries, unless such person shall have ceased to
have been such a customer for a period of at least six (6) months.

(d)                                 Executive
shall not at any time (whether during or after his employment with Company)
disclose or use for Executive’s own benefit or purposes or the benefit or purposes
of any other person, firm, partnership, joint venture, association, corporation
or other business organization, entity or enterprise other than Company and any
of its subsidiaries, any trade secrets, information, data, or 

 6
 

 

 

                                                other
confidential information of Company, including but not limited to, information
relating to customers, development programs, costs, marketing, trading,
investment, sales activities, promotion, credit and financial data, financing
methods, plans or the business and affairs of Company generally, or of any
subsidiary of Company, unless required to do so by applicable law or court
order, subpoena or decree or otherwise required by law, with reasonable
evidence of such determination promptly provided to Company.  The preceding sentence of this paragraph (d)
shall not apply to information which is not unique to Company or which is
generally known to the industry or the public other than as a result of
Executive’s breach of this covenant. 
Executive agrees that upon termination of employment with Company for
any reason, Executive will return to Company immediately all memoranda, books,
papers, plans, information, letters and other data, and all copies of these
materials, in any way relating to the business of Company and its subsidiaries,
except that Executive may retain personal notes, notebooks and diaries.  Executive further agrees that Executive will
not retain or use for Executive’s account at any time any trade names,
trademark or other proprietary business designation used or owned in connection
with the business of Company or its subsidiaries.

(e)                                  Although
Executive and Company consider the restrictions contained in this Policy to be
reasonable, if a final judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained in
this Policy is an unenforceable restriction against Executive, the provisions
of this Policy shall not be rendered void but shall be deemed amended to apply
as to such maximum time and territory and to such maximum extent as such court
may judicially determine or indicate to be enforceable.  Alternatively, if any tribunal of competent
jurisdiction finds that any restriction contained in this Policy is unenforceable,
and such restriction cannot be amended so as to make it enforceable, such
finding shall not affect the enforceability of any of the other restrictions
contained herein.

(f)                                    In
order to receive any of the benefits described in this Policy, Executive shall
be required to execute an agreement pursuant to which Executive releases any
claims Executive may have against Company and agrees to the continuing
enforceability of the restrictive covenants of this Policy.

(g)                                 Executive
will be required to surrender to Company all correspondence, documents,
supplies, files, equipment, checks, and all other materials and records of any
kind that are the property of Company or any of its subsidiaries or affiliates
that are in the possession or under control of the Executive.

8. Miscellaneous
provisions

A.            Payments Not Compensation

Any participation by Executive in, and any terminating
distributions and vesting rights (other than previously defined) under, Company
sponsored retirement or savings plans, regardless of whether such plans are
qualified or non-qualified for tax purposes, shall be governed by the terms of
those respective plans.  Any salary
continuation or severance benefits shall not be considered compensation for
purposes of accruing additional benefits under such plans.

B.            Timing
of Payments

Notwithstanding any provision of this policy, if any
amount payable under this policy is subject to Code Section 409(A), then the
payment of such amount shall be restructured or delayed, as necessary, in a
manner that preserves as far as practically possible the form and timing of the
benefit and ensures the amount is paid in compliance with Section 409(A).  Any delayed payments shall be aggregated and
paid in a lump sum as of the first day of the first permissible month of
distribution.  Provided, however, that
the Company

 7
 

 

 

does not by operation of this requirement assume
responsibility for compliance with Section 409(A).  The Executive is responsible for any
additional tax, interest or penalties under Section 409(A) arising out of payments
under this Policy.

C.            Payment
Process and Taxation Requirements

All payments made under this Policy will follow the
legal and tax payment requirements outlined within the Appendix (A) of this Policy.

D.            Notices.

All notices or
communications hereunder shall be in writing, addressed as follows:

To Company:                        TriMas
Corporation

39400 Woodward Ave., Suite 130

Bloomfield Hills, MI  48304

Attn: Vice President, Human Resources

                                                with a copy to:

TriMas Corporation

39400 Woodward Ave.,
Suite 130

Bloomfield Hills, MI
48304

Attn:
General Counsel

Any such notice or communication shall be delivered by
hand or by courier or sent certified or registered mail, return receipt
requested, postage prepaid, addressed as above (or to such other address as
such party may designate in a notice duly delivered as described above), and
the third (3rd)
business day after the actual date of mailing shall constitute the time at
which notice was given.

      
E.  Separability; Legal Fees

If any provision of this Policy shall be declared to
be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions which shall remain
in full force and effect.  In the event
of a dispute by Company, Executive or others as to the validity or
enforceability of, or liability under, any provision of this Policy, Company
shall reimburse Executive for all reasonable legal fees and expenses incurred
by Executive if Executive prevails in the dispute resolution process.  If Executive does not prevail, Executive and
Company shall be responsible for their respective legal fees and expenses.

      
F.  ERISA Provisions

This Policy constitutes a “top hat” plan maintained
primarily for a group of management or highly compensated employees and is
exempted from most, but not all of the provisions of the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”).  To the extent that ERISA applies, the ERISA
provisions are set forth on Appendix B to the Policy.

G.  Dispute
Resolution Governing Law

Any and all disputes arising under this Policy must be
resolved in accordance with the TriMas Dispute Resolution Policy process, as
set forth in the ERISA attachment on Appendix B to the Plan. To the extent not
preempted by Federal law, this Policy and all disputes related to it shall be
governed by Michigan law, without regard to conflict of law principles.

 8
 

 

 

H. 
Amendments and Termination

This Policy may be amended or terminated at any time
by the Compensation Committee; provided, however, that no amendment or
termination may adversely affect any Executive without the Executive’s prior
written consent.  Notwithstanding the
foregoing, the Compensation Committee may amend or terminate the Policy at any
time following twelve (12) months’ written notice to any adversely affected
Executive.

 

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APPENDIX A

APPLICATION OF GOLDEN PARACHUTE LIMITATIONS

1.             Cap on Payments.

(a)                                       General
Rules. The Code may place significant tax burdens on Executive and Company
if the total payments made to Executive due to a Change of Control exceed
prescribed limits.  In order to avoid
this excise tax and the related adverse tax consequences for Company, by
signing this Agreement, Executive will be agreeing that, subject to the
exception noted below, the present value of Executive’s Total Payments will not
exceed an amount equal to Executive’s Cap.

(b)                                      Special
Definitions.  For purposes of this
Section, the following specialized terms will have the following meanings:

(1)                        “Base  Period 
Income”.  “Base  Period 
Income” is an amount equal to Executive’s “annualized includable
compensation” for the “base period” as defined in Sections 280G(d)(1)
and (2) of the Code and the regulations adopted thereunder. Generally,
Executive’s “annualized includable compensation” is the average of Executive’s
annual taxable income from Company for the “base period,” which is the five
calendar years prior to the year in which the Change of Control occurs. These
concepts are complicated and technical and all of the rules set forth in the
applicable regulations apply for purposes of this Agreement.

(2)                        “Cap”
or “280G Cap”. “Cap” or “280G Cap” shall mean an amount equal to 2.99 times
Executive’s “Base Period Income.”  This
is the maximum amount which Executive may receive without becoming subject to
the excise tax imposed by Section 4999 of the Code or which Company may
pay without loss of deduction under Section 280G of the Code.

(3)                        “Total  Payments”.  The “Total Payments” include any “payments in
the nature of compensation” (as defined in Section 280G of the Code and
the regulations adopted thereunder), made pursuant to this Policy or otherwise,
to or for Executive’s benefit, the receipt of which is contingent on a Change of
Control and to which Section 280G of the Code applies.

(c)                                  Calculating
the Cap and Adjusting Payments. If Company believes that these rules will
result in a reduction of the payments to which Executive is entitled under this
Agreement, it will so notify Executive as soon as possible. Company will then,
at its expense, retain a “Consultant” (which shall be a law firm, a certified
public accounting firm, and/or a firm of recognized executive compensation
consultants) to provide an opinion or opinions concerning whether Executive’s
Total Payments exceed the limit discussed above. Company will select the
Consultant.  At a minimum, the opinions
required by this Section must set forth the amount of Executive’s Base Period
Income, the present value of the Total Payments and the amount and present
value of any excess parachute payments. 
If the opinions state that there would be an excess parachute payment,
Executive’s payments under this Policy will be reduced to the Cap. Executive
will be allowed to choose the payment that should be reduced or eliminated, but
the payment Executive chooses to reduce or eliminate must be a payment determined
by such Consultant to be includable in Total Payments.  Executive’s decision shall be in writing and
delivered to Company within thirty (30) days of Executive’s receipt of
such opinions. If Executive fails to so notify Company, Company will decide which
payments to reduce or eliminate.  If the
Consultant selected to provide the opinions referred to above so requests in
connection with the opinion required by this Section, a firm of recognized
executive compensation consultants selected by Company shall provide an
opinion, upon which such Consultant may rely, as to the reasonableness of any
item of compensation as reasonable compensation for services rendered before or
after the Change of Control.  If Company
believes that Executive’s Total Payments will exceed the limitations of this
Section, it will nonetheless make payments to Executive, at the times stated
above, in the 

 

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                                                maximum
amount that it believes may be paid without exceeding such limitations. The
balance, if any, will then be paid after the opinions called for above have
been received.  If it is ultimately
determined, pursuant to the opinion referred to above or by the Internal
Revenue Service, that a greater payment should have been made to Executive,
Company shall pay Executive 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 rate set forth above, so that Executive will have received
or be entitled to receive the maximum amount to which Executive is entitled
under this Agreement.

(d)                                 Effect
of Repeal.  In the event that the
provisions of Sections 280G and 4999 of the Code are repealed without
succession, this Section shall be of no further force or effect.

(e)                                  Exception.  The Consultant selected pursuant to
Section 1(c) of Appendix A will calculate Executive’s “Uncapped Benefit”
and Executive’s “Capped Benefit.”  The
limitations of Section 1(a) of Appendix A shall not apply to
Executive’s benefit if the Company reasonably determines that the amount of the
Uncapped Benefit that would be retained by Executive, after payment of all
applicable taxes by Executive, including excise tax (but not the amount of any
excise tax arising from any payment under Section 2 of Appendix A),
exceeds the Capped Benefit, after payment by Executive of all applicable
taxes.  If the after tax amount of the
Uncapped Benefit that would be retained by Executive is equal to or less than
the after tax amount of the Capped Benefit that would be retained by Executive,
then payments to Executive shall be adjusted, as necessary, so Executive’s
Capped Benefit is not exceeded, as provided in Section 1(a) of
Appendix A.  For this purpose,
Executive’s “Uncapped Benefit” is the amount to which Executive would be
entitled pursuant to Section 4 of the Policy, without regard to the
limitations of Section 1(a) of Appendix A.  Executive’s “Capped Benefit” is the amount to
which Executive would be entitled pursuant to Section 4 of the Policy after the
application of the limitations of Section 1(a) of Appendix A.  In making this determination the Company
shall use Executive’s total presumed taxes. 
“Total presumed taxes” means all federal, state and local income taxes,
excise taxes and employment taxes. Executive’s total presumed taxes shall be conclusively
calculated using a combined tax rate equal to the sum of the maximum marginal
federal and applicable state and local income tax rates and employment and
excise tax rates.  The state tax rate for
Executive’s principal place of residence will be used and no adjustments will
be made for the deduction of state taxes on the federal return, any deduction
of federal taxes on a state return, the loss of itemized deductions or
exemptions, or for any other purpose.

2.             Payment of Excise Tax.

If the Cap imposed by Section 1(a) of
Appendix A does not apply to Executive because of the exception provided
by Section 1(e) of Appendix A, Company shall pay Executive an amount,
in addition to the payments otherwise due hereunder, that is calculated to
equal the amount of excise tax that Executive will incur under Section 4999
of the Code in connection with Total Payments and this payment under
Section 2 of Appendix A.  This
amount will be calculated by the Consultant and will paid by Company, less
applicable tax withholdings, as soon as possible after the amount of the
Uncapped Benefit is determined.  No
adjustment shall be required if the actual amount of the excise tax is more or
less than the amount calculated by the Consultant.  The Executive shall not be entitled to any
tax “gross up” payments pursuant to this provision.

 

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APPENDIX
B

ERISA ATTACHMENT TO TRIMAS CORPORATION

EXECUTIVE SEVERANCE/CHANGE OF CONTROL POLICY

The TriMas Corporation Executive Severance/Change of
Control Policy (the “Policy”), is intended to constitute an unfunded plan
maintained primarily for the purpose of providing benefits for a select group
of management or highly compensated employees under Sections 201(2), 301(a)(3)
and 401(a)(1) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”).  Notwithstanding any
contrary provisions in the Policy, the Policy is subject to the provisions set
forth below.

1.             Plan
Administrator and Named Fiduciary. 
The Plan Administrator and Named Fiduciary of the Plan for purposes of
ERISA shall be TriMas Corporation, or any successor thereto.  The address of the Plan Administrator is
39400 Woodward Avenue, Suite 130, Bloomfield Hills, MI  48304. 
The Plan Administrator shall have absolute discretion to administer the
Plan, including but not limited to questions of construction, interpretation
and eligibility under the Plan.

2.             Claims
Procedure.  Claims for benefits under
the Policy shall be processed in accordance with the TriMas Corporation
Alternative Dispute Resolution Policy (the “ADR Policy”), subject, however, to
the modifications described below.

(a)           Mediation.  If an Executive is unable to resolve a
dispute over benefits under the Policy through internal human resource
channels, he or she must request mediation of the dispute.  The decision of the mediator shall be
delivered to the Executive electronically or by mail within 90 days after the
Executive’s request for mediation, unless circumstances require an
extension.  The need for an extension
shall be communicated to the Executive before the expiration of the initial 90
day period.  The extension may not exceed
90 days.

If the mediator denies
the Executive’s claim for benefits, the mediator shall provide, in written or
electronic form, a notice of a claim denial, which sets forth:

(1)                                  the specific reasons for the denial;

(2)                                  reference to specific provisions of the
Policy upon which the denial is based;

(3)                                  a description of any additional material
or information necessary for the Executive to perfect his or her claim, along
with an explanation of why such material or information is necessary; and

(4)                                  an explanation of claim review procedures
under the Policy and the time limits applicable to such procedures.

Any
such claim denial notice shall be written in a manner that may be understood
without legal or actuarial counsel.

(b)           Arbitration.

(1)                                  An Executive whose claim for benefits has
been wholly or partially denied by the mediator may request arbitration of such
denial.  The request for arbitration must
be in written or electronic form, and delivered to the Plan Administrator
within 60 days following the denial of the claim by the mediator.

The request should set forth the reasons why the
Executive believes the denial of his or her claim is incorrect.  The Executive shall be entitled to submit
such issues, comments, documents, or records as the Executive shall consider
relevant to a determination of the claim, without regard to whether such
information was submitted to or considered by the

 

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mediator. Prior to submitting such request, the
Executive shall be provided, upon request and free of charge, reasonable access
to, and copies of, such documents, records, and other information that are
relevant to the claim.

(2)                                  The Executive may, at all stages of
review, be represented by counsel, legal or otherwise, of his or her choice,
provided that the fees and expenses of the Executive’s counsel shall be borne
by the Executive.

(3)                                  The Plan Administrator’s decision with
respect to any such review shall be delivered electronically or in writing to
the Executive no later than 60 days following receipt by the Plan Administrator
of the Executive’s request, unless special circumstances, such as the need to
hold a hearing, require an extension of time for processing.  If an extension is needed, the Plan
Administrator shall, before the end of the initial review period, give the
Executive written notice of the special circumstances requiring the extension
and the date by which he or she expects a decision will be rendered. In any
event, the Plan Administrator must provide the Executive with written or
electronic notification of the decision on review no later than 120 days after
receipt of the Executive’s request.

In the case of an
adverse benefit determination by the arbitrator, the notification shall set
forth the information described in Section (a)(1) and (2) above, a statement
that the Executive is entitled to receive, upon request and at no charge,
reasonable access to, and copies of, all documents, records, and other
information relevant to the claim, a description of any voluntary appeal
procedure offered by the Policy, and the Executive’s right to obtain
information about the appeals procedure.

(c)           Time Limits Affecting Jurisdiction.  The Plan Administrator shall not entertain a
claim or a request for review unless it is filed timely in the manner specified
by subsection (c) above, which is a condition precedent to obtaining review by
the Plan Administrator.  The period of
time within which the benefit determination, or an appeal of a benefit
determination, is required to be made shall begin at the time the claim or
appeal is filed and without regard to whether all the information necessary to
make a determination accompanies the filing. 
If the period of review is extended because of the Executive’s failure
to submit all necessary information, the period for making the determination
shall be tolled from the date the notice of extension is sent to the Executive
to the date on which the Executive responds to the request.

(d)           TriMas Alternative Dispute
Resolution Policy Process.  An
arbitrator selected pursuant to the ADR Policy, as modified above, shall not
have jurisdiction or authority to change, add to or subtract from any of the
provisions of the Policy.  The arbitrator’s
sole authority shall be to interpret or apply the provisions of the Policy, and
the arbitrator shall have the power to compel attendance of witnesses at the
hearing.  The arbitrator shall be
appointed upon mutual agreement of the Corporation and the Executive pursuant
to the arbitration rules referenced above. 
Once an Executive commences arbitration proceedings, the Executive shall
not be permitted to terminate the arbitration proceedings without the express
written consent of the Corporation.  Any
court having jurisdiction may enter a judgment based upon such
arbitration.  All decisions of the arbitrator
shall be final and binding on the Executive and the Corporation without appeal
to any court.  The costs of the
arbitration shall be split equally between the parties.

3.             Non-alienation of Benefits.  Except in so far as this provision may be
contrary to applicable law, no sale, transfer, alienation, assignment, pledge
collateralization, or attachment of any benefits under the Policy shall be
valid or recognized by the Corporation.

This ERISA Attachment to
the TriMas Corporation Executive Severance/Change in Control Policy has been
executed as of __________, 2006.

	
  

  	
  TRIMAS
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

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