EXHIBIT 10.1 AMERICAN EXPRESS COMPANY 2006 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM GUIDEDeferred Unit Award Agreement |
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EXHIBIT 10.1
AMERICAN EXPRESS COMPANY
2006 PAY-FOR-PERFORMANCE DEFERRAL PROGRAM GUIDE
2006 Pay-for-Performance
Deferral Program Guide
[LOGO OF AMERICAN EXPRESS COMPANY]
<PAGE>
American Express Company
2006 PAY-FOR-PERFORMANCE
DEFERRAL PROGRAM GUIDE
Table of Contents
<Table>
<Caption>
Page
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<S> <C>
- Introduction 3-5
- Timing of Request 6
- Initial Deferral Amount 6
- Period of Deferral 6
- "Retirement" 7
- Six-Month Delay 7
- Deferral Bookkeeping Account 7
- "Interest" Equivalents on Deferred Amount 7
- ROE Formula Rate Schedule for 2006 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 16
and Other Benefit Plans
Appendix A -- Deferral Election Forms
- Worksheet for 2006 Pay-for-Performance Deferral Program 18
(required for any deferral request using the paper forms)
- Election Form for 2006 Annual Incentive Award 19-20
(otherwise payable on or about February 2007)
- Election Form for 2006 Base Salary 21-22
(otherwise payable in 2006)
- Election Form for PG-XV Award Granted in 2/04 23-24
(otherwise payable on or about February 2007)
- Comprehensive Designation of Beneficiary Form 25-26
(optional for any deferral request)
Appendix B -- "Change in Control" 27-29
</Table>
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American Express Company
2006 PAY-FOR-PERFORMANCE
DEFERRAL PROGRAM GUIDE
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:
o any cash award related to the 2006 performance year (a "2006 Annual
Incentive Award") otherwise payable on or about February 2007,
under the American Express Annual Incentive Award Plan or any
successor plan or plans (an "Incentive Plan");(a)
o 2006 base salary otherwise payable in 2006 under the AXP Salary
Deferral Plan or any successor plan or plans (a "Deferral
Plan"); and
o any eventual payout under the Portfolio Grant-XV Award granted on
or about 2004 and otherwise payable on or about February 2007
("PG-XV Award") under the American Express Company 1998 Incentive
Compensation Plan, as amended and restated (the "1998 Plan").(b)
A deferral of your 2006 Annual Incentive Award, 2006 base salary and/or
PG-XV Award is part of the 2006 Pay-for-Performance Deferral Program (the
"2006 Program").
Eligible employees will be notified about the 2006 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 2006 Program, then you may
request deferred payment of a 2006 Annual Incentive Award, 2006 base salary
and/or PG-XV Award subject to the provisions of this Guide, the applicable
Incentive Plan, the applicable Deferral Plan and the 1998 Plan.
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(a) The Committee may include other incentive programs or awards in its
sole discretion. References in this Guide to "2006 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 Guide to "PG-XV" shall include such other
Performance Grants determined by the Committee.
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You must be an "active" employee (i.e., providing services to the Company
or an approved subsidiary) on December 31, 2005 and during the remainder of
2006 to participate in the 2006 Program. Employees who become newly
eligible during 2006 and are offered the opportunity to participate in the
2006 Program by the Company may request deferred payment of their
post-election 2006 base salary and the post-election portion of their 2006
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 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 2006 Program, therefore, will be
reduced.
MODIFICATION OR TERMINATION OF 2006 PROGRAM
Any terms and features of, and benefits and rights under, the 2006 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 AJCA,
applicable regulations thereunder, and other IRS guidance. The ROE Formula
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.
NEW FOR 2006
o Interest equivalents to be credited under the ROE formula rate have
changed for the 2006 Program to reflect the adjusted ROE targets
following the spin-off of Ameriprise Financial, Inc. by the Company
during 2005.
o As previously mentioned, Congress passed legislation (known as the
American Jobs Creation Act of 2004 (the "AJCA")), which generally
became effective in 2005 and made significant changes to the area
of nonqualified deferred compensation. In December of 2004 and
September of 2005, the IRS issued guidance on the application of the
new rules applicable to nonqualified deferred compensation. As a result
of this additional guidance, the following changes have been made for
the 2006 Program:
o Under the 2005 Program, employees were only allowed to make
deferral elections for PG-XVI (payable in 2008) because it was
unclear whether PG Awards would qualify as "performance-based
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compensation" under the rules and thereby qualify for later
elections. Under the additional guidance, it appears at this time
that PG Awards do qualify as performance-based compensation.
Accordingly, the Company is returning to its prior practice of
permitting deferral elections for PG Awards in the year before the
final year of the applicable performance period. Therefore, the
Company is allowing employees to make deferral elections with
respect to PG-XV (payable in 2007) under the 2006 Program.
o In the past, the Company has continued to treat individuals as
employees during their serial severance period, and delayed
distribution of their deferred amounts until the end of such
period. The additional guidance makes clear that the Company
may not treat individuals as employees during their severance
periods for determining when the payments will commence, and
whether the payments will follow the employee's election or
distributed in a lump sum. Accordingly, the Company must now
commence distributions of an employee's deferred amounts that are
subject to the AJCA on his or her actual date of termination
(subject to a six-month delay). Additionally, the Company will
use the actual date of termination to determine whether payments
will follow the employee's election or distributed in a lump sum.
The Company will continue to define "retirement" for the 2006
Program and prior years' programs as the attainment of age 55 and
10 actual or deemed years of service. For existing deferred
amounts that are not subject to the AJCA, the Company intends on
continuing to administer the distribution of such amounts in
accordance with its prior practice, to the extent such continued
administration is permissible.
o Despite the issuance of the additional guidance, many issues remain
unclear and future guidance is expected to be issued in 2006.
Accordingly, any terms and features of, and rights and benefits under,
the 2006 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 and alignment with
legislative and regulatory developments) in an effort to cause deferred
amounts to meet the requirement for favorable tax treatment pursuant to
the AJCA, applicable regulations thereunder, and other IRS guidance.
o The Company has created a new online enrollment process for deferral
elections under the 2006 Program. For the 2006 Program, employees may
continue to make deferral elections manually by submitting paper forms.
However, you are strongly encouraged to use the new online enrollment
process instead.
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TIMING OF REQUEST
Your request for deferral must be received on or before Saturday, December
31, 2005 and is irrevocable as of 11:59 PM EST on December 31, 2005. 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 2006 may request deferred payment of their post-election
2006 base salary and the post-election portion of their 2006 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:
o any 2006 Annual Incentive Award that would otherwise be payable for
2006 performance (e.g., otherwise payable on or about February
2007);
o 2006 base salary; and/or
o PG-XV Award otherwise payable on or about February 2007.
The combined amounts that you elect to defer from your 2006 Annual
Incentive Award, 2006 base salary and/or PG-XV Award is the "Initial
Deferred Amount."
The maximum total amount which you may elect to defer from your 2006 Annual
Incentive Award, 2006 base salary and/or PG-XV award combined is 100% of
your annual base salary as of the later of December 31, 2005 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
2006 base salary is 100% of their post-election 2006 base salary.
Important additional details on the "Initial Deferred Amount" are shown on
page 14 of this Guide.
PERIOD OF DEFERRAL
You may request that payment(s) be deferred until one of the following (see
also section on "Payout Provisions" on pages 9 to 11 of this Guide):
o a specific date, at least five years from date of deferral (i.e.,
February 1, 2012 for base salary, Annual Incentive Award
deferrals, and PG-XV deferrals) or later; or
o your retirement (as defined below); or
o 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 Guide.
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"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 2006 deferrals using such date
(subject to a six-month delay).
SIX-MONTH DELAY
Pursuant to the AJCA, 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
AJCA, 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 GUIDE, PAYMENTS TO ALL PARTICIPANTS
FOLLOWING RETIREMENT OR TERMINATION WILL BE DELAYED BY SIX MONTHS. If the
Company later determines based on additional IRS guidance that it can
reasonably identify those employees who are subject to the required
six-month delay, the Company may, to the extent permitted by the AJCA and
additional guidance thereunder, amend this Guide to limit the six-month
delay to only those participants for whom it is required under the AJCA.
However, there is no guarantee that the Company can or will make such
amendment, and you should not rely on the possibility of such an amendment
in making your deferral elections.
DEFERRAL BOOKKEEPING ACCOUNT
A bookkeeping account will be established and maintained (for purposes of
this Guide 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 accrued on the Initial Deferred Amount and
thereafter on the deferred balance in the account, as adjusted annually.
"INTEREST" EQUIVALENTS ON DEFERRED AMOUNT
The deferred balance is "credited" or "debited" with "interest" equivalents
based on a schedule established by the Committee (the "ROE Formula 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 FORMULA 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.
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ROE Formula Rate Schedule for the
2006 Pay-for-Performance Deferral Program
<Table>
<Caption>
=============================================================
then the ROE Formula
Rate applied to the deferral
If ROE is: Bookkeeping Account is:
============================================================
<S> <C>
ROE minus 11%
10% and below (i.e. reduction in balance) -- NOTE
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Above 10% - 14 0%
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15 - 19 4%
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20 - 22 5%
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23 6%
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24 - 25 7%
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26 - 27 8%
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28 - 30 9%
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31 10%
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32% 11%
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33% 12%
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34% 13%
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35 and above 14%
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</TABLE>
<TABLE>
<CAPTION>
<S> <C>
ROE means American Express Company's As noted above, THE DEFERRED BALANCE MAY
CONSOLIDATED ANNUAL RETURN ON EQUITY AS DECREASE IN VALUE IF ROE IS 10% OR BELOW
REPORTED BY THE COMPANY, SUBJECT TO IN ANY YEAR. The ROE Formula Rate
adjustment for significant accounting changes applied to your deferred balance may be
as determined by the Committee in its sole changed, prospectively or retroactively,
discretion. If the Company ROE is not in the sole discretion of the Committee
represented on the above Schedule, then the without your prior consent or notice.
ROE Formula Rate will be determined using
straight-line interpolation between the
applicable amounts shown.
</TABLE>
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PAYOUT PROVISIONS
You may request that the payment of the amount credited to your Deferral
Bookkeeping Account begin:
o on the first day of a specific month and year, at least five years
from date of deferral (i.e., February 1, 2012 for base
salary, Annual Incentive Award deferrals and PG-XV deferrals) or
later; or
o upon your retirement; or
o 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 may be 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 or debited through the elected
payment date or event using the ROE Formula Rate for the prior year. If you
choose annual installments, the balance remaining after each installment
payment will continue to be credited or debited with interest equivalents
based on the ROE Formula Rate in effect under the Program for that year, or
as otherwise determined by the Committee. (In the latter case, references
in this Guide to "ROE Formula 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 Formula Rate remains constant for the remainder of the elected payment
schedule. Because the actual ROE and the ROE Formula Rate could fluctuate,
your actual payments could vary from year to year. The first installment
payment will be made on the first day of the first month following the
elected payment date or event, or as administratively feasible thereafter,
and the interest equivalents for that year will be credited or debited
through the elected payment date or event using the ROE Formula Rate for
the prior year. Thus, the crediting rate applied for an election or event
(as defined) effective December 1 will reflect the Rate of the year
beginning 23 months earlier, and the crediting rate applied for an election
of January 1 will reflect the 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 or debited using the ROE
formula 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 under the AJCA), the amount credited to
your Deferral Bookkeeping Account will be paid out as soon as practicable
following 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 or debited as described above.
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DEATH
If you die before installment payments begin or 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 amount
credited to your Deferral Bookkeeping Account, with interest equivalents
credited or debited, using the ROE Formula 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 or debited for the entire period of
deferral as described below:
o for terminations prior to the end of the minimum 5-year deferral period
the lesser of: (i) the initial deferred amount credited or debited
annually at the ROE Formula Rate; or (ii) the initial deferred amount
credited annually with the rate of return on the applicable 5-year U.S.
Treasury Note, with credits or debits through your termination date
(for information on the deferral period, please refer to page 6 of this
Guide); or
o for terminations on or after the minimum 5-year deferral period:
credited or debited annually using the ROE Formula Rate, with credits
or debits 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.
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 from time to time) 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
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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 such limitations in clause (ii) above, with appropriate
income equivalents being credited or debited 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 the American Jobs Creation Act of 2004 (the "AJCA"), which generally
became effective in 2005 and made significant changes to the area of
nonqualified deferred compensation. The AJCA principally affects standards
for deferral elections and distributions. Failure to satisfy the
requirements of AJCA 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 the AJCA in an effort to maintain the effectiveness of deferral
elections. See the section "Modification or Termination of 2006 Program" on
page 4 of this Guide.
If under the AJCA 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.
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U.S. SOCIAL SECURITY TAX
For U.S. Social Security (FICA) tax purposes, the Initial Deferred Amount
will be subject to FICA tax in the year that your 2006 Annual Incentive
Award, 2006 base salary and/or PG Awards 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 $94,200 for 2006; 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 2006 Annual Incentive Award; 2006 base
salary and/or PG Award, to cover the total FICA tax amounts which 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 interest 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 crediting rate for
2006 were 10% and the Moody's rate for that year were 6%, the 4% premium
interest credited would be subject to FICA when vested.
Under the 2006 Program, interest equivalents vest when the 5-year
employment/deferral period is completed for each deferral amount you elect
or when you become "retirement" eligible (worldwide definition under the
Program of at least 55 years of age with at least 10 years of service). As
each 5-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 2006 Program for an AIA deferral will become subject to FICA tax
withholding in 3/2012). 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 2007, the premium interest equivalents credited
under the 2006 Program will become subject to FICA tax withholding in
3/2008).
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.
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IRREVOCABILITY OF DEFERRAL REQUESTS;
HARDSHIP WITHDRAWALS
A request for deferred payment of your 2006 Annual Incentive Award, 2006
base salary and/or PG-XV Award is irrevocable. You may not ask for
different terms. An exception to this rule is possible subject to the
provisions of the Guide and applicable Deferral Document, only if the
occurrence of an "unforeseeable emergency" (as defined under the AJCA) 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 2006 Annual Incentive Award,
2006 base salary and/or PG-XV 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 Guide); 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 DEFERRAL 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 THE
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 eligibility to defer your 2006 Annual Incentive
Award, 2006 base salary and/or PG-XV 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 the
employer 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 the
Company or its affiliates for any period of time.
All deferrals are subject to the provisions of this Guide, the applicable
Incentive Plan document, the applicable Deferral Plan document, the 1998
Plan document, and the PG-XV 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.
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YOU SHOULD ALSO CONSIDER, IN CONSULTATION WITH YOUR ADVISORS, THE IMPACT OF
THE AJCA 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 OR DEBITED THEREON.
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<TABLE>
<CAPTION>
Additional Details on Initial Deferred Amount
2006 ANNUAL INCENTIVE AWARD 2006 BASE SALARY PG-XV AWARD
<S>
