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Exhibit 3.2
AMENDED AND RESTATED BYLAWS
OF
AMERIPRISE FINANCIAL, INC.
Article I
Stockholders
Section 1.01.
Annual Meetings.
The annual meeting of the stockholders of the
Corporation for the election of Directors and for the transaction of such other business as properly may come before such meeting shall be held at such place, either within or without the State of
Delaware, or, within the sole discretion of the Board of Directors, by remote electronic communication technologies and at such date and at such time, as may be fixed from time to time by resolution
of the Board of Directors and set forth in the notice or waiver of notice of the meeting.
Section 1.02.
Special Meetings.
Special meetings of the stockholders may be
called at any time by the Chairman of the Board, Chief Executive Officer (or, in the event of his or her absence or disability, by the President or any Executive Vice President), or by the Board of
Directors. A special meeting shall be called by the Chairman of the Board, Chief Executive Officer (or, in the event of his or her absence or disability, by the President or any Executive Vice
President), or by the Secretary of the Corporation pursuant to a resolution approved by a majority of the entire Board of Directors. Such special meetings of the stockholders shall be held at such
places, within or without the State of Delaware, or, within the sole discretion of the Board of Directors, by remote electronic communication technologies, as shall be specified in the respective
notices or waivers of notice thereof. Any power of the stockholders of the Corporation to call a special meeting is specifically denied.
Section 1.03.
Notice Of Meetings; Waiver.
(a) The
Secretary of the Corporation or any Assistant Secretary shall cause written notice of the place, if any, date and hour of each meeting of the stockholders, and, in
the case of a special meeting, the purpose or purposes for which such meeting is called, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be
present in person and vote at such meeting, to be given personally by mail or by electronic transmission, or as otherwise provided in these By-Laws, not fewer than ten (10) nor more
than sixty (60) days prior to the meeting, to each stockholder of record entitled to vote at such meeting. If such notice is mailed, it shall be deemed to have been given personally to a
stockholder when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the record of stockholders of the Corporation, or, if a
stockholder shall have filed with the Secretary of the Corporation a written request that notices to such stockholder be mailed to some other address, then directed to such stockholder at such other
address. Such further notice shall be given as may be required by law.
(b) A
written waiver of any notice of any annual or special meeting signed by the person entitled thereto, or a waiver by electronic transmission by the person entitled to
notice, shall be deemed equivalent to notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders need be specified in a written waiver of
notice. Attendance of a stockholder at a meeting of stockholders shall constitute a waiver of notice of such meeting, except when the stockholder attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any business on the ground that the meeting is not lawfully called or convened.
(c) For
notice given by electronic transmission to a stockholder to be effective, such stockholder must consent to the Corporation's giving notice by that particular form of
electronic transmission. A stockholder may revoke consent to receive notice by electronic transmission by written notice to the Corporation. A stockholder's consent to notice by electronic
transmission is automatically revoked if the Corporation is unable to deliver two consecutive electronic transmission notices and such inability
becomes
known to the Secretary of the Corporation, any Assistant Secretary, the transfer agent or other person responsible for giving notice.
(d) Notices
are deemed given (i) if by facsimile, when faxed to a number where the stockholder has consented to receive notice; (ii) if by electronic mail,
when mailed electronically to an electronic mail address at which the stockholder has consented to receive such notice; (iii) if by posting on an electronic network (such as a website or
chatroom) together with a separate notice to the stockholder of such specific posting, upon the later to occur of (A) such posting or (B) the giving of the separate notice of such
posting; or (iv) if by any other form of electronic communication, when directed to the stockholder in the manner consented to by the stockholder.
(e) If
a stockholder meeting is to be held via electronic communications and stockholders will take action at such meeting, the notice of such meeting must:
(i) specify the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present and vote at such meeting; and (ii) provide the information
required to access the stockholder list. A waiver of notice may be given by electronic transmission.
Section 1.04.
Quorum.
Except as otherwise required by law or by the
Certificate of Incorporation, at each meeting of stockholders the presence in person or by proxy of the holders of record of a majority in voting power of the shares entitled to vote at a meeting of
stockholders shall constitute a quorum for the transaction of business at such meeting. Shares of its own stock belonging to the Corporation or to another corporation, if a majority of the shares
entitled to vote in the election of directors of such other corporation is held, directly or indirectly, by the Corporation, shall neither be entitled to vote nor be counted for quorum purposes;
provided, however, that the foregoing shall not limit the right of the Corporation or any subsidiary of the Corporation to vote stock, including but not limited to its own stock, held by it in a
fiduciary capacity.
Section 1.05.
Voting.
If, pursuant to Section 5.05 of these
By-Laws, a record date has been fixed, every holder of record of shares entitled to vote at a meeting of stockholders shall be entitled to one (1) vote for each share outstanding in
his or her name on the books of the Corporation at the close of business on such record date. If no record date has been fixed, then every holder of record of shares entitled to vote at a meeting of
stockholders shall be entitled to one (1) vote for each share of stock standing in his or her name on the books of the Corporation at the close of business on the day next preceding the day on
which notice of the meeting is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. Except as otherwise required by law, the
Certificate of Incorporation or these By-Laws, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at a meeting and voting for
nominees in the election of directors, and in all other matters, the affirmative vote of the majority of shares present in person or represented by proxy at a meeting and voting on the subject matter
shall be the act of the stockholders.
Section 1.06.
Voting By Ballot.
No vote of the stockholders on an election
of Directors need be taken by written ballot or by electronic transmission unless otherwise required by law. Any vote not required to be taken by ballot or by electronic transmission may be conducted
in any manner approved by the Board of Directors prior to the meeting at which such vote is taken.
Section 1.07.
Adjournment.
If a quorum is not present at any meeting of the
stockholders, the stockholders present in person or by proxy shall have the power to adjourn any such meeting from time to time until a quorum is present. Notice of any adjourned meeting of the
stockholders of the Corporation need not be given if the place, if any, date and hour thereof are announced at the meeting at which the adjournment is taken, provided, however, that if the adjournment
is for more than thirty (30) days, or if after the adjournment a new record date for the adjourned meeting is fixed pursuant to Section 5.05 of these By-Laws, a notice of the
adjourned meeting, conforming to the requirements of Section 1.03 hereof, shall be given to each stockholder of record entitled to vote at such meeting. At
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any
adjourned meeting at which a quorum is present, any business may be transacted that might have been transacted on the original date of the meeting.
Section 1.08.
Proxies.
Any stockholder entitled to vote at any meeting of
the stockholders may authorize another person or persons to vote at any such meeting and express such vote on behalf of him or her by proxy. A stockholder may authorize a valid proxy by executing a
written instrument signed by such stockholder, or by causing his or her signature to be affixed to such writing by any reasonable means including, but not limited to, by facsimile signature, or by
transmitting or authorizing the transmission of a telegram, cablegram or other means of electronic transmission to the person designated as the holder of the proxy, a proxy solicitation firm or a like
authorized agent. No such proxy shall be voted or acted upon after the expiration of three (3) years from the date of such proxy, unless such proxy provides for a longer period. Every proxy
shall be revocable at the pleasure of the stockholder executing it, except in those cases where applicable law provides that a proxy shall be irrevocable. A stockholder may revoke any proxy which is
not irrevocable by attending the meeting and voting in person or by filing with the Secretary of the Corporation either an instrument in writing revoking the proxy or another duly executed proxy
bearing a later date. Proxies by telegram, cablegram or other electronic transmission must either set forth or be submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder. Any copy, facsimile telecommunication or other reliable reproduction of a writing or transmission created pursuant to this
section may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.
Section 1.09.
Organization; Procedure.
At every meeting of stockholders the
presiding officer shall be the Chairman of the Board or, in the event of his or her absence or disability, a presiding officer chosen by the Board of Directors. The Secretary of the Corporation, or in
the event of his or her absence or disability, an Assistant Secretary, if any, or if there be no Assistant Secretary, in the absence of the Secretary of the Corporation, an appointee of the presiding
officer, shall act as Secretary of the meeting. The order of business and all other matters of procedure at every meeting of stockholders may be determined by such presiding officer.
Section 1.10.
Notice Of Stockholder Business And Nominations.
(a)
Annual
Meetings Of Stockholders.
-
(i)
-
Nominations
of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of
stockholders (A) by or at the direction of the Board of Directors or the Chairman of the Board, or (B) by any stockholder of the Corporation who is entitled to vote at the meeting, who
complies with the notice procedures set forth in clauses (ii) and (iii) of this paragraph and who was a stockholder of record at the time such notice is delivered to the Secretary of the
Corporation.
-
(ii)
-
For
nominations or other business to be properly brought before an annual meeting by a stockholder, pursuant to clause (B) of paragraph (a)(i) of this
Section 1.10, the stockholder must have given timely notice thereof in writing or by electronic transmission to the Secretary of the Corporation. To be timely, a stockholder's notice shall be
delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not fewer than ninety (90) days nor more than one hundred twenty (120) days prior to
the first anniversary of the preceding year's annual meeting and in any event at least forty-five (45) days prior to the first anniversary of the date on which the registrant first
mailed its proxy materials for the prior year's annual meeting of stockholders; PROVIDED, that if the date of the annual meeting is more than thirty (30) days before
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or
more than seventy (70) days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than one hundred twenty (120) days prior to such
annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth (10th) day following the day on which public announcement of
the date of such meeting is first made. In no event shall the adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. Such
stockholder's notice shall set forth (A) as to each person whom the stockholder proposes to nominate for election or reelection as a Director all information relating to such person that is
required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or any successor provisions, including such person's written consent to being named in the proxy statement as a nominee and to serving as a Director if elected;
(B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting
such business at the meeting and any material interest in such business of such stockholder and of any beneficial owner on whose behalf the proposal is made; and (C) as to the stockholder
giving the notice and any beneficial owner on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the Corporation's books, and of
such beneficial owner and (2) the class and number of shares of the Corporation which are owned of record by such stockholder and beneficially by such beneficial owner.
-
(iii)
-
Notwithstanding
anything in the second sentence of paragraph (a)(ii) of this Section 1.10 to the contrary, in the event that the number of Directors to be
elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors
made by the Corporation at least one hundred (100) days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice under this paragraph shall also be
considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of
the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation.
(b)
Special
Meetings Of Stockholders.
Only such business as shall have been brought before the special meeting of the stockholders
pursuant to the Corporation's notice of meeting pursuant to Section 1.03 of these By-Laws shall be conducted at such meeting. Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which Directors are to be elected pursuant to the Corporation's notice of meeting (1) by or at the direction of the Board of
Directors or (2) by any stockholder of the Corporation who is entitled to vote at the meeting, who complies with the notice procedures set forth in this Section 1.10 and who is a
stockholder of record at the time such notice is delivered to the Secretary of the Corporation. Nominations by stockholders of persons for election to the Board of Directors may be made at such
special meeting of stockholders if the stockholder's notice as required by paragraph (a)(ii) of this Section 1.10 shall be delivered to the Secretary of the Corporation at the
principal executive offices of the Corporation not earlier than the one hundred and twentieth (120th) day prior to such special meeting and not later than the close of business on the later of the
ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed
by the Board of Directors to be elected at such meeting. In no event shall the adjournment of a special meeting commence a new time period for the giving of a stockholder's notice as described above.
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(c)
General.
-
(i)
-
Only
persons who are nominated in accordance with the procedures set forth in this Section 1.10 shall be eligible to serve as Directors and only such business shall be
conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.10. Except as otherwise provided by law, the
Certificate of Incorporation or these By-Laws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the
meeting was made in accordance with the procedures set forth in this Section 1.10 and, if any proposed nomination or business is not in compliance with this Section 1.10, to declare that
such defective proposal or nomination shall be disregarded.
-
(ii)
-
For
purposes of this Section 1.10, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable
national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act.
-
(iii)
-
Notwithstanding
the foregoing provisions of this Section 1.10, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in this Section 1.10. Nothing in this Section 1.10 shall be deemed to affect any rights (A) of stockholders to request
inclusion of proposals in the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act, or (B) of the holders of any series of Preferred Stock, if any, to
elect Directors if so provided under any applicable Preferred Stock Certificate of Designations (as defined in the Certificate of Incorporation).
Section 1.11.
Inspectors Of Elections.
Preceding any meeting of the
stockholders, the Board of Directors shall appoint one (1) or more persons to act as Inspectors of Elections, and may designate one (1) or more alternate inspectors. In the event no
inspector or alternate is able to act, the person presiding at the meeting shall appoint one (1) or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of
the duties of an inspector, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspector shall:
(a) ascertain
the number of shares outstanding and the voting power of each;
(b) determine
the shares represented at a meeting and the validity of proxies and ballots;
(c) specify
the information relied upon to determine the validity of electronic transmissions in accordance with Section 1.08 hereof;
(d) count
all votes and ballots;
(e) determine
and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors;
(f) certify
his or her determination of the number of shares represented at the meeting, and his or her count of all votes and ballots;
(g) appoint
or retain other persons or entities to assist in the performance of the duties of inspector; and
(h) when
determining the shares represented and the validity of proxies and ballots, be limited to an examination of the proxies, any envelopes submitted with those proxies,
any information provided in accordance with Section 1.08 of these By-Laws, ballots and the regular books and records of the
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Corporation.
The inspector may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers or their nominees or a similar
person which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspector considers other reliable
information as outlined in this section, the inspector, at the time of his or her certification pursuant to paragraph (f) of this section, shall specify the precise information considered, the
person or persons from whom the information was obtained, when this information was obtained, the means by which the information was obtained, and the basis for the inspector's belief that such
information is accurate and reliable.
Section 1.12.
Opening And Closing Of Polls.
The date and time for the
opening and the closing of the polls for each matter to be voted upon at a stockholder meeting shall be announced at the meeting. The inspector shall be prohibited from accepting any ballots, proxies
or votes or any revocations thereof or changes thereto after the closing of the polls, unless the Delaware Court of Chancery upon application by a stockholder shall determine otherwise.
Section 1.13.
No Stockholder Action By Written Consent.
Effective as of the
time that the American Express Company, a New York corporation ("American Express") distributes the Common Stock of the Corporation to American Express stockholders, any action required or permitted
to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of the stockholders of the Corporation, and the ability of the stockholders to consent in
writing to the taking of any action is specifically denied.
Article II
Board Of Directors
Section 2.01.
General Powers.
Except as may otherwise be provided by law,
the Certificate of Incorporation or these By-Laws, the property, affairs and business of the Corporation shall be managed by or under the direction of the Board of Directors and the Board
of Directors may exercise all the powers of the Corporation.
Section 2.02.
Number Of Directors.
Subject to the rights of the holders of
any class or series of Preferred Stock, if any, the number of Directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the entire Board of Directors;
provided, however, that the Board of Directors shall at no time consist of fewer than three (3) Directors.
Section 2.03.
Classified Board Of Directors; Election Of Directors.
The
Directors of the Corporation, subject to the rights of the holders of shares of any class or series of Preferred Stock, shall be classified with respect to the time for which they severally hold
office, into three (3) classes, as nearly equal in number as possible, one class ("Class I") whose initial term expires at the 2006 annual meeting of stockholders, another class
("Class II") whose initial term expires at the 2007 annual meeting of stockholders, and another class ("Class III") whose initial term expires at the 2008 annual meeting of stockholders,
with each class to hold office until its successors are elected and qualified. Except as otherwise provided in Sections 2.12 and 2.13 of these By-Laws, at each annual meeting of
stockholders of the Corporation, and subject to the rights of the holders of shares of any class or series of Preferred Stock, the successors of the class of Directors whose term expires at that
meeting shall be elected to hold office for a term expiring at the annual meeting of stockholders held in the third year following the year of their election.
Section 2.04.
The Chairman Of The Board.
The Directors shall elect from
among the members of the Board a "Chairman of the Board". The Chairman of the Board shall be deemed an officer of the Corporation and shall have such duties and powers as set forth in these
By-Laws or as shall otherwise be conferred upon the Chairman of the Board from time to time by the Board of Directors.
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The
Chairman of the Board may be the Chief Executive Officer of the Corporation. The Chairman of the Board shall, if present, preside over all meetings of the Stockholders and of the Board of
Directors. The Board of Directors shall by resolution establish a procedure to provide for an acting Chairman of the Board in the event the most recently elected Chairman of the Board is unable to
serve or act in that capacity.
Section 2.05.
Annual And Regular Meetings.
The annual meeting of the Board
of Directors for the purpose of electing officers and for the transaction of such other business as may come before the meeting shall be held after the annual meeting of the stockholders and may be
held at such places within or without the State of Delaware and at such times as the Board may from time to time determine, and if so determined notice thereof need not be given. Notice of such annual
meeting of the Board of Directors need not be given. The Board of Directors from time to time may by resolution provide for the holding of regular meetings and fix the place (which may be within or
without the State
of Delaware) and the date and hour of such meetings. Notice of regular meetings need not be given, provided, however, that if the Board of Directors shall fix or change the time or place of any
regular meeting, notice of such action shall be mailed promptly, or sent by telephone, including a voice messaging system or other system or technology designed to record and communicate messages,
telegraph, facsimile, electronic mail or other electronic means, to each Director who shall not have been present at the meeting at which such action was taken, addressed to him or her at his or her
usual place of business, or shall be delivered to him or her personally. Notice of such action need not be given to any Director who attends the first regular meeting after such action is taken
without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice, whether before or after such meeting.
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Section 2.06.
Special Meetings; Notice.
Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, Chief Executive Officer (or, in the event of his or her absence or disability, by the President or any Executive Vice President),
or by the Board of Directors pursuant to the following sentence, at such place (within or without the State of Delaware), date and hour as may be specified in the respective notices or waivers of
notice of such meetings. Special meetings of the Board of Directors also may be held whenever called pursuant to a resolution approved by a majority of the entire Board of Directors. Special meetings
of the Board of Directors may be called on twenty-four (24) hours' notice, if notice is given to each Director personally or by telephone, including a voice messaging system, or
other system or technology designed to record and communicate messages, telegraph, facsimile, electronic mail or other electronic means, or on five (5) days' notice, if notice is mailed to each
Director, addressed to him or her at his or her usual place of business or to such other address as any Director may request by notice to the Secretary. Notice of any special meeting need not be given
to any Director who attends such meeting without protesting the lack of notice to him or her, prior to or at the commencement of such meeting, or to any Director who submits a signed waiver of notice,
whether before or after such meeting, and any business may be transacted thereat.
Section 2.07.
Quorum; Voting.
At all meetings of the Board of Directors, the
presence of at least a majority of the total authorized number of Directors shall constitute a quorum for the transaction of business. Except as otherwise required by law, the vote of at least a
majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.
Section 2.08.
Adjournment.
A majority of the Directors present, whether or
not a quorum is present, may adjourn any meeting of the Board of Directors to another time or place. No notice need be given of any adjourned meeting unless the time and place of the adjourned meeting
are not announced at the time of adjournment, in which case notice conforming to the requirements of Section 2.05 of these By-Laws shall be given to each Director.
Section 2.09.
Action Without A Meeting.
Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission, and such writing,
writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing may be in paper form or in electronic form.
Section 2.10.
Regulations; Manner Of Acting.
To the extent consistent with
applicable law, the Certificate of Incorporation and these By-Laws, the Board of Directors may adopt by resolution such rules and regulations for the conduct of meetings of the Board of
Directors and for the management of the property, affairs and business of the Corporation as the Board of Directors may
deem appropriate. The Directors shall act only as a Board of Directors and the individual Directors shall have no power in their individual capacities unless expressly authorized by the Board of
Directors.
Section 2.11.
Action By Telephonic Communications.
Members of the Board of
Directors may participate in a meeting of the Board of Directors by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear
each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.
Section 2.12.
Resignations.
Any Director may resign at any time by
submitting an electronic transmission or by delivering a written notice of resignation, signed by such Director, to the Chairman of the Board or the Secretary. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
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Section 2.13.
Removal Of Directors.
Subject to the rights of the holders of
any class or series of Preferred Stock, if any, to elect additional Directors under specified circumstances, any Director may be removed at any time, but only for cause, upon the affirmative vote of
the holders of a majority of the combined voting power of the then outstanding stock of the Corporation entitled to vote generally in the election of Directors. Any vacancy in the Board of Directors
caused by any such removal may be filled at a meeting duly called by the stockholders entitled to vote for the election of the Director so removed. If such stockholders do not fill such vacancy at
such meeting, such vacancy may be filled in the manner provided in Section 2.14 of these By-Laws.
Section 2.14.
Vacancies And Newly Created Directorships.
Subject to the
rights of the holders of any class or series of Preferred Stock, if any, to elect additional Directors under specified circumstances, and except as provided in Section 2.13, if any vacancies
shall occur in the Board of Directors, by reason of death, resignation, removal or otherwise, or if the authorized number of Directors shall be increased, the Directors then in office shall continue
to act, and such vacancies and newly created Directorships may be filled by a majority of the Directors then in office, although less than a quorum. Any Director filling a vacancy shall be of the same
class as that of the Director whose death, resignation, removal or other event caused the vacancy, and any Director filling a newly created Directorship shall be of the class specified by the Board of
Directors at the time the newly created Directorships were created. A Director elected to fill a vacancy or a newly created Directorship shall hold office until his or her successor has been elected
and qualified or until his or her earlier death, resignation or removal.
Section 2.15.
Compensation.
The amount, if any, which each Director shall be
entitled to receive as compensation for such Director's services as such shall be fixed from time to time by resolution of the Board of Directors.
Section 2.16.
Reliance On Accounts And Reports, Etc.
A Director, or a member
of any committee designated by the Board of Directors shall, in the performance of such Director's or member's duties, be fully protected in relying in good faith upon the records of the Corporation
and upon information, opinions, reports or statements presented to the Corporation by any of the Corporation's officers or employees, or committees designated by the Board of Directors, or by any
other person as to the matters the Director or the member reasonably believes are within such other person's professional or expert competence and who the Director or member reasonably believes or
determines has been selected with reasonable care by or on behalf of the Corporation.
Article III
Committees
Section 3.01.
Committees.
The Board of Directors, by resolution adopted by
the affirmative vote of a majority of Directors then in office, may designate from among its members one (1) or more committees of the Board of Directors, each committee to consist of such
number of Directors as from time to time may be fixed by the Board of Directors. Any such committee shall serve at the pleasure of the Board of Directors. Each such committee shall have the powers and
duties delegated to it by the Board of Directors, subject to the limitations set forth in applicable Delaware law. The Board of Directors may appoint a Chairman of any committee, who shall preside at
meetings of any such committee. The Board of Directors may elect one or more of its members as alternate members of any such committee who may take the place of any absent member or members at any
meeting of such committee, upon request of the Chairman of the Board or the Chairman of such committee.
Section 3.02.
Powers.
Each committee shall have and may exercise such powers
of the Board of Directors as may be provided by resolution or resolutions of the Board of Directors. No committee shall have the power or authority: to approve or adopt, or recommend to the
stockholders, any action
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or
matter expressly required by the Delaware General Corporation Law to be submitted to the stockholders for approval; or to adopt, amend or repeal the By-Laws of the Corporation.
Section 3.03.
Proceedings.
Each such committee may fix its own rules of
procedure and may meet at such place (within or without the State of Delaware), at such time and upon such notice, if any, as it shall determine from time to time. Each such committee shall keep
minutes of its proceedings and shall report such proceedings to the Board of Directors at the meeting of the Board of Directors next following any such proceedings.
Section 3.04.
Quorum and Manner of Acting.
Except as may be otherwise
provided in the resolution creating such committee, at all meetings of any committee, the presence of members (or alternate members) constituting a majority of the total authorized membership of such
committee shall constitute a quorum for the transaction of business. The act of the majority of the members present at any meeting at which a quorum is present shall be the act of such committee. Any
action required or permitted to be taken at any meeting of any such committee may be taken without a meeting, if all members of such committee shall consent to such action in writing or by electronic
transmission and such writing, writings or electronic transmission or transmissions are filed with the minutes of the proceedings of the committee. Such filing shall be in paper form if the minutes
are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. The members of any such committee shall act only as a committee, and the individual
members of such committee shall have no power in their individual capacities unless expressly authorized by the Board of Directors.
Section 3.05.
Action by Telephonic Communications.
Unless otherwise provided
by the Board of Directors, members of any committee may participate in a meeting of such committee by means of conference telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting pursuant to this provision shall constitute presence in person at such meeting.
Section 3.06.
Absent or Disqualified Members.
In the absence or
disqualification of a member of any committee, if no alternate member is present to act in his or her stead, the member or members thereof present at any meeting and not disqualified from voting,
whether or not he, she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.
Section 3.07.
Resignations.
Any member (and any alternate member) of any
committee may resign at any time by delivering a written notice of resignation, signed by such member, to the Board of Directors or the Chairman of the Board. Unless otherwise specified therein, such
resignation shall take effect upon delivery.
Section 3.08.
Removal.
Any member (and any alternate member) of any
committee may be removed at any time, either for or without cause, by resolution adopted by a majority of the whole Board of Directors.
Section 3.09.
Vacancies.
If any vacancy shall occur in any committee, by
reason of disqualification, death, resignation, removal or otherwise, the remaining members (and any alternate members) shall continue to act, and any such vacancy may be filled by the Board of
Directors.
Article IV
Officers
Section 4.01.
Chief Executive Officer.
The Board of Directors shall select a
Chief Executive Officer to serve at the pleasure of the Board of Directors who shall (a) supervise the carrying out of policies adopted or approved by the Board of Directors,
(b) exercise a general supervision and superintendence over all the business and affairs of the Corporation, and (c) possess such other powers
10
and
perform such other duties as may be assigned to him or her by these By-Laws, as may from time to time be assigned by the Board of Directors and as may be incident to the office of
Chief Executive Officer.
Section 4.02.
Secretary Of The Corporation.
The Board of Directors shall
appoint a Secretary of the Corporation to serve at the pleasure of the Board of Directors. The Secretary of the Corporation shall (a) keep minutes of all meetings of the stockholders and of the
Board of Directors, (b) authenticate records of the Corporation and (c) in general, have such powers and perform such other duties as may be assigned to him or her by these
By-Laws, as may from time to time be assigned to him or her by the Board of Directors or the Chief Executive Officer and as may be incident to the office of Secretary of the Corporation.
Section 4.03.
Other Officers Elected By Board Of Directors.
At any meeting
of the Board of Directors, the Board of Directors may elect a President, Vice Presidents, a Chief Financial Officer, a Treasurer, Assistant Treasurers, Assistant Secretaries, or such other officers of
the Corporation as the Board of Directors may deem necessary, to serve at the pleasure of the Board of Directors. Other officers elected by the Board of Directors shall have such powers and perform
such duties as may be assigned to such officers by or pursuant to authorization of the Board of Directors or by the Chief Executive Officer.
Section 4.04.
Other Officers.
The Board of Directors may authorize the
Corporation to elect or appoint other officers, including Vice Presidents, Assistant Treasurers, Assistant Secretaries and other officers of the Corporation, each of whom shall serve at the pleasure
of the Corporation. Officers elected or appointed by the Corporation shall have such powers and perform such duties as may be assigned to them by the Corporation.
Section 4.05.
Removal And Resignation; Vacancies.
Any officer may be removed
for or without cause at any time by the Board of Directors. Any officer may resign at any time by delivering a written notice of resignation, signed by such officer, to the Board of Directors, the
Chief Executive Officer or the Secretary. Unless otherwise specified therein, such resignation shall take effect upon delivery. Any vacancy occurring in any office of the Corporation by death,
resignation, removal or otherwise, shall be filled by or pursuant to authorization of the Board of Directors.
Section 4.06.
Authority And Duties Of Officers.
The officers of the
Corporation shall have such authority and shall exercise such powers and perform such duties as may be specified in these By-Laws, except that in any event each officer shall exercise such
powers and perform such duties as may be required by law.
Article V
Capital Stock
Section 5.01.
Certificates Of Stock, Uncertificated Shares.
The shares of
the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution or resolutions that some or all of any or all classes or series of the stock of the
Corporation shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until each such certificate is surrendered to the Corporation. Notwithstanding
the adoption of such a resolution by the Board of Directors, every holder of stock in the Corporation represented by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of, the Corporation, by the Chairman of the Board, the Chief Executive Officer or the President, and by the Chief Financial Officer, the
Treasurer or an Assistant Treasurer, or the Secretary of the Corporation or an Assistant Secretary, representing the number of shares registered in certificate form. Such certificate shall be in such
form as the Board of Directors may
11
determine,
to the extent consistent with applicable law, the Certificate of Incorporation and these By-Laws.
Section 5.02.
Signatures; Facsimile.
All signatures on the certificate
referred to in Section 5.01 of these By-Laws may be in facsimile, engraved or printed form, to the extent permitted by law. In case any officer, transfer agent or registrar who has
signed, or whose facsimile, engraved or printed signature has been placed upon a certificate, shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.
Section 5.03.
Lost, Stolen Or Destroyed Certificates.
The Board of Directors
may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon delivery to the Corporation of an
affidavit of the owner or owners of such certificate, setting forth such allegation. The Corporation may require the owner of such lost, stolen or destroyed certificate, or his or her legal
representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or
the issuance of any such new certificate.
Section 5.04.
Transfer Of Stock.
Upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares, duly endorsed or accompanied by appropriate evidence of succession, assignment or authority to transfer, the Corporation shall issue a
new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Within a reasonable time after the transfer of uncertificated stock, the
Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to the laws of the General Corporation
Law of the State of Delaware. Subject to the provisions of the Certificate of Incorporation and these By-Laws, the Board of Directors may prescribe such additional rules and regulations as
it may deem appropriate relating to the issue, transfer and registration of shares of the Corporation.
Section 5.05.
Record Date.
In order to determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date on which the
resolution fixing the record date is adopted by the Board of Directors, and which shall not be more than sixty (60) nor fewer than ten (10) days before the date of such meeting. A
determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting. In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any
rights of the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such
action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution
relating thereto.
Section 5.06.
Registered Stockholders.
Prior to due surrender of a
certificate for registration of transfer, the Corporation may treat the registered owner as the person exclusively entitled to receive dividends and other distributions, to vote, to receive notice and
otherwise to exercise all the rights and powers of the owner of the shares represented by such certificate, and the Corporation shall not be bound to recognize any equitable or legal claim to or
interest in such shares on the part of any other person, whether or not the Corporation shall have notice of such claim or interests. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented to the Corporation for transfer or uncertificated shares are requested to be
transferred, both the transferor and transferee request the Corporation to do so.
12
Section 5.07.
Transfer Agent And Registrar.
The Board of Directors may
appoint one (1) or more transfer agents and one (1) or more registrars, and may require all certificates representing shares to bear the signature of any such transfer agents or
registrars.
Article VI
Indemnification
Section 6.01.
Nature Of Indemnity.
The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding (a "Proceeding"), whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was or has agreed to become a Director or officer of the Corporation, or is or was serving or has agreed to serve at the request of the
Corporation as a Director or officer, of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity,
and may indemnify any person who was or is a party or is threatened to be made a party to such a Proceeding by reason of the fact that he or she is or was or has agreed to become an employee or agent
of the Corporation, or is or was serving or has agreed to serve at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such Proceeding
and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any
criminal Proceeding, had no reasonable cause to believe his or her conduct was unlawful; except that in the case of a Proceeding by or in the right of the Corporation to procure a judgment in its
favor (1) such indemnification shall be limited to expenses (including attorneys' fees) actually and reasonably incurred by such person in the defense or settlement of such Proceeding, and
(2) no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that
the Delaware Court of Chancery or the court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. Notwithstanding the foregoing, but
subject to Section 6.05 of these By-Laws, the Corporation shall not be obligated to indemnify a Director or officer of the Corporation in respect of a Proceeding (or part thereof)
instituted by such Director or officer, unless such Proceeding (or part thereof) has been authorized by the Board of Directors. The termination of any Proceeding by judgment, order settlement,
conviction, or upon a plea of
nolo contendere
or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith
and in a manner which he or she reasonably believed to be in or not opposed to the best
interests of the Corporation, and, with respect to any criminal Proceeding, had reasonable cause to believe that his or her conduct was unlawful.
Section 6.02.
Successful Defense.
To the extent that a present or former
Director or officer of the Corporation has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 6.01 hereof or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by such person in connection therewith.
Section 6.03.
Determination That Indemnification Is Proper.
Any
indemnification of a present or former Director or officer of the Corporation under Section 6.01 hereof (unless ordered by a court) shall be made by the Corporation unless a determination is
made that indemnification of the present or former Director or officer is not proper in the circumstances because he or she has not met the applicable standard of conduct set forth in
Section 6.01 hereof. Any indemnification of a present or former employee or agent of the Corporation under Section 6.01 hereof (unless ordered by a court)
13
may
be made by the Corporation upon a determination that indemnification of the present or former employee or agent is proper in the circumstances because he or she has met the applicable standard of
conduct set forth in Section 6.01 hereof. Any such determination shall be made, with respect to a person who is a Director or officer at the time of such determination, (1) by a majority
vote of the Directors who are not parties to such Proceeding, even though less than a quorum, or (2) by a committee of such Directors designated by majority vote of such Directors, even though
less than a quorum, or (3) if there are no such Directors, or if such Directors so direct, by independent legal counsel in a written opinion, or (4) by the stockholders.
Section 6.04.
Advance Payment Of Expenses.
Expenses (including attorneys'
fees) incurred by a Director or officer in defending any civil, criminal, administrative or investigative Proceeding shall be paid by the Corporation in advance of the final disposition of such
Proceeding upon receipt of an undertaking by or on behalf of the Director or officer to repay such amount if it shall ultimately be determined that such person is not entitled to be indemnified by the
Corporation as authorized in this Article. Such expenses (including attorneys' fees) incurred by former Directors and officers or other employees and agents may be so paid upon such terms and
conditions, if any, as the Corporation deems appropriate. The Board of Directors may authorize the Corporation's counsel to represent such Director, officer, employee or agent in any Proceeding,
whether or not the Corporation is a party to such Proceeding.
Section 6.05.
Procedure For Indemnification Of Directors And Officers.
Any
indemnification of a Director or officer of the Corporation under Sections 6.01 and 6.02, or advance of costs, charges and expenses to a Director or officer under Section 6.04 of these
By-Laws, shall be made promptly, and in any event within thirty (30) days, upon the written request of the Director or officer. If a determination by the Corporation that the
Director or officer is entitled to indemnification pursuant to this Article VI is required, and the Corporation fails to respond within thirty (30) days to a written request for
indemnity, the Corporation shall be deemed to have approved such request. If the
Corporation denies a written request for indemnity or advancement of expenses, in whole or in part, or if payment in full pursuant to such request is not made within thirty (30) days, the right
to indemnification or advances as granted by this Article VI shall be enforceable by the Director or officer in any court of competent jurisdiction. Such person's costs and expenses incurred in
connection with successfully establishing his or her right to indemnification, in whole or in part, in any such Proceeding shall also be indemnified by the Corporation. It shall be a defense to any
such Proceeding (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Section 6.04 of these By-Laws where the required undertaking,
if any, has been received by the Corporation) that the claimant has not met the standard of conduct set forth in Section 6.01 of these By-Laws, but the burden of proving such
defense shall be on the Corporation. Neither the failure of the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) to have made a determination prior
to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Section 6.01 of
these By-Laws, nor the fact that there has been an actual determination by the Corporation (including its Board of Directors, its independent legal counsel, and its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.
Section 6.06.
Survival; Preservation Of Other Rights.
The foregoing
indemnification provisions shall be deemed to be a contract between the Corporation and each Director, officer, employee and agent who serves in any such capacity at any time while these provisions as
well as the relevant provisions of the Delaware General Corporation Law are in effect and any repeal or modification thereof shall not affect any right or obligation then existing with respect to any
state of facts then or previously existing or any Proceeding previously or thereafter brought or threatened based in whole or in part upon any such state of facts. Such a "contract right" may not be
modified retroactively without
14
the
consent of such Director, officer, employee or agent. The indemnification provided by this Article VI shall not be deemed exclusive of any other rights to which those indemnified may be
entitled under any by-law, agreement, vote of stockholders or disinterested Directors or otherwise, both as to action in such person's official capacity and as to action in another
capacity while holding such office, and shall continue as to a person who has ceased to be a Director, officer, employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 6.07.
Insurance.
The Corporation may purchase and maintain insurance
on behalf of any person who is or was or has agreed to become a Director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a Director or
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person or on such
person's behalf in any such capacity, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the
provisions of this Article VI.
Section 6.08.
Severability.
If this Article VI or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Director or officer and may indemnify each employee or agent of the
Corporation as to costs, charges and expenses (including attorneys' fees), judgments, fines and amounts paid in settlement with respect to a Proceeding, whether civil, criminal, administrative or
investigative, including a Proceeding by or in the right of the Corporation, to the fullest extent permitted by any applicable portion of this Article VI that shall not have been invalidated
and to the fullest extent permitted by applicable law.
Article VII
Offices
Section 7.01.
Initial Registered Office.
The registered office of the
Corporation in the State of Delaware shall be located at Corporation Trust Center, 1209 N. Orange Street in the City of Wilmington, County of New Castle.
Section 7.02.
Other Offices.
The Corporation may maintain offices or places
of business at such other locations within or without the State of Delaware as the Board of Directors may from time to time determine or as the business of the Corporation may require.
Article VIII
General Provisions
Section 8.01.
Dividends.
Subject to any applicable provisions of law and the
Certificate of Incorporation, dividends upon the shares of the Corporation may be declared by the Board of Directors at any regular or special meeting of the Board of Directors and any such dividend
may be paid in cash, property, or shares of the Corporation's capital stock. A member of the Board of Directors, or a member of any committee designated by the Board of Directors shall be fully
protected in relying in good faith upon the records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or
committees of the Board of Directors, or by any other person as to matters the Director reasonably believes are within such other person's professional or expert competence and who has been selected
with reasonable care by or on behalf of the Corporation, as to the value and amount of the assets, liabilities and/or net profits of the Corporation,
or any other facts pertinent to the existence and amount of surplus or other funds from which dividends might properly be declared and paid.
Section 8.02.
Execution Of Instruments.
The Board of Directors may
authorize, or provide for the authorization of, officers, employees or agents to enter into any contract or execute and deliver any
15
instrument
in the name and on behalf of the Corporation. Any such authorization must be in writing or by electronic transmission and may be general or limited to specific contracts or instruments.
Section 8.03.
Voting As Stockholder.
Unless otherwise determined by
resolution of the Board of Directors, the Chief Executive Officer, the President, any Executive Vice President or any Senior Vice President shall have full power and authority on behalf of the
Corporation to attend any meeting of stockholders of any corporation in which the Corporation may hold stock, and to act, vote (or execute proxies to vote) and exercise in person or by proxy all other
rights, powers and privileges incident to the ownership of such stock. Such officers acting on behalf of the Corporation shall have full power and authority to execute any instrument expressing
consent to or dissent from any action of any such corporation without a meeting. The Board of Directors may by resolution from time to time confer such power and authority upon any other person or
persons.
Article IX
Amendment Of By-Laws
These By-Laws may be amended, altered or repealed by resolution adopted by a majority of the Board of Directors at any special or regular meeting of
the Board of Directors if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of such meeting or at any regular or
special meeting of the stockholders upon the affirmative vote of the holders of three-fourths (
3
/
4
) or more of the combined voting power of the outstanding shares of the Corporation
entitled to vote generally in the election of Directors if, in the case of such special meeting only, notice of such amendment, alteration or repeal is contained in the notice or waiver of notice of
such meeting.
Article X
Construction
In the event of any conflict between the provisions of these By-Laws as in effect from time to time and the provisions of the Certificate of
Incorporation of the Corporation as in effect from time to time, the provisions of such Certificate of Incorporation shall be controlling.
16
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AMENDED AND RESTATED BYLAWS OF AMERIPRISE FINANCIAL, INC. Article I Stockholders
Article II Board Of Directors
Article III Committees
Article IV Officers
Article V Capital Stock
Article VI Indemnification
Article VII Offices
Article VIII General Provisions
Article IX Amendment Of By-Laws
Article X Construction
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Exhibit 10.1
TRANSITION SERVICES AGREEMENT
This TRANSITION SERVICES AGREEMENT (this "
Agreement
") is entered into this 30
th
day of September,
2005, by and between American Express Company, a New York corporation ("
AXP
"), and Ameriprise Financial, Inc., a Delaware corporation
("
Ameriprise
," and, together with AXP, each a "
Party
" and collectively, the
"
Parties
").
RECITALS
WHEREAS, the Board of Directors of AXP has determined that it is in the best interests of AXP to separate the Ameriprise Business (as defined below) and the AXP
Business (as defined below) into two independent public companies, on the terms and subject to the conditions set forth in the Separation Agreement (as defined below), in order to resolve issues
related to the allocation of capital and management resources between the Ameriprise Business and the AXP Business, and to give Ameriprise greater flexibility to manage, invest in, and expand the
Ameriprise Business while ensuring that AXP can focus its time and resources on the development of the AXP Business;
WHEREAS,
in order to effectuate the foregoing, AXP and Ameriprise have entered into a Separation and Distribution Agreement, dated as of August 24, 2005 (the
"
Separation Agreement
"), pursuant to which and subject to the terms and conditions set forth therein, the Ameriprise Business shall be separated from
the AXP Business and the Ameriprise Common Stock (as defined below) shall be distributed on a
pro rata
basis to AXP shareholders; and
WHEREAS,
in connection therewith and in order to ensure an orderly transition under the Separation Agreement, AXP desires to provide, through the AXP Service Providers (as defined
below), to Ameriprise and its relevant Affiliates, as applicable, with certain transition services (the "
AXP Services
") with respect to the operation of
Ameriprise and its relevant Affiliates following the Distribution Date (as defined below), and Ameriprise desires to provide, through the Ameriprise Service Providers (as defined below), to AXP and
its Affiliates, as applicable, with certain transition services (the "
Ameriprise Services
") with respect to the operation of AXP and its relevant
Affiliates
following the Distribution Date, as such AXP Services and Ameriprise Services are more fully described in separate schedules (all such schedules, including any appendices, exhibits or other
attachments thereto, the "
Schedules
," and each, a "
Schedule
") to this Agreement.
NOW,
THEREFORE, in consideration of the promises and covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, AXP and Ameriprise hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Capitalized
terms used herein, but not defined herein shall have the meanings assigned to such terms in the Separation Agreement, as it may be amended from time to time
in accordance with the terms thereof, and the following terms shall have the meanings set forth below:
"Ameriprise Data"
means all data relating primarily to the Ameriprise Business (including all files, records and other Information
relating primarily to the Ameriprise Business that have been uploaded to Software at any time since AXP or Ameriprise began using such Software, whether uploaded prior to, on, or after the
Distribution Date).
"Additional Required AXP Service
" shall have the meaning assigned to it in Section 2.5.
"Additional Required Ameriprise Service"
shall have the meaning assigned to it in Section 2.6.
"Ameriprise"
shall have the meaning assigned to it in the preamble.
"Ameriprise Service Providers"
means Ameriprise, its Affiliates and any third party, in each case, to the extent such Person is providing
the Ameriprise Services on behalf of Ameriprise pursuant to any Schedule.
"Ameriprise Services"
shall have the meaning assigned to it in the recitals.
"Ameriprise Transition Plan"
shall have the meaning assigned to it in Section 2.9(b).
"AXP"
shall have the meaning assigned to it in the preamble.
"AXP Data"
means all data relating primarily to the AXP Business (including all files, records and other Information relating primarily to
the AXP Business that have been uploaded to Software at any time since AXP or Ameriprise began using such Software, whether uploaded prior to, on, or after the Distribution Date).
"AXP Service Providers"
means AXP, its Affiliates and any third party, in each case, to the extent such Person is providing the AXP
Services on behalf of AXP pursuant to any Schedule.
"AXP Services
" shall have the meaning assigned to it in the recitals.
"AXP Transition Plan"
shall have the meaning assigned to it in Section 2.9(c).
"Best Efforts"
means with respect to either Party, the efforts that such Party would use on behalf of itself to enforce its rights against
a third party or cause such third party to honor its obligations to such Party, under any agreement with such third party.
"Force Majeure Event"
means any act of God, fire, flood, storm or explosion; any strike, lockout or other labor disturbance; any material
shortage of facilities, labor, materials or equipment; any delay in transportation, breakdown or accident; any Law; any riot, war, act of terror, rebellion or insurrection; any embargo or fuel or
energy shortage; any interruption in telecommunications or utilities services; or any other event, in each case beyond the control of a Party and that actually prevents, hinders or delays such Party
from performing its obligations under this Agreement.
"Loss"
shall have the meaning assigned to it in Section 5.8.
"Party"
or
"Parties"
shall have the meaning assigned to such terms in the preamble.
"Prime Rate"
means the "prime rate" published in the "Money Rates" section of
The Wall Street
Journal
. If
The Wall Street Journal
ceases to publish the "prime rate," then the Parties shall mutually agree to an equivalent
publication that publishes such "prime rate," and if such "prime rate" is no longer generally published or is limited, regulated or administered by a Governmental Authority, then a comparable interest
rate index mutually agreed to by the Parties.
"Schedules
" shall have the meaning assigned to it in the recitals.
"
Separation Agreement
" shall have the meaning assigned to it in the recitals.
"Service Provider"
means the AXP Service Providers and/or the Ameriprise Service Providers, as the context requires.
"Service Recipient"
means either AXP, to the extent AXP is receiving a service from an Ameriprise Service Provider, or Ameriprise, to the
extent Ameriprise is receiving a service from an AXP Service Provider, as the context requires.
"Services"
means the AXP Services and/or the Ameriprise Services, as the context requires.
"SOX"
means the Sarbanes-Oxley Act of 2002, as amended from time to time.
"Taxing Authority"
shall have the meaning assigned to it in Section 3.5(a)(ii).
"Transaction Tax"
shall have the meaning assigned to it in Section 3.5(a)(i).
2
"Withheld Tax"
shall have the meaning assigned to it in Section 3.5(e).
1.2
General Interpretive Principles.
(a) Words in the singular shall include the plural and vice versa,
and words of one gender shall include the other gender, in each case, as the context requires, (b) the term "hereof," "herein," "hereunder" and "herewith" and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and references to Article, Section, paragraph, exhibit and Schedule are
references to the Articles, Sections, paragraphs, exhibits and Schedules to this Agreement unless otherwise specified, (c) the word "including" and words of similar import when used in this
Agreement shall mean "including, without limitation," unless otherwise specified and (d) any reference to any federal, state, local or non-U.S. statute or Law shall be deemed to
also refer to all rules and regulations promulgated thereunder, unless the context otherwise requires.
ARTICLE II
TRANSITION SERVICES
2.1
AXP Services.
During the term of this Agreement, AXP shall provide, or shall cause one or more AXP Service
Providers to provide, to Ameriprise and its applicable Affiliates (such Affiliates as determined by Ameriprise in its sole discretion), the AXP Services, as such AXP Services are more particularly
described in the applicable Schedules attached hereto, upon the terms and subject to the conditions of this Agreement and such applicable Schedules.
2.2
Ameriprise Services.
During the term of this Agreement, Ameriprise shall provide, or shall cause one or more
Ameriprise Service Providers to provide, to AXP and its applicable Affiliates (such Affiliates as determined by AXP in its sole discretion), the Ameriprise Services, as such Ameriprise Services are
more particularly described in the applicable Schedules attached hereto, upon the terms and subject to the conditions of this Agreement and such applicable Schedules.
2.3
Standard of Performance for AXP Services.
(a) AXP shall provide, or shall cause to be provided, the AXP
Services in a manner and at a level that is substantially similar in all material respects to the typical manner and average level at which such AXP Services were provided to Ameriprise or its
Affiliate during the three-month period prior to the Distribution Date, except to the extent that (i) a different manner or level of an AXP Service is set forth in a Schedule, in which case
such AXP Service shall be provided in the manner and level as set forth in each such applicable Schedule or (ii) such AXP Service has not been provided during the three-month period prior to
the Distribution Date and the applicable Schedule does not set forth a manner or level at which such AXP Service is to be provided, in which case, such AXP Service shall be provided in the same manner
and at the same level at which
such AXP Service was provided to Ameriprise or its Affiliate on the last occasion (or during the three-month period prior to the last occasion) such AXP Service was provided to Ameriprise or its
Affiliate.
(b) Notwithstanding
Section 2.3(a), AXP may change from time to time the manner and level at which any AXP Service is provided to Ameriprise, to the extent that AXP
is making a similar change in performing a substantially similar service for itself or its Affiliates and if AXP provides Ameriprise substantially the same notice (in content and timing) as AXP
provides itself and its Affiliates with respect to such change;
provided
, that, AXP may not make any change to the manner and level at which any AXP
Service is provided to Ameriprise if such change would result in a violation, or cause Ameriprise to be in violation, of applicable Law;
provided
,
further
,
if Ameriprise can demonstrate, in accordance with the terms of this Agreement, that such change is not commercially reasonable and Ameriprise
has suffered a material financial harm as a result of such change, AXP shall be required to restore the manner and level at which such AXP Service is provided to Ameriprise to the manner and level
required by Section 2.3(a). No such change shall affect the fees and expenses for the applicable AXP Service.
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(c) Subject
to Section 5.5, in no event shall AXP be liable or accountable, in damages or otherwise, for any error of judgment or any mistake of fact or Law or for
any action or omission in connection with the provision of the AXP Services by AXP or any AXP Service Provider that AXP or such AXP Service Provider took or refrained from taking in good faith
hereunder, except in the case of AXP's or such AXP Service Provider's intentional breach, fraud, gross negligence or willful misconduct.
2.4
Standard of Performance for Ameriprise Services.
(a)Ameriprise shall provide, or shall cause to be provided,
the Ameriprise Services in a manner and at a level that is substantially similar in all material respects to the typical manner and average level at which such Ameriprise Services were provided to AXP
or its Affiliate during the three-month period prior to the Distribution Date, except to the extent that (i) a different manner or level of an Ameriprise Service is set forth in a Schedule, in
which case such Ameriprise Service shall be provided in the manner and level as set forth in each such applicable Schedule or (ii) such Ameriprise Service has not been provided during the
three-month period prior to the Distribution Date and the applicable Schedule does not set forth a manner or level at which such Ameriprise Service is to be provided, in which case, such Ameriprise
Service shall be provided in the same manner and at the same level at which such Ameriprise Service was provided to AXP or its Affiliate on the last occasion (or during the three-month period prior to
the last occasion) such Ameriprise Service was provided to AXP or its Affiliate.
(b) Notwithstanding
Section 2.4(a), Ameriprise may change from time to time the manner and level at which any Ameriprise Service is provided to AXP, to the extent
that Ameriprise is making a similar change in performing a substantially similar service for itself and its Affiliates or if Ameriprise provides AXP substantially the same notice (in content and
timing) as Ameriprise provides itself and its Affiliates with respect to such change;
provided
, that, Ameriprise may not make any change to the manner
and level at which any Ameriprise Service is provided to AXP if such change would result in a violation, or cause AXP to be in violation, of applicable Law;
provided,
further
, if AXP can demonstrate, in accordance with the terms of this Agreement, that such change is not commercially reasonable and AXP has suffered a material financial harm
as a result of such change, Ameriprise shall be required to restore the manner and level at which such Ameriprise Service is provided to AXP to the manner and level required by Section 2.4(a).
No such change shall affect the fees and expenses for the applicable Ameriprise Service.
(c) Subject
to Section 5.6, in no event shall Ameriprise be liable or accountable, in damages or otherwise, for any error of judgment or any mistake of fact or Law or
for any action or omission in connection with the provision of the Ameriprise Services by Ameriprise or any Ameriprise Service Provider that Ameriprise or such Ameriprise Service Provider took or
refrained from taking in good faith hereunder, except in the case of Ameriprise's or such Ameriprise Service Provider's intentional breach, fraud, gross negligence or willful misconduct.
2.5
Omitted AXP Services.
If, from time to time during the term of this Agreement, Ameriprise determines that
the provision of an additional service is reasonably necessary to enable Ameriprise and its Affiliates to operate on a stand-alone basis, and such service (whether or not then currently being
provided) is not included in a Schedule (such service, including without limitation the right to use, or the use of, any Asset in connection with such service, hereinafter referred to as an
"
Additional Required AXP Service"
), then Ameriprise may give written notice thereof to AXP in accordance with Section 8.1 hereof. Upon receipt of
such notice by AXP, if AXP is willing to provide such Additional Required AXP Service, the Parties will negotiate in good faith a schedule setting forth the Additional Required AXP Service, the terms
and conditions (including any service level requirements) for the provision of such Additional Required AXP Service and the fees payable by Ameriprise for such Additional Required AXP Service, such
fees to be determined on an arms'-length basis.
2.6
Omitted Ameriprise Services.
If, from time to time during the term of this Agreement, AXP determines that
the provision of an additional service is reasonably necessary to enable AXP and its
4
Affiliates
to operate on a stand-alone basis, and such service (whether or not then currently being provided) is not included in a Schedule (such service, including without limitation the right to
use, or the use of, any Asset in connection with such service, herein after referred to as an
"Additional Required Ameriprise Service"
), then AXP may
give written notice thereof to Ameriprise in accordance with Section 8.1 hereof. Upon receipt of such notice by Ameriprise, if Ameriprise is willing to provide the Additional Required
Ameriprise Service, the Parties will negotiate in good faith a schedule setting forth the Additional Required Ameriprise Service, the terms and conditions (including any service level requirements)
for the provision of such Additional Required Ameriprise Service and the fees payable by AXP for such Additional Required Ameriprise Service, such fees to be determined on an arms'-length basis.
2.7
Interruption of Services.
(a) If, due to a Force Majeure Event, AXP or an AXP Service Provider is unable,
wholly or partially, to perform its obligations hereunder, then AXP shall be relieved of liability and shall suffer no prejudice for failing to perform or comply during the continuance and to the
extent of such whole or partial inability to perform its obligations hereunder so caused by such Force Majeure Event;
provided
, that, (i) AXP
gives Ameriprise prompt notice, written or oral (but if oral, promptly confirmed in writing) of such whole or partial inability to perform its obligations hereunder and a reasonably detailed
description of the cause thereof and (ii) in the event such whole or partial inability to perform its obligations hereunder is a result of AXP's or such AXP Service Provider's capacity or
similar limitations, with respect to the allocation of such limited resources, Ameriprise and its Affiliates shall be treated no less favorably by AXP or such AXP Service Provider than AXP or any
Affiliate of AXP. If AXP fails to promptly give notice of such Force Majeure Event, then AXP shall only be relieved from such performance or compliance from and after the giving of such notice. AXP
shall or shall cause the applicable AXP Service Provider(s) to use its reasonable best efforts to remedy the situation caused by such Force Majeure Event and remove, so far as possible and with
reasonable timeliness, the cause of its inability to perform or comply. AXP shall give Ameriprise prompt notice of the cessation of the Force Majeure Event.
(b) If,
due to a Force Majeure Event, Ameriprise or an Ameriprise Service Provider is unable, wholly or partially, to perform its obligations hereunder, then Ameriprise
shall be relieved of liability and shall suffer no prejudice for failing to perform or comply during the continuance and to the extent of such whole or partial inability to perform its obligations
hereunder so caused by such Force Majeure Event;
provided
, that, (i) Ameriprise gives AXP prompt notice, written or oral (but if oral, promptly
confirmed in writing) of such whole or partial inability to perform its obligations hereunder and a reasonably detailed description of the cause thereof and (ii) in the event such whole or
partial inability to perform its obligations hereunder is a result of Ameriprise's or such Ameriprise Service Provider's capacity or similar limitations, with respect to the allocation of such limited
resources, AXP and its Affiliates shall be treated no less favorably by Ameriprise or such Ameriprise Service Provider than Ameriprise or any Affiliate of Ameriprise. If Ameriprise fails to promptly
give notice of such Force Majeure Event, then Ameriprise shall only be relieved from such performance or compliance from and after the giving of such notice. Ameriprise shall or shall cause the
applicable Ameriprise Service Provider(s) to use its reasonable best efforts to remedy the situation caused by such Force Majeure Event and remove, so far as possible and with reasonable timeliness,
the cause of its inability to perform or comply. Ameriprise shall give AXP prompt notice of the cessation of the Force Majeure Event.
2.8
Access.
(a) Ameriprise shall, and shall cause its applicable Affiliates to, make available on a timely basis
to each AXP Service Provider such Information reasonably requested by such AXP Service Provider to enable such AXP Service Provider to provide the AXP Services. Ameriprise shall, and shall cause its
applicable Affiliates to, provide to the AXP Service Providers reasonable access to the premises of Ameriprise and such Affiliates and the systems, software and networks located therein, to the extent
necessary for the purpose of providing the AXP Services. AXP shall ensure that it and the
5
other
AXP Service Providers comply with applicable Law and Ameriprise's security and other policies and procedures, as may be provided to AXP by Ameriprise in writing from time to time.
(b) AXP
shall, and shall cause its applicable Affiliates to, make available on a timely basis to each Ameriprise Service Provider such Information reasonably requested by
such Ameriprise Service Provider to enable such Ameriprise Service Provider to provide the Ameriprise Services. AXP shall, and shall cause its applicable Affiliates to, provide to the Ameriprise
Service Providers reasonable access to the premises of AXP and such Affiliates and the systems, software and networks located therein, to the extent necessary for the purpose of providing the
Ameriprise Services. Ameriprise shall ensure that it and the other Ameriprise Service Providers comply with applicable Law and AXP's security and other policies and procedures, as may be provided to
Ameriprise by AXP in writing from time to time.
2.9
Transition of Responsibilities.
(a) Each Party agrees to use its good faith efforts to reduce or eliminate
its and its Affiliates' dependency on each Service as soon as is reasonably practicable. AXP agrees to cooperate with Ameriprise to facilitate the smooth transition of responsibility for the AXP
Services to Ameriprise or any third party. Ameriprise agrees to cooperate with AXP to facilitate the smooth transition of responsibility for the Ameriprise Services to AXP or any third party.
(b) As
promptly as practicable, AXP and Ameriprise will agree in good faith to a plan for Ameriprise to assume responsibility or eliminate the need for the provision of each
AXP Service (the "
Ameriprise Transition Plan
"). The Ameriprise Transition Plan will contain a schedule of transition events, including the expected date
by which the Ameriprise Transition Plan will be completed, any training (including the transfer of knowledge and expertise) that will be needed by Ameriprise and the estimated costs and expenses, if
any, to be paid by Ameriprise to AXP with respect to such training and other services that AXP agrees to provide to Ameriprise in order to facilitate the completion of the Ameriprise Transition Plan.
(c) As
promptly as practicable, AXP and Ameriprise will agree in good faith to a plan for AXP to assume responsibility or eliminate the need for the provision of each
Ameriprise Service (the
"AXP Transition Plan"
). The AXP Transition Plan will contain a schedule of transition events, including the expected date by
which the AXP Transition Plan will be completed, any training (including the transfer of knowledge and expertise) that will be needed by AXP and the estimated costs and expenses, if any, to be paid by
AXP to Ameriprise with respect to such training and other services that Ameriprise agrees to provide to AXP in order to facilitate the completion of the AXP Transition Plan.
ARTICLE III
FEES AND EXPENSES
3.1
Fees and Expenses.
The fees and expenses for each of the Services to be provided hereunder are set forth in
each Schedule.
3.2
Billing and Payment; No Set-off.
Amounts payable in respect of Services under this Agreement
shall be invoiced to the Party receiving such Services monthly in arrears and paid to the Party providing such Services, as directed by such providing Party, which amounts shall be due within
30 days after the date of invoice. All amounts due and payable hereunder shall be invoiced and, except as set forth in any Schedule hereto, paid in U.S. dollars without offset,
set-off, deduction or counterclaim, however arising.
3.3
Additional Costs.
(a) Ameriprise shall reimburse AXP for the costs designated in each Schedule as
reimbursable by Ameriprise. If it is necessary for AXP or any AXP Service Provider to incur any additional costs in connection with the provision of the AXP Services, AXP shall inform Ameriprise of
such need before any such additional cost is incurred. Upon mutual written agreement of Ameriprise and AXP, as to the necessity of any such increase, Ameriprise shall advance, or shall cause
6
to
be advanced, to AXP an amount equal to the estimated costs and expenses to be reasonably incurred in connection therewith. If the actual costs and expenses incurred by AXP or such AXP Service
Provider are greater than the estimated costs, the necessity of increased costs shall again be subject to the mutual written agreement of the Parties, and if the Parties cannot agree, AXP shall return
the advance of estimated costs to the extent not previously expended by AXP in connection with the provision of such AXP Service. If the actual costs and expenses incurred by AXP or such AXP Service
Provider are less than the estimated costs and expenses, AXP shall repay, to Ameriprise, the difference between the actual and estimated costs and expenses.
(b) AXP
shall reimburse Ameriprise for the costs designated in each Schedule as reimbursable by AXP. If it is necessary for Ameriprise or any Ameriprise Service Provider to
incur any additional costs in connection with the provision of the Ameriprise Services, Ameriprise shall inform AXP of such need before any such additional cost is incurred. Upon mutual written
agreement of AXP and Ameriprise, as to the necessity of any such increase, AXP shall advance, or shall cause to be advanced, to Ameriprise an amount equal to the estimated costs and expenses to be
reasonably incurred in connection therewith. If the actual costs and expenses incurred by AXP or such AXP Service Provider are greater than the estimated costs, the necessity of increased costs shall
again be subject to the mutual written agreement of the Parties, and if the Parties cannot agree, Ameriprise shall return the advance of estimated costs to the extent not previously expended by
Ameriprise in connection with the provision of such Ameriprise Service. If the actual costs and expenses incurred by AXP or such AXP Service Provider are less than the estimated costs and expenses,
Ameriprise shall repay, to AXP, the difference between the actual and estimated costs and expenses.
3.4
Late Payments.
Late payments shall bear interest at a rate per annum equal to the Prime Rate plus 2%.
3.5
Taxes.
(a)
Separate Statement
.
(i) The
fees and expenses set forth in the Schedules and to be paid for the services provided pursuant to this Agreement do not include any amount of sales, use, excise,
gross receipts, value added, goods and services, or any other transaction or revenue based taxes applicable to the provision of the services (each such tax, together with any applicable interest,
penalties, or additions to tax imposed with respect to such tax, a "
Transaction Tax
"), unless the separate statement of such Transaction Tax is
prohibited by Law.
(ii) The
Service Provider shall separately state and identify in the invoices, usage reports, and/or descriptive materials provided (electronically or otherwise) to the
Service Recipient any amount of Transaction Taxes that the Service Provider undertakes to collect from the Service Recipient and remit to the appropriate Governmental Authority or other authority
responsible for the collection of such Transaction Taxes (each a "
Taxing Authority
").
(b)
Good Faith Collection and Identification.
(i) The
Service Provider shall act in good faith to collect from the Service Recipient and remit to the appropriate Taxing Authority those Transaction Taxes imposed by the
jurisdictions in which the Service Provider is registered as a "vendor" to collect and remit such Transaction Taxes;
provided, however
, that the
delivery by the Service Recipient to the Service Provider of a resale certificate, exemption certificate, or self-pay permit shall be deemed to be the equivalent of good faith collection
and remission.
(ii) The
Service Provider shall act in good faith to describe the services rendered pursuant to this Agreement in the invoices, usage reports, and/or descriptive materials
provided (electronically or otherwise) to the Service Recipient with specificity sufficient to determine the applicability of Transaction Taxes.
7
(iii) The
Service Recipient, pursuant to this Agreement, shall act in good faith to identify the physical location and taxing jurisdictions in which its receives the benefit
of the services provided in the purchase orders, usage reports, and/or descriptive materials provided (electronically or otherwise) to the Service Provider to determine the applicability of
Transaction Taxes.
(c)
Indemnification.
(i) The
Service Recipient, pursuant to this Agreement, shall be solely liable for the payment of any Transaction Tax applicable to such receipt, without regard to the
identity of the Party on whom the Liability for the Transaction Tax is imposed by statute, regulation, or otherwise, unless the payment of such Transaction Tax by the Service Recipient is prohibited
by Law.
(A) It
is the sole responsibility of the Service Recipient pursuant to this Agreement, to provide the Service Provider with all geographic and jurisdictional Information
necessary to determine the
Transaction Taxes applicable to the provision of services under this Agreement, and any failure to provide such Information shall relieve the Service Provider from responsibility for any act or
failure to act resulting in the imposition of an incorrect amount of Transaction Tax or otherwise avoidable multiple impositions of Transaction Tax.
(B) The
failure of the Service Provider to separately state, collect, and/or remit any applicable Transaction Tax shall not relieve the Service Recipient pursuant to this
Agreement, from Liability for the payment of any applicable Transaction Tax.
(ii) The
Party receiving a service pursuant to this Agreement shall indemnify and hold the Service Provider harmless from any Liability arising from any failure to
separately state, collect, and/or remit any applicable Transaction Tax, plus any reasonable costs, fees, and expenses incurred by the Service Provider in the defense of such Liability.
(iii) The
Service Provider shall have no Liability for any over-collection of Transaction Taxes from the Service Recipient, pursuant to this Agreement, that are
remitted to a Taxing Authority as long as such over-collection was made in good faith;
provided, however
, that if the Service Provider is a
necessary party to the filing of a claim for the refund of any over-collected Transaction Taxes, then the Service Provider shall reasonably cooperate with the Service Recipient pursuant to
this Agreement in the preparation and filing of the such refund claim.
(iv)
No Limitation on Liability.
(A) Any
other provision of this Agreement to the contrary notwithstanding, the indemnification provided pursuant to this Section 3.5(c) shall not be subject to or
included in the computation of the maximum liability limitation set forth in either Section 5.7(a) or Section 5.7(b) of this Agreement.
(B) Any
other provision of this Agreement to the contrary notwithstanding, the indemnification provided pursuant to this Section 3.5(c) shall not be subject to the
restriction on incidental, consequential, and punitive damages set forth in Section 5.7(c) of this Agreement to the extent that such damages are imposed by or arise as a result of the
collection of a Transaction Tax by a Taxing Authority.
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(d) This Agreement contemplates that the legal relationship between the Service Provider and the Service Recipient may vary with the services being provided and that a
Service Provider may be simultaneously acting in one or more of the following capacities: (i) purchasing agent, (ii) reseller and/or (iii) provider of services.
(i) In
the event the Service Provider purchases services from a third-party provider for use and consumption by the Service Recipient "as acquired", and the contractual
relationship with the third-party provider allows for the purchase of the services by both Parties, the Service Provider shall be the appointed purchasing agent of the Service Recipient and the
administration of the Transaction Taxes shall reflect such agency relationship.
(ii) In
the event the Service Provider purchases services for use and consumption by the Service Recipient from a third-party provider "as acquired" and the contractual
relationship with the third-party provider does not allow for the purchase of the services by both of the Parties, the Service Provider shall resell the services to the Service Recipient and the
administration of the Transaction Taxes shall reflect such reseller relationship.
(iii) In
the event the Service Provider either (i) modifies services acquired from a third-party provider for delivery of services to the Service Recipient under this
Agreement, (ii) incorporates services acquired from a third-party provider into services for delivery to the Service Recipient under this Agreement, or (iii) provides Services to the
Service Recipient without the purchase of services acquired from a third-party provider, the Service Provider shall be deemed to be the provider of the services and the administration of the
Transaction Taxes shall reflect such provision of services by the Service Provider.
(e) Each
Party shall withhold and pay over to the Governmental Authority responsible for the collection of any amount of income tax or other assessment, charge, regulatory
fee or other amount required by Law or regulation to be withheld from payments made to the other Party pursuant to this Agreement (the
"Withheld Tax"
),
and the Withheld Tax shall be credited to the account of the Party from whose payment the Withheld Tax was withheld.
(f) Any
other provision of this Agreement to the contrary notwithstanding, no Party shall be responsible for any taxes imposed on the other Party measured by income,
capital, or resulting from the existence or general Business operations of the other Party other than those resulting from an indemnified Loss including, but not limited to, any amount of Withheld
Tax.
(g) It
is hereby acknowledged that a Service Provider may pay Transaction Taxes to a Taxing Authority or a third-party vendor and such Service Provider may not be capable of
identifying or communicating Information regarding such payment to the Service Recipient. The Parties shall cooperate to identify purchases on which Transaction Taxes have been previously paid or
remitted to reduce the occurrence of any over-collection of such Transaction Taxes.
(h) Subject
to Sections 5.10 and 8.9, the Parties agree to and shall, from time to time, do and perform such other and further acts, and execute and deliver any and all such
other and further instruments as may be required by Law or reasonably requested by the other Party to establish, maintain, and protect the respective rights and remedies of the other Party as provided
in this Agreement with respect to Transaction Taxes and Withheld Taxes.
ARTICLE IV
CONFIDENTIALITY
4.1
Confidentiality Obligations.
(a) Each Party acknowledges (i) that such Party has in its possession
and in connection with the provision of Services hereunder, such Party will receive Information of the other Party that is not available to the general public, and (ii) that such Information
9
may
constitute, contain or include material non-public Information of the other Party. Subject to Section 4.1(c), AXP, on behalf of itself and each of its Affiliates, and
Ameriprise, on behalf of itself and each of its Affiliates, agrees to hold, and to cause its respective directors, officers, employees, agents, third party contractors, vendors, Service Providers,
accountants, counsel and other advisors and representatives to hold, in strict confidence, with at least the same degree of care that such Party applies to its own confidential and proprietary
Information pursuant to its applicable policies and procedures in effect as of the Distribution Date, all Information concerning the other Party (or its Business) and such other Party's Affiliates (or
their respective Business) that is either in its possession (including Information in its possession prior to the Distribution Date) or furnished by the other Party or the other Party's Affiliates or
their respective directors, officers, employees, agents, third party contractors, vendors, Service Providers, accountants, counsel and other advisors and representatives at any time pursuant to this
Agreement, and will not use such Information other than for such purposes as may be expressly permitted hereunder, except, in each case, to the extent that such Information: (i) is or becomes
available to the general public, other than as a result of a disclosure by such Party or its Affiliates or any of their respective directors, officers, employees, agents, third party contractors,
vendors, Service Providers, accountants, counsel and other advisors and representatives in breach of this Agreement; (ii) was available to such Party or its Affiliates or becomes available to
such Party or its Affiliates, on a non-confidential basis from a source other than the other Party hereto;
provided
, that, the source of
such Information was not bound by a confidentiality obligation with respect to such Information, or otherwise prohibited from transmitting the Information to such Party or its Affiliates by a
contractual, legal or fiduciary obligation; or (iii) is independently generated by such Party without use of or reference to any proprietary or confidential Information of the other Party.
(b)
No Release, Compliance with Law, Return or Destruction.
Each Party agrees not to release or disclose, or
permit to be released or disclosed, any such Information to any other Person, except its directors, officers, employees, agents, third party contractors, vendors, Service Providers, accountants,
counsel, lenders, investors and other advisors and representatives who need to know such Information in order to provide the Services pursuant to this Agreement, and except in compliance with
Section 4.1(c). Notwithstanding anything herein to the contrary, each Party shall advise its directors, officers, employees, agents, third party contractors, vendors, Service Providers,
accountants, counsel, lenders, investors and other advisors and representatives who have been provided with such Information of such Party's confidentiality obligations hereunder and that such
Information may constitute, contain or include material non-public Information of the other Party. Each party shall, and shall cause, its directors, officers, employees, agents, third
party contractors, vendors, Service Providers, accountants, counsel, lenders, investors and other advisors and representatives who have been provided with such Information to use such Information only
in accordance with (i) the terms of this Agreement and (ii) applicable Law (including federal and state securities Laws). Each Party shall promptly, after receiving a written request of
the other Party, return to the other Party all such Information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or certify to the other Party that
it has destroyed such Information (and such copies thereof and such notes, extracts or summaries based thereon), as directed by the other Party.
(c)
Protective Arrangements.
Notwithstanding anything herein to the contrary, in the event that either Party or
any of its directors, officers, employees, agents, third party contractors, vendors, Service Providers, accountants, counsel, lenders, investors and other advisors and representatives either
determines on the advice of its counsel that it is required to disclose any Information pursuant to applicable Law or the rules or regulations of a Governmental Authority or receives any demand under
lawful process or from any Governmental Authority to disclose or provide Information of the other Party that is subject to the confidentiality provisions hereof, such Party shall, if possible, notify
the other Party prior to disclosing or providing such Information and shall cooperate at the expense of the requesting Party in seeking any reasonable protective arrangements requested by such other
Party. In the event that a protective arrangement is not timely obtained, the Person that received such request
10
(i) may
thereafter disclose or provide such Information to the extent required by such Law (as so advised by counsel) or by lawful process or such Governmental Authority, without liability
therefor and (ii) shall exercise its reasonable best efforts to have confidential treatment accorded any such Information so furnished.
ARTICLE V
NO WARRANTY; LIMITATION OF LIABILITY; INDEMNIFICATION; ESCALATION
5.1
Warranties and Disclaimer of Warranty by AXP.
(a) AXP represents and warrants to Ameriprise as of the date
hereof and at all times during which the AXP Services are provided to Ameriprise, that:
(i) Subject
to the receipt of the Consents set forth on
Exhibit 5.3
hereof, neither the provision of the AXP Services
by any AXP Service Provider, nor the receipt or use thereof by Ameriprise in accordance with the terms and conditions hereof, shall breach, violate, infringe upon or constitute misappropriation of any
Intellectual Property right of any Person. Subject to the terms and conditions hereof, of the Separation Agreement and of the other Ancillary Agreements, the provision of the AXP Services will not
confer on Ameriprise any Intellectual Property rights, except as explicitly provided herein or therein.
(ii) The
AXP Services will be performed in a timely manner consistent with this Agreement, as each individual Schedule may require, by qualified individuals with appropriate
subject matter expertise, in a professional and workmanlike manner, conforming to generally accepted industry standards and practices applicable to each individual Schedule and in strict accordance
with all applicable Laws.
(b) EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE AXP SERVICES TO BE PURCHASED UNDER THIS AGREEMENT ARE PROVIDED AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT
WARRANTY OR CONDITION OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR ANY OTHER WARRANTY WHATSOEVER.
5.2
Warranties and Disclaimer of Warranty by Ameriprise.
(a) Ameriprise represents and warrants to AXP as of the
date hereof and at all times during which the Ameriprise Services are provided to AXP, that:
(i) Subject
to the receipt of the Consents set forth on
Exhibit 5.4
hereof, neither the provision of the Ameriprise
Services by any Ameriprise Service Provider, nor the receipt or use thereof by AXP in accordance with the terms and conditions hereof, shall breach, violate, infringe upon or constitute
misappropriation of any Intellectual Property right of any Person. Subject to the terms and conditions hereof, of the Separation Agreement and of the other Ancillary Agreements, the provision of the
Ameriprise Services will not confer on AXP any Intellectual Property rights, except as explicitly provided herein or therein.
(ii) The
Ameriprise Services will be performed in a timely manner consistent with this Agreement, as each individual Schedule may require, by qualified individuals with
appropriate subject matter expertise, in a professional and workmanlike manner, conforming to generally accepted industry standards and practices applicable to each individual Schedule and in strict
accordance with all applicable Laws.
(b) EXCEPT
AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE AMERIPRISE SERVICES TO BE PURCHASED UNDER THIS AGREEMENT ARE PROVIDED AS IS, WHERE IS, WITH ALL FAULTS, AND WITHOUT
WARRANTY OR CONDITION OF ANY KIND,
11
EXPRESS
OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OR ANY OTHER WARRANTY WHATSOEVER.
5.3
Third Parties and AXP Services.
(a) AXP and Ameriprise shall cooperate to obtain all Consents (including
those set forth on
Exhibits 5.3
and
5.4
) sufficient to enable the AXP Service Providers to
perform the AXP Services in accordance with this Agreement for any third party Software or other Intellectual Property related to the provision of the AXP Services;
provided
, that, AXP shall not be
required to incur any costs in connection therewith. Ameriprise will cooperate with AXP in obtaining all such required
Consents related to the provision of the AXP Services and Ameriprise shall bear any costs incurred in connection therewith,
provided
,
further
, that
Ameriprise shall only be required to reimburse AXP for those expenses incurred by AXP that Ameriprise has previously approved in writing.
Attached hereto as
Exhibit 5.3
is a list of required Consents for any third party Software or other Intellectual Property known to be related to,
and necessary for, the provision of the AXP Services and an estimate of charges to be imposed by third party software providers. In the event that
any such Consent is not obtained, then, unless and until such Consent is obtained, during the term of the applicable Schedule, the Parties shall cooperate with each other in achieving a reasonable
alternative arrangement for Ameriprise to continue to process its work and with respect to such third party Software or Intellectual Property for the AXP Service Providers to perform the AXP Services.
(b) Nothing
contained in this Agreement shall preclude Ameriprise from enforcing any rights or benefits available to it or AXP, or availing itself of any rights or defenses
available to it or AXP under any third party agreement pursuant to which AXP Services are being provided to Ameriprise.
5.4
Third Parties and Ameriprise Services.
(a) AXP and Ameriprise shall cooperate to obtain all Consents
(including those set forth on
Exhibits 5.3
and
5.4
) sufficient to enable the Ameriprise Service
Providers to perform the Ameriprise Services in accordance with this Agreement for any third party Software or other Intellectual Property related to the provision of the Ameriprise Services;
provided
,
that, Ameriprise shall not be required to incur any costs in connection therewith. AXP will cooperate with Ameriprise in obtaining all such
required Consents related to the provision of the Ameriprise Services and shall bear any costs in connection therewith;
provided, further
, that AXP
shall only be required to reimburse Ameriprise for those expenses incurred by Ameriprise that AXP has previously approved in writing. Attached hereto as
Exhibit 5.4
is a list of required Consents
for any third party Software or other Intellectual Property known to be related to, and necessary for,
the provision of the Ameriprise Services and an estimate of charges to be imposed by third party Software providers. In the event that any such Consent is not obtained, then, unless and until such
Consent is obtained, during the term of the applicable Schedule the Parties shall cooperate with each other in achieving a reasonable alternative arrangement with respect to such third party Software
or Intellectual Property for AXP to continue to process its work and for the Ameriprise Service Providers to perform the Ameriprise Services.
(b) Nothing
contained in this Agreement shall preclude AXP from enforcing any rights or benefits available to it or Ameriprise, or availing itself of any rights or defenses
available to it or Ameriprise under any third party agreement pursuant to which Ameriprise Services are being provided to AXP.
5.5
Obligation to Re-perform AXP Services.
In the event of any breach of this Agreement by AXP or
any other AXP Service Provider with respect to any failure by AXP or an AXP Service Provider, as applicable, to provide any AXP Service in accordance with the terms of this Agreement, AXP shall, or
shall cause the applicable AXP Service Provider to, correct in all material respects such error or defect or re-perform in all material respects such AXP Service at the request of
Ameriprise and at the expense of AXP. To be effective, any such request by Ameriprise must (i) specify in reasonable detail the particular error or defect and (ii) be made no more than
ninety (90) days from the date such error or defect was discovered by Ameriprise or should have been discovered by Ameriprise after reasonable inquiry.
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5.6
Obligation to Re-perform Ameriprise Services.
In the event of any breach of this Agreement by
Ameriprise or any other Ameriprise Service Provider with respect to any failure by AXP or an AXP Service Provider, as applicable, to provide any Ameriprise Service in accordance with the terms of this
Agreement, Ameriprise shall, or shall cause the applicable Ameriprise Service Provider to, correct in all material respects such error or defect or re-perform in all material respects such
Ameriprise Service at the request of AXP and at the expense of Ameriprise. To be effective, any such request by AXP must (i) specify in reasonable detail the particular error or defect and
(ii) be made no more than ninety (90) days from the date such error or defect was discovered by AXP or should have been discovered by AXP after reasonable inquiry.
5.7
LIMITATION OF LIABILITY.
NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY:
(a) EXCEPT
FOR ANY LIABILITIES THAT MAY BE INCURRED UNDER SECTION 3.5(C), THE MAXIMUM LIABILITY OF AXP TO, AND (EXCEPT AS SET FORTH IN SECTION 5.5) THE SOLE REMEDY OF,
AMERIPRISE AND ITS AFFILIATES (AND THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS, VENDORS, AMERIPRISE SERVICE PROVIDERS AND EMPLOYEES) WITH RESPECT TO ANY AND ALL CLAIMS ARISING IN CONNECTION WITH THE
PROVISION OF THE AXP SERVICES BY AXP OR ANY AXP SERVICE PROVIDER, REGARDLESS OF THE THEORY UPON WHICH THE LIABILITY IS PREMISED, SHALL NOT EXCEED THE FEES RECEIVED BY AXP WITH RESPECT TO THE PROVISION
OF THE AXP SERVICE(S) TO WHICH SUCH CLAIM RELATES IN THE MONTHLY PERIOD(S) IN WHICH THE ACTION OR OMISSION OF AXP THAT GAVE RISE TO SUCH CLAIM OCCURRED OR WAS PENDING;
(b) EXCEPT
FOR ANY LIABILITIES THAT MAY BE INCURRED UNDER SECTION 3.5(C), THE MAXIMUM LIABILITY OF AMERIPRISE TO, AND (EXCEPT AS SET FORTH IN SECTION 5.6) THE SOLE REMEDY
OF, AXP AND ITS AFFILIATES (AND THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS, VENDORS, AXP SERVICE PROVIDERS AND EMPLOYEES) WITH RESPECT TO ANY AND ALL CLAIMS ARISING IN CONNECTION WITH THE PROVISION
OF THE AMERIPRISE SERVICES BY AMERIPRISE OR ANY OTHER AMERIPRISE SERVICE PROVIDER, REGARDLESS OF THE THEORY UPON WHICH THE LIABILITY IS PREMISED, SHALL NOT EXCEED THE FEES RECEIVED BY AMERIPRISE WITH
RESPECT TO THE PROVISION OF THE AMERIPRISE SERVICE(S) TO WHICH SUCH CLAIM RELATES IN THE MONTHLY PERIOD(S) IN WHICH THE ACTION OR OMISSION OF AMERIPRISE THAT GAVE RISE TO SUCH CLAIM OCCURRED OR WAS
PENDING;
(c) EXCEPT
FOR ANY LIABILITIES THAT MAY BE INCURRED UNDER SECTION 3.5(C), IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ITS AFFILIATES (OR THEIR RESPECTIVE
DIRECTORS, OFFICERS, AGENTS, SERVICE PROVIDERS OR EMPLOYEES) FOR INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THE PERFORMANCE OF THIS AGREEMENT, EVEN IF THE PARTY HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES, AND EACH PARTY HEREBY WAIVES ON BEHALF OF ITSELF, ITS AFFILIATES AND THEIR RESPECTIVE DIRECTORS, OFFICERS, AGENTS, SERVICE PROVIDERS OR EMPLOYEES ANY CLAIM FOR SUCH
DAMAGES INCLUDING ANY CLAIM FOR PROPERTY DAMAGE OR LOST PROFITS, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE;
(d) IN
NO EVENT SHALL AXP BE LIABLE FOR THE ACTS OR OMISSIONS OF THIRD PARTY AXP SERVICE PROVIDERS TO THE EXTENT THAT AXP HAS EMPLOYED BEST EFFORTS (AS DEFINED HEREIN) TO
INDUCE OR CAUSE SUCH THIRD PARTY AXP SERVICE PROVIDER TO PROVIDE THE AXP SERVICES IN ACCORDANCE WITH THE MANNER AND LEVELS AGREED TO HEREUNDER; AND
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(e) IN
NO EVENT SHALL AMERIPRISE BE LIABLE FOR THE ACTS OR OMISSIONS OF THIRD PARTY AMERIPRISE SERVICE PROVIDERS TO THE EXTENT THAT AMERIPRISE HAS EMPLOYED BEST EFFORTS (AS
DEFINED HEREIN) TO INDUCE OR CAUSE SUCH THIRD PARTY AMERIPRISE SERVICE PROVIDER TO PROVIDE THE AMERIPRISE SERVICES IN ACCORDANCE WITH THE MANNER AND LEVELS AGREED TO HEREUNDER.
5.8
AXP Indemnity.
AXP shall indemnify and hold harmless Ameriprise and its Affiliates (and their respective
directors, officers, agents, Ameriprise Service Providers and employees) from and against any and all claims, demands, complaints, damages, loss, liability, cost or expense (each of the foregoing, a
"
Loss
") arising out of, relating to or in connection with (i) any Action that determined that the provision by any AXP Service Provider and/or
the receipt by Ameriprise or its Affiliates of any AXP Service infringes upon or misappropriates the Intellectual Property of any third party, to the extent that any such Loss is determined to have
resulted from such AXP Service Provider's intentional breach, fraud, gross negligence or willful misconduct or (ii) any action or omission by an Ameriprise Service Provider in providing the
Ameriprise Services hereunder, except to the extent any such Loss arises from such Ameriprise Service Provider's intentional breach, fraud, gross negligence or willful misconduct.
5.9
Ameriprise Indemnity.
Ameriprise shall indemnify and hold harmless AXP and its Affiliates (and their
respective directors, officers, agents, AXP Service Providers and employees) from and against any and all Losses arising out of, relating to or in connection with (i) any Action that determined
that the provision by any Ameriprise Service Provider and/or the receipt by AXP or its Affiliates of any Ameriprise Service infringes upon or misappropriates the Intellectual Property of any third
party to the
extent that any such Loss is determined to have resulted from such Ameriprise Service Provider's intentional breach, fraud, gross negligence or willful misconduct, or (ii) any action or
omission by an AXP Service Provider in providing the AXP Services hereunder, except to the extent any such Loss arises from such AXP Service Provider's intentional breach, fraud, gross negligence or
willful misconduct.
5.10
Escalation.
In the event that any dispute arises between the Parties that cannot be resolved pursuant to
the escalation path set forth in a Schedule, if any, either Party shall have the right to refer the dispute for resolution to the Coordinators listed in such Schedule by delivering to the other Party
a written notice of such referral (a "
Dispute Escalation Notice
"). Following receipt of a Dispute Escalation Notice, the Coordinators shall negotiate in
good faith to resolve such dispute. In the event that the Coordinators are unable to resolve such dispute within five (5) business days after the date of the Dispute Escalation Notice, either
Party shall have the right to refer the dispute to the chief financial officers of the Parties, who shall negotiate in good faith to resolve such dispute. In the event that the chief financial
officers of the parties are unable to resolve such dispute within 15 business days after the date of the Dispute Escalation Notice, either Party shall have the right to refer the dispute to the chief
executive officers of the Parties, who shall negotiate in good faith to resolve such dispute. In the event that the chief executive officers of the Parties are unable to resolve such dispute within 30
business days after the date of the Dispute Escalation Notice, either Party shall have the right to commence litigation in accordance with Section 8.9 hereof. The Parties agree that all
discussions, negotiations and other Information exchanged between the Parties during the foregoing escalation proceedings shall be without prejudice to the legal position of a Party in any subsequent
Action.
ARTICLE VI
INTERNAL CONTROLS
6.1 If
requested by Ameriprise, AXP shall and shall cause each AXP Service Provider to permit Ameriprise reasonable access (in addition to the access required by
Section 2.8) to its respective books,
14
records,
accountants, accountants' work papers, personnel and facilities for the purpose of Ameriprise's testing and verification of the effectiveness of each AXP Service Provider's controls with
respect to AXP Services as is reasonably necessary to enable the management of Ameriprise to comply with its obligations under SOX §404 and to enable Ameriprise's independent public
accounting firm to attest to and report on the assessment of the management of Ameriprise in accordance with SOX §404 and Accounting Standard No. 2, as amended, or as required by
Ameriprise's external auditors;
provided, however
, that in lieu of providing such access, AXP may, in its sole discretion, instead furnish Ameriprise
with a type II SAS 70 report; and
provided, further
, that AXP shall not be required to furnish Ameriprise access to any information other than
information that relates specifically to AXP Services. Ameriprise is not required to file a SOX §404 assessment for its fiscal year ending December 31, 2005. Accordingly,
with respect to periods prior to first quarter 2006, AXP shall only be required to provide Information with respect to AXP Services as is reasonably required by Ameriprise in order to enable
Ameriprise to make the certifications required under SOX §302.
6.2 If
requested by AXP, Ameriprise shall and shall cause each Ameriprise Service Provider to permit AXP reasonable access (in addition to the access required by
Section 2.8(a)) to its respective books, records, accountants and accountants' work papers, personnel and facilities for the purpose of AXP's testing and verification of the effectiveness of
each Ameriprise Service Provider's controls with respect to Ameriprise Services as is reasonably necessary to enable the management of AXP to comply with its obligations under SOX §404 and
AXP's independent public accounting firm to attest to and report on the assessment of the management of AXP in accordance with SOX §404 and Accounting Standard No. 2, as amended, or
as required by AXP's external auditors;
provided, however
, that in lieu of providing such access, Ameriprise may, in its sole discretion, instead
furnish AXP with a type II SAS 70 report; and
provided, further
, that Ameriprise shall not be required to furnish AXP access to any information other
than Information that relates specifically to Ameriprise Services.
6.3 Without
limiting the generality of, and in order to give effect to, the foregoing provisions of Article VI:
(a) the
Parties shall cooperate, prior to the Distribution Date and from time to time thereafter, to identify the significant processes provided by each Party to the other
Party in connection with the provision of the Services hereunder;
(b) each
Party shall develop and maintain comprehensive procedures to adequately test, evaluate and document the design and effectiveness of its controls over such
significant processes;
(c) each
Party as Service Provider shall provide to the other Party, its auditors and any third party that such other Party has retained to assist it with its SOX
§404 compliance (subject to such third party's having signed an appropriate confidentiality agreement with the Party that is providing the relevant Information), no later than the 30th day
of the last month of each fiscal quarter ending in March, June, September and December during which the Service Provider provided a Service comprising a significant process to the other Party,
adequate documentation (it being acknowledged and agreed that documentation that is substantially similar to the Information currently included in AXP's Magique system shall be deemed adequate) with
respect to the testing of its controls over the significant processes;
(d) in
the event any deficiencies are found as a result of the testing, the Service Provider and the Service Recipient shall cooperate in good faith to develop and implement
commercially reasonable action plans and timetables to remedy such deficiencies and/or implement adequate compensating controls;
provided, however
, that
if a Party as Service Provider provides a substantially similar service for itself or its Affiliates, then such Party as Service Provider shall not be required to take any actions that are different
from the actions that such Party is taking with respect to such services that it provides for itself or its Affiliates, unless the control deficiency is or could reasonably be expected to be a
material weakness in the Service Recipients' internal control over financial reporting (and the Service Recipient
15
shall
share its analysis in this regard with the Service Provider), in which case the Service Provider shall cooperate in good faith with the Service Recipient to develop and implement in a timely
fashion commercially reasonable action plans and timetables to remedy the deficiency and/or implement adequate compensating controls such that the deficiency will not rise to the level of a material
weakness;
provided further
, that, if, as a result of such remedy and/or implementation, the Service Provider is required to take actions that are
different than the actions that the Service Provider is taking with respect to the substantially similar services that it provides for itself or its Affiliates, the Service Recipient shall be
obligated to fund the incremental costs incurred by the Service Provider, including all out of pocket incremental costs, plus a reasonable allocation of costs of employees who are diverted from
providing services that such employees would otherwise be providing to the Service Provider during the period of such remedy and/or implementation;
(e) the
Service Provider shall, if requested by the Service Recipient, make its personnel and testing and documentation available to the auditors of the Service Recipient to
enable such auditors to attest to and report on the assessment of internal control over financial reporting of the management of the Service Recipient. The Service Provider shall cooperate and assist
the Service Recipient's auditors in performing any process walkthroughs and process testing that such auditor may request of the significant processes; and
(f) in
the event that Sections 6.3(a)-(e) hereof do not reasonably enable the Service Recipient to comply with its obligations under SOX §404 and to enable the
Service Recipient's registered public accounting firm to attest to and report on the assessment by the management of the Service Recipient in accordance with SOX §404 and Accounting
Standard No. 2, then upon reasonable notice, the Service Recipient shall be permitted to conduct, at its own expense, an independent audit of the Service Provider's controls with respect to the
Services solely to the extent necessary to accomplish such purpose or purposes.
16
ARTICLE VII
TERM; TERMINATION
7.1
Term.
This Agreement shall commence on the Distribution Date and unless terminated earlier in accordance
with this Article VII, will terminate on the earlier to occur of (a) the second anniversary of the Distribution Date and (b) the date on which the terms of all the Schedules have
expired or been terminated.
7.2
Early Termination of Schedules.
In the event that pursuant to Section 2.7, a Service Provider reduces
or suspends the provision of any Service due to a Force Majeure Event and such reduction or suspension continues for 15 days, the other Party may immediately terminate the applicable Schedule,
upon written notice and without any reimbursement obligation.
7.3
Breach of Agreement.
Subject to Article V, if either Party shall cause or suffer to exist any
material breach of any of its obligations under this Agreement, including any failure to make payments when due, and that Party does not cure such default in all material respects within
30 days after receiving written notice thereof from the non-breaching Party, the non-breaching Party may terminate each affected Schedule, including the provision of
Services pursuant thereto, immediately by providing written notice of termination.
7.4
Sums Due.
(a) In the event of a termination (including any termination pursuant to Section 7.2) or
expiration of this Agreement (or Services under one or more Schedules), AXP shall be entitled to the payment or reimbursement of, and Ameriprise shall, or shall cause its applicable Affiliates to, pay
and reimburse AXP, on the date of such termination or expiration (i) all amounts due to AXP or any AXP Service Provider under this Agreement and (ii) all amounts accrued in connection
with the provision of AXP Services through the date of such termination or expiration that are not yet due and payable to AXP or any AXP Service Provider under this Agreement, as if such amounts were
due and payable on the date of such termination or expiration.
(b) In
the event of a termination (including any termination pursuant to Section 7.2) or expiration of this Agreement (or Services under one or more Schedules),
Ameriprise shall be entitled to the payment or reimbursement of, and AXP shall, or shall cause its applicable Affiliates to, pay and reimburse Ameriprise, on the date of such termination or expiration
(i) all amounts due to Ameriprise or any Ameriprise Service Provider under this Agreement and (ii) all amounts accrued in connection with the provision of the Ameriprise Services through
the date of such termination or expiration that are not yet due and payable to Ameriprise or any Ameriprise Service Provider under this Agreement, as if such amounts were due and payable on the date
of such termination or expiration.
7.5
Effect of Termination.
Articles I, III, IV, VI and VIII and Sections 5.1(a)(i), 5.1(b), 5.2(a)(i), 5.2(b),
5.7, 5.8, 5.9, 5.10, 7.4 and this 7.5 shall survive any termination of this Agreement.
ARTICLE VIII
MISCELLANEOUS
8.1
Notices.
All notices, requests and other communications hereunder (except for routine communications
contemplated by certain Schedules) must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to
the Parties at the following addresses or facsimile numbers:
If
to AXP, to:
American
Express Company
200 Vesey Street
New York, New York 10285-4905
Attn: Gilbert E. Ahye
17
with
a copy to:
American
Express Company
200 Vesey Street
New York, New York 10285-4905
Attn: General Counsel
If
to Ameriprise, to:
Ameriprise
Financial, Inc.
707 2
nd
Avenue, South
Minneapolis, Minnesota 55474
Attn: Walter Berman
with
a copy to:
Ameriprise
Financial, Inc.
707 2
nd
Avenue, South
Minneapolis, Minnesota 55474
Attn: General Counsel
All
such notices, requests and other communications will (i) if delivered personally to the address as provided in this section, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to the facsimile number as provided in this section, be deemed given upon receipt and (iii) if delivered by mail in the manner described above to the address as provided
in this section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or
other communication is to be delivered pursuant to this section). Any party from time to time may change its address, facsimile number or other Information for the purpose of notices to that party by
giving notice specifying such change to the other party.
8.2
Entire Agreement.
This Agreement, together with all exhibits and Schedules hereto, the Separation and
Distribution Agreement and the other Ancillary Agreements, constitutes the entire agreement of the parties with respect to the subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.
8.3
Waiver.
Any term or condition of this Agreement may be waived at any time by the Party that is entitled to
the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of
any term or condition of this Agreement, in any one or more instances, shall be deemed or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All
remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative.
8.4
Amendment.
This Agreement may be amended, supplemented, modified or superseded only by a written instrument
signed by duly authorized signatories of the Parties.
8.5
Independent Contractors.
In performing the Services hereunder, each Service Provider shall operate as and
have the status of an independent contractor. No Service Provider's employees shall be considered employees or agents of the other Party, nor shall the employees of any party be eligible or entitled
to any benefits, perquisites or privileges given or extended to any of the other Party's employees in connection with the provision of Services. Nothing contained in this Agreement shall be deemed or
construed to create a joint venture or partnership between the Parties. No Party shall have any power to control the activities and/or operations of the other Party. No Party shall have any power or
authority to bind or commit any other Party.
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8.6
No Third Party Beneficiary.
The terms and provisions of this Agreement are intended solely for the benefit
of each Party hereto and their respective Affiliates, successors or permitted assigns, and it is not the intention of the Parties to confer third party beneficiary rights upon any other Person.
8.7
No Assignment; Binding Effect.
Neither this Agreement nor any right, interest or obligation hereunder may be
assigned by any Party hereto without the prior written consent of the other Party hereto and any attempt to do so will be void, except that each Party hereto may assign any or all of its rights,
interests and obligations hereunder to an Affiliate, provided, that, any such Affiliate agrees in writing to be bound by all of the terms, conditions and provisions contained herein. Subject to the
preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties hereto and their respective successors and assigns.
8.8
Headings.
The headings used in this Agreement have been inserted for convenience of reference only and do
not define or limit the provisions hereof.
8.9
Submission to Jurisdiction; Waivers.
Subject to the prior exhaustion of the escalation procedures set forth
in Section 5.10 and to the fullest extent permitted by applicable Law, each Party hereto (i) agrees that any claim, action or proceeding by such party seeking any relief whatsoever
arising out of, relating to or in connection with, this Agreement or the transactions contemplated hereby shall be brought only in the United States District Court for the Southern District of New
York or any New York State court, in each case, located in the Borough of Manhattan and not in any other State or Federal court in the United States of America or any court in any other country,
(ii) agrees to submit to the exclusive jurisdiction of such courts located in the Borough of Manhattan for purposes of all legal proceedings arising out of, or in connection with, this
Agreement or the transactions contemplated hereby, (iii) waives and agrees not to assert any objection that it may now or hereafter have to the laying of the venue of any such action brought in
such a court or any claim that any such action brought in such a
court has been brought in an inconvenient forum, (iv) agrees that mailing of process or other papers in connection with any such action or proceeding in the manner provided in
Section 8.1 or any other manner as may be permitted by Law shall be valid and sufficient service thereof and (v) agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by applicable Law.
8.10
Severability.
If any provision of this Agreement is held to be illegal, invalid or unenforceable under any
present or future Law, the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance
herefrom.
8.11
Governing Law.
This Agreement and any dispute arising out of, in connection with or relating to this
Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the conflicts of laws principles thereof.
8.12
Counterparts.
This Agreement may be executed in any number of counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.
8.13
Order of Precedence.
In the event of an inconsistency or conflict between this Agreement and a Schedule or
an attachment or exhibit thereto, the Schedule (or the attachment or exhibit thereto) shall prevail.
8.14
Ownership of and License to Data.
(a) It is acknowledged and agreed that (i) AXP retains all right,
title and interest in and to all AXP Data and nothing herein shall create or vest in Ameriprise any right, title or interest in or to the AXP Data and (ii) Ameriprise retains all right, title
and interest in and to all Ameriprise Data and nothing herein shall create or vest in AXP any right, title or interest in or to the Ameriprise Data: and
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(b) AXP
hereby grants to Ameriprise a non-exclusive, royalty free, fully paid-up, non-transferable, worldwide license to use AXP Data
solely (i) to provide the Ameriprise Services and (ii) to comply with Ameriprise's obligations under applicable Law with respect to such AXP Data.
(c) Ameriprise
hereby grants to AXP a non-exclusive, royalty free, fully paid-up, non-transferable, worldwide license to use Ameriprise
Data solely (i) to provide the AXP Services and (ii) to comply with AXP's obligations under applicable Law with respect to such Ameriprise Data.
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above.
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AMERICAN EXPRESS COMPANY
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By
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/s/ Gilbert E. Ahye
Name: Gilbert E. Ahye
Title: Senior Vice President
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AMERIPRISE FINANCIAL, INC.
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By
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/s/ Walter S. Berman
Name: Walter S. Berman
Title: Executive Vice President and Chief Financial Officer
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QuickLinks
TRANSITION SERVICES AGREEMENT
RECITALS
ARTICLE I DEFINITIONS
ARTICLE II TRANSITION SERVICES
ARTICLE III FEES AND EXPENSES
ARTICLE IV CONFIDENTIALITY
ARTICLE V NO WARRANTY; LIMITATION OF LIABILITY; INDEMNIFICATION; ESCALATION
ARTICLE VI INTERNAL CONTROLS
ARTICLE VII TERM; TERMINATION
ARTICLE VIII MISCELLANEOUS
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Exhibit 10.2
TAX ALLOCATION AGREEMENT
DATED AS OF SEPTEMBER 30, 2005
BY AND BETWEEN
AMERICAN EXPRESS COMPANY
AND
AMERIPRISE FINANCIAL, INC.
ARTICLE I
DEFINITIONS AND STANDARDS
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Section 1.01.
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Definitions
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2
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Section 1.02.
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General Interpretive Principles
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8
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Section 1.03.
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Applicable Standards
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8
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ARTICLE II
U.S. CONSOLIDATED FEDERAL INCOME TAX LIABILITIES
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Section 2.01.
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Pre-2005 Taxable Years
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8
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Section 2.02.
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2005 Taxable Year
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9
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Section 2.03.
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U.S. Federal Alternative Minimum Tax
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10
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ARTICLE III
U.S. COMBINED STATE AND LOCAL INCOME TAX LIABILITIES
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Section 3.01.
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Returns Covered
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Section 3.02.
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Pre-2005 Taxable Years
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Section 3.03.
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Net Operating Losses
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Section 3.04.
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2005 Taxable Year
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Section 3.05.
|
|
Estimated Taxes, Etc
|
|
11
|
Section 3.06.
|
|
Adjustments
|
|
12
|
ARTICLE IV
SEPARATE TAX RETURN OBLIGATIONS
|
Section 4.01.
|
|
Ameriprise Tax Liability
|
|
12
|
Section 4.02.
|
|
AXP Tax Liability
|
|
12
|
Section 4.03.
|
|
Separate Return Adjustments
|
|
12
|
ARTICLE V
TAX-FREE STATUS OF DISTRIBUTION
|
Section 5.01.
|
|
Tax-Free Status Ruling, Etc
|
|
13
|
Section 5.02.
|
|
Maintaining Status of Active Business
|
|
13
|
Section 5.03.
|
|
Limits on Proposed Acquisition Transactions, Etc
|
|
13
|
Section 5.04.
|
|
Twenty Five Percent Proposed Acquisition Transactions
|
|
14
|
Section 5.05.
|
|
Indemnity
|
|
14
|
ARTICLE VI
DUAL CONSOLIDATED LOSSES
|
Section 6.01.
|
|
Ameriprise Liability
|
|
15
|
Section 6.02.
|
|
Recapture Taxes
|
|
15
|
Section 6.03.
|
|
Closing Agreement
|
|
15
|
|
|
|
|
|
|
i
ARTICLE VII
CARRYOVER AND CARRYBACK ITEMS
|
Section 7.01.
|
|
Carryovers to Post-Affiliation Years
|
|
15
|
Section 7.02.
|
|
Carrybacks from Post-Affiliation Years
|
|
16
|
ARTICLE VIII
U.S. FEDERAL INCOME TAX ADJUSTMENTS
|
Section 8.01.
|
|
Determination
|
|
16
|
Section 8.02.
|
|
Payments
|
|
16
|
Section 8.03.
|
|
Procedures
|
|
17
|
Section 8.04.
|
|
Intercompany Adjustments
|
|
17
|
ARTICLE IX
U.S. FEDERAL INCOME TAX PROCEEDINGS
|
Section 9.01.
|
|
Ameriprise and AXP Issues
|
|
17
|
Section 9.02.
|
|
Procedures
|
|
17
|
Section 9.03.
|
|
Control of Issues
|
|
18
|
Section 9.04.
|
|
Options for Resolution
|
|
18
|
Section 9.05.
|
|
Forum for Judicial Proceedings
|
|
19
|
Section 9.06.
|
|
Settlement of Claims
|
|
19
|
ARTICLE X
PAYMENTS
|
Section 10.01.
|
|
Reporting of Indemnity Payments, Etc
|
|
19
|
Section 10.02.
|
|
Interest on Late Payments
|
|
19
|
ARTICLE XI
TAX RETURNS
|
Section 11.01.
|
|
Cooperation and Furnishing of Tax Return Information
|
|
19
|
Section 11.02.
|
|
Preparation of Tax Returns
|
|
20
|
ARTICLE XII
POST-AFFILIATION YEARS AND POST-COMBINED YEARS
|
Section 12.01.
|
|
Returns
|
|
21
|
Section 12.02.
|
|
Actions or Transactions
|
|
21
|
Section 12.03.
|
|
Proposed Adjustments
|
|
21
|
ARTICLE XIII
BOOKS AND RECORDS
|
Section 13.01.
|
|
Retention Period
|
|
21
|
Section 13.02.
|
|
Record Retention Policy
|
|
21
|
Section 13.03.
|
|
Tax Attributes
|
|
21
|
|
|
|
|
|
|
ii
ARTICLE XIV
COMPENSATION AND EMPLOYEE BENEFITS
|
Section 14.01.
|
|
General
|
|
22
|
Section 14.02.
|
|
AXP Stock-Based Awards
|
|
22
|
Section 14.03.
|
|
Reporting of Deductions
|
|
22
|
Section 14.04.
|
|
Employment Taxes and Tax Reporting
|
|
22
|
Section 14.05.
|
|
Determinations
|
|
22
|
ARTICLE XV
MISCELLANEOUS
|
Section 15.01.
|
|
Notices
|
|
22
|
Section 15.02.
|
|
Complete Agreement; Representations
|
|
23
|
Section 15.03.
|
|
Amendment, Modification, or Waiver
|
|
24
|
Section 15.04.
|
|
Severability
|
|
24
|
Section 15.05.
|
|
No Assignment; Binding Effect; No Third-Party Beneficiaries
|
|
24
|
Section 15.06.
|
|
Headings
|
|
24
|
Section 15.07.
|
|
Counterparts
|
|
24
|
Section 15.08.
|
|
Governing Law
|
|
24
|
iii
FORM OF TAX ALLOCATION AGREEMENT
This TAX ALLOCATION AGREEMENT, dated as of this 30
th
day of September, 2005 (this "
Agreement
"), is between American
Express Company, a New York corporation ("
AXP
"), and Ameriprise Financial, Inc., a Delaware corporation ("
Ameriprise
," and together
with AXP, each a "Party" and collectively, the "
Parties
"). AXP has its executive office at American Express Tower, 3 World Financial Center, 200 Vesey Street, New York,
New York 10285. Ameriprise has an executive office at 707 2nd Avenue, South, Minneapolis, Minnesota 55474.
WHEREAS,
the Board of Directors of AXP has determined that it is in the best interests of AXP to separate the Ameriprise Business (as defined below) and the AXP Business (as defined
below) into two independent public companies, on the terms and subject to the conditions set forth in the Separation Agreement (as defined below), in order to resolve issues related to the allocation
of capital and management resources between the Ameriprise Business and the AXP Business, and to give Ameriprise greater flexibility to manage, invest in, and expand the Ameriprise Business while
ensuring that AXP can focus its time and resources on the development of the AXP Business;
WHEREAS,
in order to effectuate the foregoing, AXP and Ameriprise have entered into a Separation and Distribution Agreement, dated as of August 24, 2005, (the
"
Separation Agreement
"), pursuant to which and subject to the terms and conditions set forth therein, the Ameriprise Business shall be separated from the AXP Business and
the Ameriprise Common Stock (as defined below) shall be distributed on a pro rata basis to AXP shareholders;
WHEREAS,
for U.S. federal income Tax purposes, from January 13, 1984, through the Distribution Date (defined below) of the Distribution (defined below), income of certain present
and former members of the Ameriprise Group (defined below) has been or will be included in AXP Consolidated Returns (defined below) and, from January 1, 1990, through the Distribution Date,
income of certain life insurance companies subject to tax under section 801 of the Code (defined below), that are or were part of the Ameriprise Group, has been or will be included in AXP
Consolidated Returns;
WHEREAS,
certain Ameriprise Combined Group (defined below) members have filed or will file Combined Returns (defined below) covering U.S. state and local income Taxes with AXP Combined
Groups (defined below) as part of their respective Total Combined Groups (defined below);
WHEREAS,
Ameriprise and other members of the Ameriprise Group will cease to be members of the AXP Group for U.S. federal income Tax purposes after the Distribution Date, and Ameriprise
and other members of Ameriprise Combined Groups will cease to be members of their respective Total Combined Groups for U.S. state and local income Tax purposes after the Distribution Date;
WHEREAS,
the failure of the Distribution to have a Tax-Free Status (defined below) or certain actions taken with respect to Ameriprise Capital Stock (defined below) could
subject AXP and its shareholders to additional Tax costs in connection with the Distribution; and
WHEREAS,
AXP and Ameriprise desire in this Agreement to (i) set forth Tax allocation principles for Affiliation Years for U.S. federal income Tax purposes and Combined Years for
U.S. state and local income Tax purposes, which, except to the extent provided herein, will supersede all prior policies and procedures governing the allocation of Taxes, (ii) define the
effects upon the settlement and allocation of certain Tax liabilities and Tax benefits of transactions or developments that occur during taxable years commencing after the Distribution Date,
(iii) set forth the responsibility for their respective stand-alone income and other Tax liabilities, and (iv) allocate liability for certain Tax costs that may be incurred in connection
with the Distribution.
1
NOW,
THEREFORE, in consideration of the foregoing, the promises and covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, AXP and Ameriprise hereby agree as follows:
ARTICLE I
DEFINITIONS AND STANDARDS
SECTION
1.01.
Definitions
. For all purposes of this Agreement, the following terms shall have the following meanings:
"
2004
Excess AXP Group Benefits
" shall mean the term as defined in Section 2.01.
"
2004
Tax Liability
" shall mean the term as defined in Section 2.01.
"
2004
Tax Year
" shall mean the term as defined in Section 2.01.
"
2005
Excess AXP Group Benefits
" shall mean the term as defined in Section 2.02.
"
2005
Tax Liability
" shall mean the term as defined in Section 2.02.
"
2005
Tax Year
" shall mean the term as defined in Section 2.02.
"
Additional
Excess Items
" shall mean the term as defined under "Excess AXP Group Benefits."
"
Adjusted
Separate Ameriprise Group Federal Tax Liability
" shall mean with respect to any Affiliation Year(s) the U.S. federal income Tax liability of the
Ameriprise Group, as determined by AXP in good faith, applying the Highest Federal Tax Rate, computed as if the Ameriprise Group (with Ameriprise as the common parent) filed a consolidated U.S.
federal income Tax Return separately from the AXP Group ("
Ameriprise Consolidated Return
"), and applying such U.S. Tax laws and regulations as would have been applicable
to the Ameriprise Group if it had so filed separately, but not taking into account any items that are predicated on base amounts determined on a consolidated basis such as research Credits, subject to
the following:
(i) the
Ameriprise Group shall be treated as bound by all accounting methods, elections and other determinations adopted or made by AXP for the AXP Group for all Affiliation
Years, including, but not limited to, determinations made in respect of carrybacks and carryovers;
(ii) the
Ameriprise Group shall be permitted to reduce its Adjusted Separate Ameriprise Group Federal Tax Liability (but not below zero) to the extent that AXP determines
that the AXP Group is able to reduce its U.S. federal income Tax liability in the AXP Consolidated Return for such Affiliation Year by utilizing items of deduction, loss, or Credit of the Ameriprise
Group which AXP determines the Ameriprise Group would have been unable to utilize if it had filed an Ameriprise Consolidated Return ("
Excess Items
");
provided
, that if there are any limitations in the ability of the AXP Group to utilize items in the same category as such Excess Items in their entirety for such year, the
Ameriprise Group shall be limited in the reduction of its Adjusted Separate Ameriprise Group Federal Tax Liability to its share of such Excess Items, as determined by AXP, on a Proportionate Basis;
provided
,
further
, that if, pursuant to the above provisions, an Excess Item is not usable, in whole or in part, by the AXP Group in one
Affiliation Year, it may, as determined by AXP in good faith pursuant to Section 8.03 hereof, be
carried over or carried back as an Excess Item to any other Affiliation Year subject to the same limitations as above; and
(iii) the
Ameriprise Group shall take into account the items of Ameriprise Group income, gain, loss, deduction or Credit attributable to intercompany items, excess loss
accounts, dual consolidated losses and other items that AXP determines are required to be restored, recaptured or otherwise triggered as a result of the Distribution or related transactions.
2
"
Adjustment
"
shall mean, with respect to any Affiliation Year, any change in actual Tax liability from the Tax liability reported on an AXP Consolidated
Return, including changes attributable to amended Tax Returns, deficiencies asserted by a Taxing authority, overpayments, and claims for refund, and changes required by application of the Code and
Treasury Regulations including, but not limited to, changes required pursuant to Treasury Regulations Section 1.1502-47 (setting forth consolidated return rules applicable to
life-non-life groups), and Taxing authority audits, examinations, proceedings or litigation resulting from any of the foregoing events (collectively, "
Adjustment
Events
"). Adjustment shall mean with respect of any Combined Year in which an Ameriprise Combined Group files a Combined Return with an AXP Combined Group as part of a Total Combined
Group, any change in the actual Tax liability of the applicable Total Combined Group, including changes attributable to Adjustment Events.
"
Affiliate
"
shall mean any entity that is directly or indirectly controlled by the person in question. For this purpose, "control" shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of the management and the policies of a person, whether through ownership of voting securities, by contract or otherwise.
"
Ameriprise Affiliate
" shall mean an Affiliate of Ameriprise. "
AXP Affiliate
" shall mean an Affiliate of AXP other than Ameriprise and
Ameriprise Affiliates.
"
Affiliation
Year
" shall mean each taxable year, or portion thereof, with respect to which any member of the Ameriprise Group joined or will join the AXP
Group in the filing of an AXP Consolidated Return.
"
Ameriprise
AMT Liability
" shall mean the term as defined in Section 2.03.
"
Ameriprise
Business
" means the business and operations conducted by the Ameriprise Group from time to time, whether prior to, at or after the Effective
Time, including the business and operations conducted by the Ameriprise Group, as more fully described in the Information Statement; provided that "Ameriprise Business" shall not include AMEX
Assurance.
"
Ameriprise
Capital Stock
" shall mean all classes or series of stock of Ameriprise and all options, warrants, derivatives, rights to acquire stock, and other
interests and instruments taken into account for purposes of determining a Fifty-Percent or Greater Interest in Ameriprise.
"
Ameriprise
Combined Group
" shall mean an affiliated group of corporations (as constituted from time to time), consisting of Ameriprise and/or its directly
or indirectly owned subsidiaries, that AXP determines will join in filing a Combined Return with an AXP Combined Group.
"
Ameriprise
Common Stock
" shall mean the term as defined under "Distribution."
"
Ameriprise
Group
" shall mean the affiliated group of corporations (as constituted from time to time), consisting of Ameriprise and/or its directly or
indirectly owned subsidiaries, that AXP determines will join in filing an AXP Consolidated Return.
"
Ameriprise
Group State Tax Liability
" shall mean the term as defined in Section 3.02.
"
Ameriprise
Issues
" shall mean the term as defined in Section 9.01.
"
Ameriprise
Separate AMT
" shall mean the term as defined in Section 2.03.
"
Ameriprise
Unsettled Issues
" shall mean the term as defined in Section 9.03.
"
AMT
"
shall mean the term as defined in Section 2.03.
"
Article IX
Taxes
" shall mean the term as defined in Section 9.03.
"
AXP
AMT Liability
" shall mean the term as defined in Section 2.03.
"
AXP
Business
" means all businesses and operations of the AXP Group, other than the Ameriprise Business.
3
"
AXP
Combined Group
" shall mean an affiliated group of corporations (as constituted from time to time) owned directly or indirectly by AXP that AXP
determines will join in filing a Combined Return excluding members of an Ameriprise Combined Group.
"
AXP
Consolidated Return
" shall mean a consolidated U.S. federal income Tax Return filed by AXP on behalf of the AXP Group.
"
AXP
Excess Issue
" shall mean the term as defined in Section 9.04.
"
AXP
Group
" shall mean the affiliated group of corporations (as constituted from time to time), of which AXP is the common parent, that AXP determines will
join in filing an AXP Consolidated Return.
"
AXP
Issues
" shall mean the term as defined in Section 9.01.
"
AXP
LOIs
", "
AXP Options
" and "
AXP Restricted Stock
" shall have the meanings ascribed to them in
the Employee Benefits Agreement by and between AXP and Ameriprise dated as of September 30, 2005.
"
AXP
Stock-Based Awards
" shall mean AXP LOIs, AXP Options and/or AXP Restricted Stock.
"
Board
Certificate
" shall mean the term as defined in Section 5.04.
"
Closing
Agreement
" shall mean the term as defined in Section 6.01.
"
Code
"
shall mean the Internal Revenue Code of 1986, as amended. Any references herein to sections of the Code or Treasury Regulations promulgated thereunder
shall include any successor provisions thereto.
"
Combined
Return
" shall mean a combined or unitary U.S. state or local income, franchise, or gross receipts Tax Return.
"
Combined
State
" shall mean a U.S. state or locality requiring or permitting the filing of a Combined Return.
"
Combined
Year
" shall mean a taxable year (or portion thereof) in which an AXP Combined Group files a Combined Return with an Ameriprise Combined Group.
"
Credits
"
shall mean all of the credits against U.S. federal income Tax or, as applicable, against U.S. state or local Tax. Credits shall include, but not be
limited to, foreign Tax credits, research credits, low-income housing credits, investment Tax credits and targeted job credits.
"
Distribution
"
shall mean the distribution on a
pro rata
basis to holders of issued and outstanding shares of
common stock, par value $0.20 per share, of AXP, other than shares of AXP common stock held in the treasury of AXP, of all of the issued and outstanding shares of Ameriprise common stock, par value
$0.01 per share ("
Ameriprise Common Stock
"), beneficially owned by AXP, by means of a dividend of such Ameriprise Common Stock to such shareholders.
"
Distribution
Date
" shall mean the date on which the Distribution shall be effected, such date to be determined by, or under the authority of, the Board of
Directors of AXP in its sole and absolute discretion.
"
Dual
Consolidated Loss
" shall mean the term as defined in Section 6.01.
"
Effective
Time
" means the time at which the Distribution occurs on the Distribution Date.
"
Estimated
State Taxes
" shall mean the term as defined in Section 3.05.
"
Evaluation
"
shall mean the term as defined in Section 9.03.
4
"
Excess
AXP Group Benefits
" shall mean the amount by which AXP determines that AXP was able to reduce its U.S. federal income Tax liability in the AXP
Consolidated Return for an Affiliation Year by use of Excess Items (as defined above under "Adjusted Separate Ameriprise Group Federal Tax Liability") which would reduce the Adjusted Separate
Ameriprise Group Federal Tax Liability for such year, if zero, below zero ("
Additional Excess Items
"). Use of Additional Excess Items shall otherwise be subject to the
same limitations and other provisions applicable to the use of Excess Items, as determined by AXP in good faith.
"
Exercised
AXP Options
" shall mean the term as defined in Section 14.02.
"
Fifty-Percent
or Greater Interest
" shall mean a "50-percent or greater interest" for purposes of Sections 355(d) and (e) of the Code and
the Treasury Regulations promulgated thereunder.
"
Final
Determination
" shall mean a final settlement with a Taxing authority that is binding on all Parties or, if applicable, a final judicial decision upon
the expiration of the time for the decision to be appealed, with respect to the items in question.
"
Foreign
Attribute
" shall mean any item of income, gain, loss or deduction or any asset or liability relevant to the computation of taxable income from
sources without the United States and any item of Credit described in Section 901 of the Code (without regard to the limitation of Section 904 of the Code).
"
Fund
Management Business
" shall mean the business of Ameriprise so designated, as described in the request for rulings from the IRS in respect of the
Distribution and related matters, dated February 27, 2005, as supplemented from time to time.
"
Highest
Combined Tax Rate
" for the taxable year in question shall mean the sum of (i) the Highest Federal Tax Rate, and (ii) in the case of a
corporation, the average, weighted by jurisdiction, of the highest U.S. state and local income, franchise, and gross receipts Tax rates that would be applicable to such a corporation (net of any U.S.
federal income Tax benefit), or in the case of a Person other than a corporation, the highest U.S. state and local income Tax rates (net of any U.S. federal income Tax benefit) that would be
applicable to such Person or the beneficial owner(s) of such Person.
"
Highest
Federal Tax Rate
" for the taxable year in question shall mean (i) in the case of a corporation, the highest U.S. federal income Tax rate
applicable to a corporation, or (ii) in the case of a Person other than a corporation, the highest U.S. federal income Tax rate that would be applicable to such Person or the beneficial
owner(s) of such Person.
"
Income
Tax Benefit
" shall mean the amount of the Tax savings realized by the applicable group, as determined by AXP in good faith. Such amount shall be
determined by comparing (i) the actual U.S. federal income Tax liability and the corresponding U.S. state and local income Tax liability (net of any federal Tax benefit) of the applicable group
for the taxable year in question without giving effect to the items in question with (ii) the actual U.S. federal income Tax liability and the corresponding U.S. state and local Tax liability
(net of any federal Tax benefit) of the applicable group for such year after giving full effect to such items. An Income Tax Benefit shall be deemed to be realized at the time that the applicable
group receives a refund or credit for refund from the relevant Taxing authority.
"
Income
Tax Detriment
" shall mean the amount of additional Tax incurred by the applicable group, as determined by AXP in good faith. Such amount shall be
determined by comparing (i) the actual U.S. federal income Tax and the corresponding U.S. state and local Tax liability (net of any U.S. federal income Tax benefit) of the applicable group for
the taxable year in question after giving full effect to the items in question with (ii) the actual U.S. federal income Tax and the corresponding U.S. state and local Tax liability (net of any
U.S. federal income Tax benefit) of the applicable group without giving effect to such items. Unless otherwise provided herein, an Income Tax Detriment shall be deemed to be incurred at such time as
payment is made to the relevant Taxing authority upon a Final
5
Determination
of items in questions. In computing the Tax liability of the AXP Group for purposes of clause (i) of the second sentence of this definition or clause (ii) of the second
sentence of the definition of "Income Tax Benefit" above, increases or decreases in the U.S. federal, state or local income Tax liability of the AXP Group attributable to the effect on AXP's (or any
AXP subsidiary's) basis in the stock of any member of the Ameriprise Group will not be taken into account.
"
IRS
"
shall mean the U.S. Internal Revenue Service.
"
IRS
Agreement
" shall mean the term as defined in Section 9.04.
"
Minimum
Tax Credit
" shall mean the term as defined in Section 2.03.
"
New
AXP Issues
" shall mean the term as defined in Section 9.04.
"
NOLs
"
shall mean the term as defined in Section 3.03.
"
Person
"
shall mean an individual or a partnership, corporation, limited liability company, association, joint stock company, trust, joint venture,
unincorporated organization, or other entity, without regard to whether such entity is treated as disregarded for U.S. federal income Tax purposes.
"
Post-Affiliation
Year
" shall mean a taxable period after the Distribution Date during which Ameriprise and its subsidiaries do not join the AXP
Group in the filing of an AXP Consolidated Return.
"
Post-Combined
Year
" shall mean a taxable period after the Distribution Date during which Ameriprise and its subsidiaries do not join a Total
Combined Group in the filing of a Combined Return with an AXP Combined Group.
"
Proportionate
Basis
" shall mean, with respect to an item or items attributable to a particular member or members of the Ameriprise Group, the determination
of the portion of such items based on the total value of such items over the total value of all items in the same category for the entire AXP Group for the same Affiliation Year of the AXP Group,
subject to any appropriate Adjustments thereto, as determined by AXP in good faith.
"
Proposed
Acquisition Transaction
" shall mean a transaction or series of transactions (or any agreement, understanding or arrangement, within the meaning of
Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, to enter into a transaction or series of transactions), as a result of which Ameriprise would merge or
consolidate with any other Person or as a result of which any Person or any group of Persons would (directly or indirectly) acquire, or have the right to acquire through the acquisition of an option
or otherwise, from Ameriprise and/or one or more holders of Ameriprise Capital Stock, an amount of Ameriprise Capital Stock that would, when combined with any other changes in ownership of Ameriprise
Capital Stock pertinent for purposes of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder, comprise 40% or more of (A) the value of all outstanding
Ameriprise Capital Stock as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series, or (B) the total combined voting power
of all outstanding Ameriprise Capital Stock as of the date of such transaction, or in the case of a series of transactions, the date of the last transaction of such series. For purposes of determining
whether a transaction constitutes an indirect acquisition for purposes of the first sentence of this definition, any recapitalization resulting in a shift of voting power or any redemption of shares
of stock shall be treated as an indirect acquisition of shares of stock by the non-exchanging shareholders. This definition and the application thereof is intended to monitor compliance
with Section 355(e) of the Code and the Treasury Regulations promulgated thereunder and shall be interpreted accordingly by AXP in good faith.
"
RAR
"
shall mean the term as defined in Section 9.02.
"
Recapture
Taxes
" shall mean the term as defined in Section 6.02.
6
"
Representation
Letters
" shall mean the term as defined in Section 5.01.
"
Section 7.02
Claims
" shall mean claims for refund attributable to items described in and filed pursuant to Section 7.02 of this Agreement.
"
SFAS
Exercised AXP Options
" shall mean the term as defined in Section 14.02.
"
Tax
"
or "
Taxes
" shall mean any tax, assessment, duty, fee or other charge imposed or collected by any government or political
subdivision thereof or any taxing authority thereunder, including but not limited to, any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social
security, premium, guarantee fund, workers compensation, unemployment, disability, property,
ad valorem
, stamp, excise, severance, occupation, service,
sales, use, license, lease, transfer, import, export, value added, minimum, alternative minimum, estimated or other tax (including any assessment, duty, fee or other charge in the nature of or in lieu
of any such tax), and any interest, penalties, additions to tax, or additional amounts in respect of the foregoing.
"
Tax
Advisor
" shall mean a United States law or accounting firm of national standing in the field of taxation selected by AXP.
"
Tax-Free
Status
" shall mean the qualification of the Distribution and related transactions as a distribution in which no gain or loss is
recognized, and no amount is includible in income, for U.S. federal income Tax purposes (other than intercompany items, excess loss accounts or other items required to be taken into account pursuant
to the Treasury Regulations promulgated under Section 1502 of the Code).
"
Tax-Related
Losses
" shall mean (i) all U.S. federal, state and local Taxes payable pursuant to any Final Determination or otherwise;
(ii) all professional fees, and court costs incurred in connection with such Taxes; and (iii) all costs, expenses and damages associated with stockholder litigation or controversies,
including but not limited to, any amount paid by AXP or any AXP Affiliate in respect of the liability of shareholders, whether paid to shareholders, the IRS, any other Taxing
authority, or any other person or entity, in each case, arising from the Distribution and related transactions failing to have Tax-Free Status in any manner.
"
Tax
Return
" shall mean any Tax return (including any amended return), report, information return, election, notice or other document filed or to be filed
with a Taxing authority, including any schedules or related or supporting information.
"
Total
Combined Group
" shall mean, with respect to any U.S. jurisdiction that requires or permits the filing of a Combined Return, the affiliated group of
corporations (as constituted from time to time), that AXP determines will join in the filing of such Combined Return, that includes an AXP Combined Group and an Ameriprise Combined Group.
"
TPIs
"
shall mean the term as defined in Section 2.03.
"
Treasury
Regulations
" shall mean U.S. Treasury regulations issued under the Code.
"
Twenty
Five Percent Proposed Acquisition Transaction
" shall mean any transaction or series of transactions that is not a Proposed Acquisition Transaction
but would be a Proposed Acquisition Transaction if the percentage reflected in the definition of Proposed Acquisition Transaction were 25% instead of 40%.
"
Unqualified
Tax Opinion
" shall mean an unqualified "will" opinion of a law firm of nationally recognized standing in the field of taxation, which opinion is
acceptable to AXP and on which AXP may rely to confirm that a transaction will not affect the Tax-Free Status, including confirmation that may be provided for purposes of avoiding any
applicable penalties or additions to Tax. Any such opinion shall assume that the Distribution and related transactions would have qualified for Tax-Free Status had the transaction in
question not occurred.
7
"
Vesting
Period
" shall mean the period from and including the date on which an AXP Stock-Based Award is granted, to and including the date on which such
award is first exercisable (in the case of AXP Options) or vests, whichever occurs first. For these purposes, an AXP Stock-Based Award will be deemed to be vested when it is considered vested in
accordance with the applicable retirement practice and policies of AXP.
"
Vesting
Ratio
" shall mean the ratio of the number of days during a Vesting Period that an entity was a direct employer of record of a holder of an AXP
Stock-Based Award over the total number of days in the Vesting Period; provided, however, that no more than one entity will be deemed to be a direct employer of a holder on any given day.
SECTION
1.02.
General Interpretive Principles
. (a) Words in the singular shall include the plural and vice versa, and words
of one gender shall include the other gender, in each case, as the context requires, (b) the term "hereof," "herein," "hereunder," and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement and not to any particular provision of this Agreement, and any references to Article, Section, paragraph, exhibit and schedule are references
to the Articles, Sections, paragraphs, exhibits and schedules to this Agreement unless otherwise specified, (c) the word "including" and words of similar import when used in this Agreement
shall mean "including, without limitation," unless otherwise specified and (d) any reference to any federal, state, local or non-U.S. statute or law shall be deemed to also refer to
all rules and regulations promulgated thereunder, unless the context otherwise requires.
SECTION
1.03.
Applicable Standards
. Except as otherwise specifically provided herein, this Agreement shall supersede in all
respects any and all policies and procedures governing the allocation of Tax liability among the members of the AXP Group or the Total Combined Groups. Except as otherwise specifically provided
hereunder, all determinations and actions required under this Agreement will be taken by AXP and shall be made in good faith taking into account, among other factors, the goal of reducing the
aggregate Taxes of the Parties. It is the intention of the Parties that this Agreement shall be administered in a manner so that the allocation of income, deduction, loss or Credit between the Parties
will produce Tax consequences for the Parties, on a current, carryback and carryover basis, that are consistent with those that are required by the Code and Treasury Regulations.
ARTICLE II
U.S. CONSOLIDATED FEDERAL INCOME TAX LIABILITIES
SECTION
2.01.
Pre-2005 Taxable Years
. (a)
Ameriprise and AXP Tax
Liabilities
. Ameriprise shall be responsible for, and shall indemnify and hold AXP and the AXP Affiliates harmless against, the U.S. federal income Tax liability of the
Ameriprise Group for all taxable years ending on or before December 31, 2004, including the "2004 Tax Liability" (defined below). Ameriprise shall be liable for and pay AXP the Adjusted
Separate Ameriprise Group Federal Tax Liability for each such Affiliation Year. AXP shall pay Ameriprise, but Ameriprise shall remain liable for, Excess AXP Group Benefits, if any, for any such year
if the Adjusted Separate Ameriprise Group Federal Tax Liability for such year is zero. The "
2004 Tax Liability
" is the Adjusted Separate Ameriprise Group Federal Tax
Liability for the taxable year ending on December 31, 2004 ("
2004 Taxable Year
").
(b)
2004 Tax Liability
. On or after the day AXP files the AXP Consolidated Return for the 2004 Taxable Year, AXP
shall determine the amount of the 2004 Tax Liability or any Excess AXP Group Benefits for such year ("
2004 Excess AXP Group Benefits
"). Ameriprise shall pay to AXP or AXP
shall pay to Ameriprise an amount equal to the difference between (i) the 2004 Tax Liability and (ii) the sum of any payments previously made by Ameriprise to AXP with respect to the
2004 Tax Liability, reduced (to and below zero) by the sum of any payments previously made or to be made by AXP to Ameriprise in respect of any 2004 Excess AXP Group Benefits. Payment by Ameriprise is
due within five (5) business days after billing by AXP. Payment by AXP is due within thirty (30) business days of filing the AXP Consolidated Return for the 2004 Taxable Year.
8
SECTION 2.02.
2005 Taxable Year.
(a)
Ameriprise and
AXP Tax Liabilities.
Ameriprise shall be responsible and pay AXP for, and shall indemnify and hold AXP and the AXP Affiliates harmless against, the "2005 Tax Liability" (as
defined below), which shall include, but not be limited to, all liabilities arising from the triggering of intercompany and other items as described in clause (iii) of the definition above of
"Adjusted Separate Ameriprise Group Federal Tax Liability." Notwithstanding anything herein to the contrary, Ameriprise shall be responsible for, and shall indemnify and hold AXP and the AXP
Affiliates harmless against, any Tax liabilities incurred in connection with the sale of AMEX Assurance Company including, but not limited to, any such liabilities arising from the triggering of any
intercompany items relating to such sale. AXP agrees to indemnify, and hold Ameriprise and the Ameriprise Affiliates harmless against, U.S. federal income tax liabilities in respect of members of the
AXP Group (other than members of the Ameriprise Group) under Treasury Regulations Section 1.1502-6. The "
2005 Tax Liability
" is the Adjusted Separate
Ameriprise Group Federal Tax Liability for the taxable year beginning on January 1, 2005 and ending on and including the Distribution Date (the "
2005 Taxable
Year
"). AXP shall pay Ameriprise but Ameriprise shall remain liable for the Excess AXP Group Benefits, if any, for the taxable year of the AXP Group ending on December 31, 2005
if the Adjusted Separate Ameriprise Group Federal Tax Liability is zero under the preceding sentence ("
2005 Excess AXP Group Benefits
"). In determining the 2005 Tax
Liability or 2005 Excess AXP Group Benefits, if applicable, Ameriprise will be credited with any losses or reduction in gain attributable to the sale of its interest in American Express International
Deposit Company, a Cayman Islands company, to AXP, but only to the extent AXP determines in good faith that such losses or reduction in gain (i) reduce the Adjusted Separate Ameriprise Group
Federal Tax Liability or result in Excess AXP Group Benefits for the appropriate periods, and (ii) exceed $15.7 million.
(b)
Estimated Payments, Etc.
From and after the date of this Agreement, Ameriprise shall pay to AXP no later
than the day before each due date for the payment of quarterly estimated U.S. federal income Taxes for the taxable year of the AXP Group ending on December 31, 2005 and the payment due on
March 15, 2006, as determined in good faith by AXP, the difference, if any, between (A) the 2005 Tax Liability due, determined in good faith by AXP, based on the method for making
estimated payments elected by AXP pursuant to Section 6655 of the Code, and (B) the sum of any payments previously made by Ameriprise to AXP with respect to the 2005 Tax Liability.
(c)
Payment Upon Filing Return.
On or after the day that AXP files the AXP Consolidated Return for the taxable
year ending on December 31, 2005, AXP shall determine the amount of the 2005 Tax Liability or any 2005 Excess AXP Group Benefits. Ameriprise shall pay to AXP or AXP shall pay to Ameriprise, as
the case may be, the difference between (i) the 2005 Tax Liability and (ii) (A) the sum of the amounts previously paid by Ameriprise to AXP with respect to the 2005 Tax Liability,
reduced (to and below zero) by (B) the sum of any payments previously made or to be made by AXP to Ameriprise in respect of any Excess AXP Group Benefits. Payment by Ameriprise is due within
five (5) business days after billing by AXP. Payment by AXP is due within thirty (30) business days of filing the AXP Consolidated Return for the taxable year ending on
December 31, 2005.
(d)
Settling Tax Payable Accounts.
On or before the Distribution Date, Ameriprise and AXP shall cooperate to
settle all Tax payable accounts for all Affiliation Years and all Combined Years, in accordance with AXP's direction, based on the most accurate and complete information then available.
(e)
Assignment of Taxable Items.
AXP shall determine the amounts of income, gain, loss, deduction, and Credit of
the Ameriprise Group for the 2005 Taxable Year which are properly includable in the AXP Consolidated Return for the taxable year of the AXP Group ending on December 31, 2005. For all relevant
purposes of this Agreement, the members of the Ameriprise Group and each Ameriprise Combined Group shall cease to be members of the AXP Group and their respective Total Combined Groups, as of the end
of the Distribution Date, and Ameriprise shall cause the books of account of the members of the Ameriprise Group and the Ameriprise Combined Groups to be closed for accounting and Tax purposes as of
the end of the Distribution Date in accordance with
9
AXP's
direction. In determining consolidated taxable income for the taxable period that ends on the Distribution Date, the income and other items of the Ameriprise Group shall be determined by AXP in
good faith in accordance with Treasury Regulations Section 1.1502-76(b)(1), -76(b)(2)(i) and -76(b)(2)(iv) and no election shall be made under
1.1502-76(b)(2)(ii)(D) to ratably allocate items. However, an allocation shall be made in good faith by AXP under Treasury Regulations
Section 1.1502-76(b)(2)(iii) if such allocation is determined by AXP in good faith to be necessary to appropriately allocate income in the event that the Distribution Date
occurs on any date other than the last or first day of any month. Pursuant to Treasury Regulations Section 1.1502-76(b)(2)(vi), any item of a passthrough entity that is owned by a
member of the Ameriprise Group shall be allocated as if such member sold its entire interest in the entity immediately before the Distribution. In the event that a member or members of the Ameriprise
Group would be treated as owning an interest of less than 50% in the aggregate in such passthrough entity, then pursuant to Treasury Regulations Section 1.706-1(c)(2)(ii), each such
member's share of any distributive items shall be the amount determined by taking into account the pro rata part of such items that such member would have included in taxable income had such member
remained a partner or owner of the passthrough entity until the end of the partnership taxable year based on the portion of the partnership taxable year that has elapsed through the Distribution Date
or upon such other reasonable method that the Parties may agree. All of the foregoing determinations to be made shall be made in good faith by AXP. Ameriprise and Ameriprise Affiliates shall file
their respective Tax Returns for the taxable period beginning on the first day after the Distribution Date consistently with such determinations.
(f)
Determining Foreign Attributes.
Without limiting the foregoing, AXP shall also determine the portion of any
Foreign Attribute for the Ameriprise Group that is allocable to the taxable year ending December 31, 2005, provided, that such portion to be allocated will not include any amount described in
Section 951(a) of the Code (relating to inclusions in income of controlled foreign corporation earnings) or any amount described in Section 1293(a) of the Code (relating to inclusions in
income of qualified electing fund earnings), or any indirect foreign Tax Credit under Sections 960 and 1293(f) of the Code for foreign income Taxes deemed paid with respect to either of these items,
all as determined by AXP in good faith; and
provided
,
further
, that, without the prior written consent of AXP, Ameriprise and its subsidiaries
shall not elect to recapture an amount of taxable income from sources without the U.S. of any member of the Ameriprise Group greater than the minimum amount required by Section 904(f)(1)
of the Code for any Affiliation Year. Ameriprise shall provide AXP with all information it requests to make any determination under this subsection (f). AXP will likewise share all information with
Ameriprise necessary for Ameriprise to determine its share of the consolidated foreign Tax Credits for the taxable year ending December 31, 2005 and all prior taxable years.
SECTION
2.03.
U.S. Federal Alternative Minimum
Tax.
(a)
Ameriprise Tax Liability.
Notwithstanding any other provision in this Agreement, if, for any Affiliation
Year, the AXP Group is liable for alternative minimum Tax for U.S. federal income Tax purposes (or any similar U.S. federal Tax) ("
AMT
") and the Ameriprise Group would be
liable for AMT if it filed a Tax Return as a separate consolidated group ("
Ameriprise Separate AMT
"), Ameriprise shall pay to AXP an amount (the "
Ameriprise
AMT Liability
") determined by AXP equal to the product of the AMT liability for the AXP Group (the "
AXP AMT Liability
") and a fraction (the
"
Fraction
") (x) the numerator of which is the sum of the Tax preference items and adjustments of the Ameriprise Group relevant for purposes of the computation of
AMT (the "
TPIs
") for such Affiliation Year and (y) the denominator of which is the sum of the TPIs of all members of the AXP Group for such Affiliation Year. The
Ameriprise AMT Liability for such Affiliation Year shall not exceed the amount of the Ameriprise Separate AMT for such Affiliation Year.
(b)
Minimum Tax Credits.
If for any Affiliation Year Ameriprise has paid to AXP the Ameriprise AMT Liability,
AXP shall pay to Ameriprise its proportionate share (determined below) of the minimum Tax credit for U.S. federal income Tax purposes (the "
Minimum Tax Credit
") arising
10
from
such Affiliation Year which is actually utilized by the AXP Group in a subsequent Affiliation Year. Ameriprise's proportionate share of such credit for any Affiliation Year shall be equal to the
product of such credit and the Fraction (defined in subsection (a) above). In no event shall Ameriprise be paid amounts in the aggregate in respect of such credit in excess of the corresponding
Ameriprise AMT Liability.
ARTICLE III
U.S. COMBINED STATE AND LOCAL INCOME TAX LIABILITIES
SECTION 3.01.
Returns Covered.
If any member of an AXP Combined Group and
any member of an Ameriprise Combined Group are required to file, or if AXP elects that any member of an AXP Combined Group and any member of an Ameriprise Combined Group shall file a Combined
Return for any taxable years, or where any U.S. state or local Taxing authority successfully asserts such a combined filing requirement, the allocation and settlement of amounts due between the
Parties shall be governed by this Article III.
SECTION
3.02.
Pre-2005 Taxable Years.
For each taxable year ending on
or before December 31, 2004, AXP shall determine in good faith each Ameriprise Combined Group's respective share, as determined below, of the total U.S. state and local Tax liability in each
such Combined State. The Ameriprise Combined Group's share of such total tax liability ("
Ameriprise Group State Tax Liability
") will be based on the aggregate
apportionment percentage of all members of the Ameriprise Combined Group, determined with reference only to those companies that are subject to such state's taxing jurisdiction. The Ameriprise Group
State Tax Liability will include any minimum or similar Taxes for members of each Ameriprise Combined Group that may be required by the relevant state or locality. In addition, in determining the
Ameriprise Group State Tax Liability for Minnesota and Nebraska, respectively, AXP will, in good faith, directly reduce the Ameriprise Group State Tax Liability in Minnesota for the employer transit
pass Credit generated by members of the Ameriprise Combined Group and the Ameriprise Group State Tax Liability in Nebraska for the employment Tax Credit generated by members of the Ameriprise Combined
Group, but only if and to the extent such Credit is used to reduce the Tax liability of the Total Combined Group in Minnesota or Nebraska, as the case may be, for that year. Ameriprise shall be
responsible for and pay to AXP, and shall indemnify AXP and the AXP Affiliates from and against, the Ameriprise Group State Tax Liability for each Combined Return for all taxable years ending on or
before December 31, 2004.
SECTION
3.03.
Net Operating Losses.
Consistent with the approach applied for
operating units of Total Combined Groups, Ameriprise Group State Tax Liability will not be reduced by, nor will Ameriprise or any other Ameriprise Combined Group member receive any payment, credit or
benefit for, U.S. state or local net operating losses ("
NOLs
"), including any carryback or carryover NOLs, that any such member generates for U.S. state or local income
Tax purposes on a stand-alone basis, whether or not they are used in a Combined Return (except insofar as such NOLs may reduce the Ameriprise Combined Group's share of the total U.S. state and local
liability for a Total Combined Return).
SECTION
3.04.
2005 Taxable Year.
For the taxable year beginning on
January 1, 2005, AXP shall determine in good faith the Ameriprise Combined Group's share of the total U.S. state and local Tax liability in each Combined State in the same manner as set forth
in Sections 3.02 and 3.03 above, taking into account the apportionment percentages and other relevant items of each appropriate Ameriprise Combined Group through the Distribution Date. Ameriprise
shall be responsible for and pay to AXP, and shall indemnify AXP and the AXP Affiliates from and against, the Ameriprise Group State Tax Liability for all Combined Returns for the taxable year
beginning January 1, 2005.
SECTION
3.05.
Estimated Taxes, Etc.
For each Combined State, AXP will determine in
good faith the Ameriprise Combined Group's estimated Tax payments and extension payments (collectively, "
Estimated State Taxes
"), will prescribe the information required
to be provided by the Ameriprise
11
Combined
Group to support AXP's preparation and filing of Combined Returns and payment of Estimated State Taxes, together with a schedule of due dates for providing of such information and paying its
share of Estimated State Taxes, and Ameriprise will timely and accurately provide and pay the same to AXP. AXP will calculate in good faith the aggregate Ameriprise Group State Tax Liability for all
Combined States for a Combined Year less a credit for aggregate Estimated State Taxes paid or determine the refund due to Ameriprise to the extent aggregate Estimated State Taxes paid by Ameriprise
exceed the aggregate Ameriprise Group State Tax Liability. Payment by Ameriprise is due within five (5) business days after billing by AXP. Payment of a refund by AXP is due by
November 30 of the year in which Combined State Tax Returns are filed.
SECTION
3.06.
Adjustments.
(a) If an Adjustment occurs, the Ameriprise Group
State Tax Liability for the year in question shall be recomputed by AXP in good faith, including all changes to apportionment percentages that result from such Adjustment. Ameriprise shall make
payments to AXP for an increase in the Ameriprise Group Tax Liability or AXP shall make payments to Ameriprise for a decrease in the Ameriprise Group Tax Liability, including its allocable share of
interest, penalties and additions to Tax and external costs. Payment in respect of such Adjustments by Ameriprise is due within five (5) business days after billing by AXP for the items in
question. Payment in respect of such Adjustments by AXP is due within thirty (30) business days after AXP receives a refund or credit for refund in respect of the items in question.
Notwithstanding anything herein to the contrary, in determining the Ameriprise Group State Tax Liability for Minnesota, as agreed, the Ameriprise Group State Tax Liability for the Combined Years
beginning January 1, 1999 and ending December 31, 2001 has been directly increased for the entire audit Adjustment to date for that period in the total amount of $3,514,710 ($3,086,168
of tax and $248,542 of interest), and such amount has been paid in full by Ameriprise.
(b) AXP
shall in good faith control all contests relating to any such Adjustments, provided, however, in respect of any Combined State in which the Ameriprise Combined Group
would bear at least 50% of the costs of any such Adjustments, AXP shall consult with Ameriprise in good faith, subject to the ultimate authority of AXP to determine how to proceed.
ARTICLE IV
SEPARATE TAX RETURN OBLIGATIONS
SECTION 4.01.
Ameriprise Tax Liability.
Ameriprise shall be responsible for,
and shall indemnify and hold harmless AXP and AXP Affiliates against, any and all U.S. federal, state and local and non-U.S. Taxes that are required to be reported on any separate Tax
Return that does not include AXP or any AXP Affiliate.
SECTION
4.02.
AXP Tax Liability.
AXP shall be responsible for, and shall indemnify
and hold harmless Ameriprise and Ameriprise Affiliates against, any and all U.S. federal, state and local and non-U.S. Taxes that are required to be reported on any separate Tax Return
that does not include Ameriprise or any Ameriprise Affiliate.
SECTION
4.03.
Separate Return Adjustments.
If there is an adjustment to a separate
Tax Return of AXP and/or AXP Affiliates, or Ameriprise and/or Ameriprise Affiliates, as the case may be, that results in the inclusion in income in such Tax Return of income attributable to the other
group of companies, and the recipient thereby incurs an Income Tax Detriment, Ameriprise shall pay to AXP or AXP shall pay to Ameriprise, as the case may be, an amount equal to such Income Tax
Detriment (including any interest, penalties and additions to Tax) within thirty (30) business days after the Final Determination of such Income Tax Detriment.
12
ARTICLE V
TAX-FREE STATUS OF DISTRIBUTION
SECTION 5.01.
Tax-Free Status Ruling, Etc.
Ameriprise
acknowledges and agrees that AXP will control the process of obtaining any rulings or other formal advice from relevant Taxing authorities in respect of the Tax-Free Status, the
Distribution or any related transaction. Ameriprise shall promptly execute and cause to be delivered to the Tax Advisor any representation letters ("
Representation
Letters
") that the Tax Advisor provides to it and understands that such letter or letters will be relied upon by the Tax Advisor in rendering an opinion or opinions on the
Tax-Free Status and related matters and/or obtaining any such ruling or formal advice. Ameriprise shall represent that, subject to any qualifications therein which are acceptable to the
Tax Advisor, all information contained in its Representation Letters that concerns or relates to it or any Ameriprise Affiliate is true, correct and complete. Ameriprise shall take such other actions
as may be necessary or desirable to obtain any such ruling, formal advice or opinion as the Tax Advisor may request.
SECTION
5.02.
Maintaining Status of Active Business.
Ameriprise agrees that, from
the date hereof until the first day after the second anniversary of the Distribution Date, it shall maintain the status of the Fund Management Business as an active trade or business as defined in
Section 355(b)(2) of the Code and the Treasury Regulations promulgated thereunder, that is part of, or treated as part of, the Ameriprise legal entity for U.S. federal income Tax purposes.
SECTION
5.03.
Limits on Proposed Acquisition Transactions, Etc.
Ameriprise agrees
that, from the date hereof until the first day after the second anniversary of the Distribution Date, it shall not (i) enter into any Proposed Acquisition Transaction, approve any Proposed
Acquisition Transaction (whether for purposes of Section 203 of the Delaware General Corporation Law, as amended, any similar corporate statute, any "fair price" or other provision of
Ameriprise's charter or bylaws or otherwise) or, to the extent Ameriprise has the right to prohibit any Proposed Acquisition Transaction, permit any Proposed Acquisition Transaction to occur (whether
by redeeming rights under a shareholder rights plan, finding a tender offer to be a "permitted offer" under any such plan or otherwise causing any such plan to be inapplicable or neutralized with
respect to any Proposed Acquisition Transaction), (ii) merge or consolidate with any other Person or liquidate or partially liquidate, (iii) sell or otherwise transfer in a single
transaction or series of transactions 50% or more of the gross or net assets of the Fund Management Business or 50% or more of the consolidated gross or net assets of Ameriprise and the Ameriprise
Affiliates (such percentages to be measured based on fair market value as of the Distribution Date), (iv) redeem or otherwise repurchase (directly or through an Ameriprise Affiliate) any
Ameriprise Capital Stock, or rights to acquire such stock, (v) amend its certificate of incorporation (or other organizational documents), or take any other action, whether through a
stockholder vote or otherwise, affecting the relative voting rights of the separate classes of Ameriprise Capital Stock (including, without limitation, through the conversion of one class of
Ameriprise Capital Stock into another class of Ameriprise Capital Stock) or (vi) take any other action or actions (including any action or transaction that would be reasonably likely to be
inconsistent with any representation made in the Representation Letters, or any rulings, formal advice or opinion described in Section 5.01 above) which in the aggregate (taking into account
any other transactions described in this Section 5.03) would be reasonably likely to have the effect of causing or permitting one or more Persons (whether or not acting in concert) to acquire,
directly or indirectly, Ameriprise Capital Stock representing a Fifty-Percent or Greater Interest in Ameriprise or otherwise jeopardize the Tax-Free Status, unless prior to taking any such
action set forth in the foregoing clauses (i) through (vi), (A) Ameriprise shall have requested that AXP obtain a private letter ruling from the IRS and AXP shall have received such a
ruling in form and substance satisfactory to AXP that confirms that the Tax-Free Status will be preserved, taking into account such action and other transactions in the aggregate, or
(B) Ameriprise shall provide AXP with an Unqualified Tax Opinion in form and substance satisfactory to AXP that confirms that the Tax-Free Status will be preserved, taking into
13
account
such action and other transactions in the aggregate, or (C) AXP shall have waived the requirement to obtain such ruling or opinion. In determining whether such a ruling or opinion is
satisfactory, AXP may consider, among other factors, the appropriateness of any underlying assumptions and representations made in connection with such ruling or opinion. To the extent that any such
ruling or opinion concerns the acquisition of a Fifty-Percent or Greater Interest in Ameriprise, it shall expressly conclude that such acquisition will satisfy one or more of the safe harbors
described in the Treasury Regulations promulgated under Section 355(e) of the Code. Ameriprise shall bear all costs and expenses of securing any such ruling or opinion and shall reimburse AXP
for all external costs and expenses that it may incur in good faith in seeking to obtain or evaluate any such ruling or opinion.
SECTION
5.04.
Twenty Five Percent Proposed Acquisition Transactions.
If Ameriprise
proposes to enter into any Twenty Five Percent Proposed Acquisition Transaction, approve a Twenty Five Percent Proposed Acquisition Transaction or, to the extent Ameriprise has the right to prohibit
any Twenty Five Percent Proposed Acquisition Transaction, proposes to permit any Twenty Five Percent Proposed Acquisition Transaction to occur, in each case, during the period from the date hereof
until the first day after the second anniversary of the Distribution Date, Ameriprise shall provide AXP, no later than ten (10) business days prior to the signing of any written agreement or
taking any binding action with respect to such transaction, with a detailed written description of such transaction (including the type and amount of Ameriprise Capital Stock to be issued or
transferred in such transaction) and a certificate duly approved by the Board of Directors of Ameriprise to the effect that the Twenty Five Percent Proposed Acquisition Transaction is not a Proposed
Acquisition Transaction or any other transaction to which the requirements of Section 5.03 above would apply (a "
Board Certificate
").
SECTION
5.05.
Indemnity.
(a) Subject to subsection (b) of this
section, Ameriprise shall be responsible for, and shall indemnify and hold AXP and AXP Affiliates and their direct and indirect shareholders harmless against any Tax-Related Losses that
are attributable to or result from any one or more of the following: (i) the direct or indirect acquisition of all or a portion of Ameriprise's Capital Stock and/or its assets (or any
transaction or series of transactions that is deemed to be such an acquisition for purposes of Section 355(e) of the Code and the Treasury Regulations promulgated thereunder) by any means
whatsoever by any Person, (ii) any negotiations, understandings, agreements or arrangements by Ameriprise, any Ameriprise Affiliate or any of their direct or indirect shareholders with respect
to transactions or events (including, without limitation, stock issuances pursuant to the exercise of stock options or otherwise, option grants, capital contributions or acquisitions, or a series of
such transactions or events) that cause the Distribution and related transactions to be treated as part of a plan pursuant to which one or more Persons acquire directly or indirectly a Fifty-Percent
or Greater Interest in Ameriprise, (iii) any act or failure to act by Ameriprise or any Ameriprise Affiliate described in Section 5.03 above (regardless of whether such act or failure to
act is covered by a ruling, Unqualified Tax Opinion or waiver described in clause (A), (B) or (C), respectively, of Section 5.03 above, or a Board Certificate described in
Section 5.04 above) or (iv) any breach by Ameriprise of its agreements or representations set forth in Sections 5.01 or 5.02 above.
(b) For
purposes of calculating the amount and timing of any Tax-Related Loss in connection with any Tax payable by an indemnified party, such loss shall be
calculated by assuming that the indemnified party pays income Tax at the Highest Combined Tax Rate in effect in each relevant taxable year and that the income arising in connection with the
Tax-Related Losses is the only item of income, deduction, Credit or loss for such year. AXP shall consult with Ameriprise in good faith in respect of any audit, proceeding or contest in
respect of any Tax-Related Loss but shall ultimately control the disposition of the same in good faith. Ameriprise shall pay AXP or such other applicable indemnified party the amount of
any such Tax-Related Losses for which Ameriprise is responsible under this Section 5.05 within one (1) business day before payment is due from AXP or such other party.
(c) Ameriprise
shall not (i) merge or consolidate with any other Person or liquidate or partially liquidate into any other Person, (ii) sell or otherwise
transfer to any other Person or group of Persons,
14
directly
or indirectly, in a single transaction or series of transactions 25% or more of the gross or net assets of Ameriprise (such percentage to be determined based on fair market value as of the
Distribution Date), (iii) engage in any other reorganization or restructuring with any other Person, or (iv) agree or permit any Person or group of Persons, directly or indirectly, in a
single transaction or series of transactions, to acquire a Fifty-Percent or Greater Interest in Ameriprise, unless, in each case, each such Person agrees, to AXP's satisfaction, to be jointly and
severally liable with Ameriprise in its obligations under this Article V.
ARTICLE VI
DUAL CONSOLIDATED LOSSES
SECTION 6.01.
Ameriprise Liability.
Notwithstanding any other provision of
this Agreement or the provisions of any closing agreement relating to Dual Consolidated Losses (defined below) of any member of the Ameriprise Group ("
Closing Agreement
"),
Ameriprise shall be liable for, and indemnify AXP and AXP Affiliates against (i) any Tax liability together with interest, penalties and additions to Tax (including, without limitation, the
interest charge described in or that results from the application of Treasury Regulations Section 1.1503-2 or Treasury Regulations Section 1.1503-2A, or interest
determined under any Closing Agreement that arises from any triggering event or recapture under such regulations or Closing Agreement), applicable to an item of deduction or loss of Ameriprise or an
Ameriprise Affiliate (a "
Dual Consolidated Loss
") or from the receipt of any payment under this Article VI and (ii) any costs or expenses (including, without
limitation, external attorneys' and accountants' fees) incurred by AXP or an AXP Affiliate in connection with determining, avoiding or contesting Recapture Taxes (defined below) or enforcing the
provisions of this Article VI. All indemnifiable amounts described in this Section 6.01 shall be collectively referred to as "
Recapture Taxes
", to be
determined in accordance with Section 6.02 below.
SECTION
6.02.
Recapture Taxes.
Recapture Taxes shall be determined by AXP in good
faith, based, in relevant part, on the following assumptions: (i) the amount of gross income realized from a triggering event or recapture of a Dual Consolidated Loss cannot be offset by any
losses, deductions or Credits (other than those offsets actually permitted under Treasury Regulations Section 1.1503-2(g)(vii)(B) or (C)(2), provided that such regulations are
applicable and all applicable requirements of the regulations are fully satisfied); (ii) the amount of gross income, if any, realized upon the receipt of any payment under this
Article VI cannot be offset by any losses, deductions or Credits; and (iii) the amounts described in clause (i) and (ii) of Section 6.01 above are taxable at the
Highest Combined Tax Rate.
SECTION
6.03.
Closing Agreement.
At Ameriprise's request, at Ameriprise's sole cost
and expense, AXP will cooperate in good faith in an effort to enter into a closing agreement with the IRS of the type described in Treasury Regulations
Section 1.1503-2(g)(2)(iv)(B)(2), to the effect that Dual Consolidated Losses will not be recaptured as a result of the Distribution.
ARTICLE VII
CARRYOVER AND CARRYBACK ITEMS
SECTION 7.01.
Carryovers to Post-Affiliation Years.
AXP will
apportion, in good faith, any U.S. federal consolidated net operating or capital losses, Credits or other applicable items between members of the Ameriprise Group (departing from the AXP Group as a
consequence of the Distribution and related transactions) and members of the AXP Group (not taking into account Ameriprise Group members) pursuant to applicable Treasury Regulations promulgated under
Section 1502 of the Code. Such consolidated items and their apportionment will be adjusted by AXP to reflect any Adjustments that take place in applicable Affiliation Years.
15
SECTION
7.02.
Carrybacks from Post-Affiliation
Years.
(a)
Carryback Items.
If Ameriprise and/or its subsidiaries sustain U.S. federal capital or net operating
losses or generate U.S. federal Credits in a Post-Affiliation Year which may be carried back to an Affiliation Year and will generate an Income Tax Benefit, Ameriprise may request AXP to
file a Section 7.02 Claim with the IRS with respect to the U.S. federal income Tax liability of the AXP Group for such Affiliation Year. AXP shall have sole discretion whether to accept
a request to file carryback claims (except for foreign Tax Credit or domestic source capital loss carryback claims) and file any amended Tax Returns or claims for refund relating thereto, which
discretion may be exercised without regard to satisfying a standard of good faith or any other standard provided for in this Agreement or elsewhere. With regard to requests to file foreign Tax Credit
or domestic source capital loss carryback claims to an Affiliation Year, AXP will implement such requests it determines in good faith to be available on the terms set forth hereinafter.
(b)
Procedures.
If AXP files a Section 7.02 Claim, AXP shall have full control over the
Section 7.02 Claim and may determine in good faith the nature of all actions to be taken in connection with such claim. If there is any limitation that applies to the AXP Group in respect of
all or a portion of the items that comprise a Section 7.02 Claim in respect of foreign Tax Credits or domestic source capital losses, any Income Tax Benefit in respect of such claim shall be
determined by AXP in good faith. If there any limitations in the ability of the AXP Group to utilize items in the same category as the items that
comprise such claim, any Income Tax Benefit will be determined by AXP in good faith based on the assumption that the items were utilized on a Proportionate Basis. AXP will pay to Ameriprise for the
amount of the Tax Benefit, if any, it determines in good faith was derived from such claim within 30 business days after it receives a refund or credit for refund therefor. Ameriprise will repay to
AXP all or a portion of such amount as determined by AXP in good faith to the extent the Tax Benefit is reduced as a result of an Adjustment for any Affiliation Year or otherwise, together with
applicable interest and penalties. If AXP elects to file a Section 7.02 Claim in respect of the carryback of any attribute other than foreign Tax Credits or domestic source capital
losses, the terms for payment and other provisions shall be determined based upon the mutual agreement, if any, of the Parties. If AXP files a Section 7.02 Claim, Ameriprise will indemnify AXP
for any additional Taxes or loss of Tax benefits incurred by a member of the AXP Group (including interest, penalties and additions to Tax) arising from such claim. AXP shall also be entitled to
reimbursement from Ameriprise for any reasonable external costs for professional services incurred by AXP in connection with the Section 7.02 Claim whether or not Ameriprise receives payment or
credit therefor.
ARTICLE VIII
U.S. FEDERAL INCOME TAX ADJUSTMENTS
SECTION 8.01.
Determination.
If an Adjustment occurs, the liability of
Ameriprise or AXP, as the case may be, pursuant to Article II hereof, or the amounts allocated pursuant to Article VII, shall be recomputed by AXP. As recomputed for purposes of
Article II, Ameriprise shall make payments to AXP for an increase in Ameriprise's liability or AXP shall make payments to Ameriprise for an increase in AXP's liability. For purposes of Sections
2.01 and 2.02, Ameriprise's liability shall be deemed to have increased by any Adjustment that results in an increase in the Adjusted Separate Ameriprise Group Federal Tax Liability or a decrease in
the Excess AXP Group Benefits, and AXP's liability shall be deemed to have increased by any Adjustment that results in a decrease in the Adjusted Separate Ameriprise Group Federal Tax Liability or an
increase in the Excess AXP Group Benefits.
SECTION
8.02.
Payments.
Payments due from Ameriprise to AXP shall be made no later
than one (1) business day before the due date for payment by AXP to a Taxing authority upon the Final Determination of the items in question, or, to the extent no such payment is due, within
thirty (30) business days after the date of such Final Determination. Payments due from AXP to Ameriprise shall be made within thirty (30) business days after AXP receives a refund or a
credit for a refund with
16
regard
to the items in question after a Final Determination therefor. Such payments shall include any applicable interest, penalties and additions to Tax and, if applicable, any reasonable external
costs for professional services incurred by AXP thereon. In calculating any interest payable by Ameriprise to AXP hereunder, interest, if any, due from AXP to the IRS shall first be deemed to arise
with respect to the increase in the liability of Ameriprise, as determined above.
SECTION
8.03.
Procedures.
Subject to Section 7.02 hereof, for any
Affiliation Year or Combined Year, AXP will determine in good faith whether to give effect, through any Tax Return, claim for refund or otherwise, to items of loss, deduction or Credit for the
Ameriprise Group which are greater than those reflected on prior Tax Returns and the nature of all actions taken with respect thereto. If AXP files such a claim, Ameriprise will indemnify AXP for any
additional Taxes or loss of Tax benefits incurred by a member of the AXP Group or the applicable Total Combined Group (including interest, penalties and additions to Tax) arising from such claim.
SECTION
8.04.
Intercompany Adjustments.
If any transaction or arrangement between
the AXP and/or AXP Affiliates, on the one hand, and Ameriprise and/or Ameriprise Affiliates, on the other hand, is recharacterized for applicable Tax purposes under Section 482 of the Code or
otherwise and such recharacterization results in an Income Tax Detriment to one applicable group of companies and an Income Tax Benefit to the other group, the group incurring the Income Tax Detriment
shall be paid by the other group an amount equal to such Income Tax Detriment (including any interest, penalties and additions to Tax) within thirty (30) business days after the Final
Settlement of such Income Tax Detriment. In addition, each Party hereto shall be responsible for, and shall indemnify and hold the other Party and its Affiliates harmless against, any Taxes
attributable to intercompany items or otherwise for any stock or other assets (tangible or intangible) transferred to it (or an AXP Affiliate, in the case of AXP, or an Ameriprise Affiliate, in the
case of Ameriprise) from the other Party hereto (or an AXP Affiliate, in the case of AXP, or an Ameriprise Affiliate, in the case of Ameriprise) for which it is determined not to have paid or provided
fair market value consideration.
ARTICLE IX
U.S. FEDERAL INCOME TAX PROCEEDINGS
SECTION 9.01.
Ameriprise and AXP Issues.
AXP and Ameriprise hereby agree
that during the course of the audit of any Affiliation Year, they will in good faith endeavor to discuss and resolve separately with the IRS district agents any "
Ameriprise
Issues
" and "AXP Issues" (defined below). "Ameriprise Issues" are issues relating to items of income, gain, loss, deduction, or Credit that are attributable solely to the Ameriprise
Group and that could not reasonably have material adverse consequences for the U.S. federal income Tax liability of a member of the AXP Group (other than a member of the Ameriprise Group) if resolved
against the taxpayer, as determined in good faith by AXP. "
AXP Issues
" are any other issues, including issues relating to Foreign Attributes of the Ameriprise Group.
SECTION
9.02.
Procedures.
(a) In the event a Revenue Agent's Report
("
RAR
") is issued with respect to such taxable year, and the RAR contains adjustments proposed with respect to Ameriprise Issues, at Ameriprise's request, AXP shall
protest (as provided for in applicable Treasury Regulations) the adjustments made with respect to Ameriprise Issues. Ameriprise will prepare that portion of any protest which it determines should be
filed in connection with any adjustment proposed with respect to Ameriprise Issues and shall limit such portion of the protest to the defense of the specific Ameriprise Issues raised in the RAR,
unless AXP, in its sole discretion, determines otherwise.
(b) After
the filing of such protest, AXP and Ameriprise shall jointly meet with the representatives of the IRS responsible for disposing of the issues in dispute and
request the separate resolution of the AXP and Ameriprise Issues. They shall further request that the IRS assign separate representatives to conduct any review of or proceedings on their respective
issues.
17
(c) Regardless of whether the IRS agrees to resolve the issues affecting each Party or assign separate representatives to deal with the issues of each, AXP and Ameriprise
each will attend meetings and will prepare written presentations to be made to the IRS regarding any adjustments proposed only with respect to its respective issues. AXP and Ameriprise shall keep each
other promptly informed of any developments and discussions at any such meetings concerning adjustments, whether or not formally proposed, affecting the other Party.
SECTION
9.03.
Control of Issues.
(a) For each Affiliation Year, AXP shall
have full control of all AXP Issues and all Ameriprise Issues not otherwise settled by Ameriprise at the audit or appellate level of the IRS ("
Ameriprise Unsettled
Issues
") if the aggregate liability for any Taxes for which Ameriprise would be liable hereunder ("
Article IX Taxes
") with respect to all Ameriprise
Unsettled Issues for such Affiliation Year does not exceed $1,000,000. If the aggregate liability for Article IX Taxes with respect to Ameriprise Unsettled Issues for any Affiliation Year
exceeds $1,000,000, Ameriprise shall, at its sole cost and expense, unless AXP agrees to waive the same, obtain an evaluation of the Ameriprise Unsettled Issues
("
Evaluation
") from an independent attorney experienced in the field of U.S. federal corporate income Taxation, who shall be selected jointly by the Parties and who, in
the case of a listed or reportable transaction for U.S. federal income Tax purposes, is not a disqualified Tax advisor within the meaning of Section 6664(d)(3)(B)(ii) of the Code. The
Evaluation shall state, for the Ameriprise Unsettled Issues on an issue-by-issue basis, whether, in the opinion of the attorney (which in the case of a listed transaction or
reportable transaction for U.S. federal income Tax purposes does not constitute a disqualified Tax opinion as defined in Section 6664(d) of the Code) the filing position for each such issue
satisfies the requirements set forth in Section 6662(d) of the Code required for the reduction in any understatement of income Tax penalty and in the case of any such listed transactions or
reportable transactions satisfies the additional requirements set forth in Section 6664(d) of the Code required to avoid a reportable transaction understatement penalty. Any discussions with
respect to the Evaluation shall be held with both Parties jointly, and such attorney shall send a copy of the Evaluation (including any drafts thereof) to both Parties simultaneously.
(b) If
the Evaluation discloses any Ameriprise Unsettled Issues which do not fully meet the aforementioned standards as applicable, Ameriprise shall be obligated to settle
such issues with the IRS at its own cost and expense within a reasonable period of time after receipt of the Evaluation. If the aggregate liability for Article IX Taxes with respect to the
remaining Ameriprise Unsettled Issues does not exceed $1,000,000, Ameriprise also shall be obligated to settle all such issues at its own cost and expense within a reasonable period of time after
receipt of the Evaluation.
SECTION
9.04.
Options for Resolution.
If, for any Affiliation Year, the aggregate
liability for Article IX Taxes with respect to the remaining Ameriprise Unsettled Issues exceeds $1,000,000, AXP may select one of two options: (i) retain complete control over and
liability for the remaining Ameriprise Unsettled Issues, or (ii) cede complete control to Ameriprise for the remaining Ameriprise Unsettled Issues. In the event that AXP selects option (ii),
Ameriprise shall assume complete responsibility and liability for such issues, but shall proceed with reasonable diligence to resolve the same. In so doing, Ameriprise may, upon ten
(10) business days written notice to AXP, fund the prepayment of any remaining Ameriprise Unsettled Issue if the effect of such prepayment is to toll an interest charge for such issue and AXP
does not otherwise determine in good faith that such action would adversely affect the U.S. federal income Tax liability of a member of the AXP Group (other than a member of the Ameriprise Group). In
addition, in such event, Ameriprise shall be liable and indemnify AXP and the AXP Affiliates for, but AXP shall control the resolution of, (A) each AXP Issue which is not expressly set forth in
the RAR with respect to such Affiliation Year ("
New AXP Issues
") and (B) each AXP Excess Issue as defined below. For purposes of this Article IX, an
"
AXP Excess Issue
" shall mean an AXP Issue the Tax liability for which (including any related interest, penalties and additions to Tax) exceeds any proposed deficiency set
forth in the RAR with respect to
18
such
AXP Issue or, if less, the amount of any deficiency with respect to such AXP Issue in an agreement with the IRS reached during Appellate proceedings ("
IRS
Agreement
"). Ameriprise's liability for an AXP Excess Issue shall be an amount equal to the excess, if any, of the actual liability for Taxes (including any related interest, penalties
and additions to Tax) with respect to such AXP Excess Issue over the proposed deficiency in the RAR or IRS Agreement, as the case may be.
SECTION
9.05.
Forum for Judicial Proceedings.
In any case where judicial
proceedings are instituted, AXP shall be entitled to select the forum for such judicial proceedings, unless AXP determines, in good faith, that such proceedings involve only Ameriprise Unsettled
Issues and has chosen option (ii) described in Section 9.04 above in respect of such issues. In such event, Ameriprise shall be entitled to select the forum for judicial proceedings.
Each Party shall bear the costs of litigation in respect of its own issues,
provided
,
however
, that
Ameriprise shall bear the costs of litigation in respect of New AXP Issues and AXP Excess Issues.
SECTION
9.06.
Settlement of Claims.
AXP may agree to settle any case involving net
U.S. federal income Tax claims for refund by the Ameriprise Group and net U.S. federal income Tax liabilities by the AXP Group (not including the Ameriprise Group) or otherwise on such terms as it
determines are advisable; provided, however, that if the Ameriprise Group has a fully agreed case providing for a net U.S. federal income Tax refund of at least $1,000,000, AXP may settle the entire
case involving the entire AXP Group by agreeing to forego such refund (or any portion thereof) only if it agrees to reimburse Ameriprise for the amount of such foregone refund (or portion thereof).
ARTICLE X
PAYMENTS
Section 10.01.
Reporting of Indemnity Payments, Etc.
Any Tax indemnity
payments hereunder or payments made in respect of Tax-Related Losses hereunder shall, unless otherwise required by law, be reported for Tax purposes by the payer and the recipient as a
cash capital contribution by AXP or a cash distribution by Ameriprise, as the case may be, immediately before the Distribution. If, notwithstanding such reporting, such payment results in additional
taxable income to the recipient, such payments shall be increased such that the amount that the recipient receives (net of Taxes) shall equal the amount of the payment that it would otherwise be
entitled to receive pursuant to this Agreement.
SECTION
10.02.
Interest on Late Payments.
If any payments hereunder are not made
when due, interest shall accrue on the unpaid amount at the underpayment rate for large corporate underpayments, in effect from time to time under Section 6621 of the Code, while such amount is
outstanding.
ARTICLE XI
TAX RETURNS
SECTION
11.01.
Cooperation and Furnishing of Tax Return
Information.
(a)
Cooperation.
AXP and Ameriprise each agree to cooperate fully in connection with the preparation of
any Tax Return relating to any Affiliation Year or Combined Year and the resolution of any related Tax audits, proceedings or disputes. In this regard, except as provided in the service level
agreement between AXP and Ameriprise relating to Tax services after the Distribution Date or herein, the Tax department of Ameriprise and its subsidiaries shall, at the expense of Ameriprise, and the
Tax department of AXP and its subsidiaries shall, at the expense of AXP, continue to perform the same Tax-related functions with respect to such Tax Returns, audits, proceedings or
disputes they have performed to date.
(b)
Tax Return Information.
For purposes of the preparation by AXP of Tax Returns for the taxable
years ending on December 31, 2004 and December 31, 2005, respectively, on or prior to such date(s) as specified by AXP, Ameriprise shall provide AXP with Tax information for the
respective life
19
and
non-life subgroups of the Ameriprise Group and Tax information for all members of each Ameriprise Combined Group, including but not limited to, schedule(s) showing the items of income,
gain, loss, deduction and Credit and Foreign Attributes with respect to each such taxable year required to be included in applicable Tax Returns and complete work papers together with such other
information as AXP may request. The information provided by Ameriprise shall be consistent with any similar information provided by Ameriprise to AXP for prior taxable years.
(c)
Disclosures.
Ameriprise represents that it has provided, and agrees to promptly provide, to
AXP complete and accurate information that is required or AXP requests to satisfy all applicable U.S. federal, state and local, and non-U.S., disclosure and reporting requirements in
respect of listed transactions, reportable transactions and other transactions that may be viewed as Tax-motivated, including, but not limited to, U.S. state expense disallowance
information. Ameriprise also represents that is has provided, and agrees to promptly provide, to AXP all documents and other information that is required or AXP requests to satisfy the transfer
pricing and other documentation requirements set forth in Sections 482 and 6662 of the Code and the Treasury Regulations thereunder or otherwise (including analogous provisions under U.S. state and
local or non-U.S. law), including but not limited to, principal documents as defined in Treasury Regulations Section 1.6662-6(d)(2)(iii)(B), and to address any transfer
pricing audit issue arising under Section 482 of the Code or otherwise, shall promptly provide to AXP any documents and information it may request, including background documents as defined in
Treasury Regulations Section 1.6662-6(d)(2)(iii)(C). Ameriprise further represents that it has provided, and agrees to promptly provide, to AXP all internal and external tax
opinions memoranda relating to the transactions and other matters addressed in this subsection (c). If Ameriprise fails to timely satisfy the requirements of this subsection (c), it will indemnify,
and hold AXP and AXP Affiliates harmless against, any Taxes, interest, penalties or additions to Tax arising therefrom.
SECTION
11.02.
Preparation of Tax
Returns
.
(a)
Preparation
. AXP shall have sole
authority for the preparation and filing of any consolidated U.S. federal income Tax Return or Combined Tax Return, which include the items of income, gain, loss, deduction and Credit of the
Ameriprise Group or any Ameriprise Combined Group for all relevant taxable periods, including but not limited to, determination of Foreign Attributes. With respect to the U.S. federal income Tax
Returns for the taxable years ending December 31, 2004 and December 31, 2005, respectively, AXP agrees to notify Ameriprise and, subject to filing deadlines, give Ameriprise an
opportunity to comment on the reporting, if it plans to file such Tax Returns reflecting data or information that is materially different from the final data or information provided by Ameriprise. In
addition, with respect to any Combined Tax Return for the taxable years ending December 31, 2004 and December 31, 2005, respectively, in which Ameriprise is projected to have Tax
liability in excess of $500,000, AXP agrees to notify Ameriprise and, subject to filing deadlines, give Ameriprise an opportunity to comment on the reporting, if it plans to file such Tax Returns
reflecting data or information that is materially different from the final data or information provided by Ameriprise. Any decisions with respect to the timing, filing, or content of the above Tax
Returns shall be made by AXP in its sole discretion and shall be final and binding upon the Parties hereto.
(b)
Elections.
Ameriprise and the appropriate members of the Ameriprise Group or an Ameriprise
Combined Group shall make or give their consent to such elections or other matters relating to the Ameriprise Group or an Ameriprise Combined Group as AXP determines are necessary or advisable in
connection with the filing of any such Tax Returns. In addition, no member of the Ameriprise Group may elect to be considered as not having been a member of the AXP Group for U.S. federal income Tax
purposes and no member of an Ameriprise Combined Group may elect to be considered as not having been a member of a Total Combined Group for U.S. state or local Tax purposes for any taxable year or
portion thereof without the prior written consent of AXP.
20
ARTICLE XII
POST-AFFILIATION YEARS AND POST-COMBINED YEARS
Section 12.01.
Returns.
Ameriprise shall not and shall not permit any of the
Ameriprise Affiliates to (i) file or amend any Tax Return for the Post-Affiliation Year or a Post-Combined Year beginning on the first day following the Distribution
Date, in a manner that is inconsistent with the manner in which AXP filed its Tax Returns in an Affiliation Year or a Combined Year or (ii) make any election for any
Post-Affiliation Year or Post-Combined Year if such election would have the effect of binding or requiring conformity by any member of the AXP Group or any Total Combined Group
for any Affiliation Year or Combined Year.
SECTION
12.02.
Actions or Transactions.
Ameriprise shall be obligated to inform and
disclose fully to AXP any actions taken or transactions undertaken in a Post-Affiliation Year or a Post-Combined Year which can reasonably be expected to affect in any material
way the Tax liability of the AXP Group for any Affiliation Year or a Total Combined Group for any Combined Year.
SECTION
12.03.
Proposed Adjustments.
Ameriprise shall promptly notify AXP and keep
AXP apprised of any proposed adjustments which arise out of an audit or examination of a Post-Affiliation Year or Post-Combined Year Tax Return which could reasonably be
expected to affect in any material way the Tax liability of for any Affiliation Year or Combined Years or which could reasonably result in treatment of items that is inconsistent with the manner in
which AXP filed its Tax Returns for such years.
ARTICLE XIII
BOOKS AND RECORDS
Section 13.01.
Retention Period.
Without limiting any of the provisions of
this Agreement, each of the Parties agrees that it shall retain, until the expiration of the appropriate statutes of limitations (including any extensions) plus ninety (90) days, copies of any
Tax Returns for any open periods during the Affiliation Years and Combined Return Years which might be subject to adjustment under this Agreement, supporting work schedules and other books, records or
information which may be relevant and that it will not destroy or otherwise dispose of such records without first providing the other Party with a reasonable opportunity to review and copy the same.
Without limiting the foregoing, Ameriprise shall cooperate with AXP in identifying such books, records or information and so retain or provide to AXP such books, records or information as may be
specified by AXP in writing within 180 days after the Distribution Date. Any information obtained pursuant to this Agreement, or any other information obtained by AXP or Ameriprise relating to
the Tax position of either Party shall be kept confidential by the Parties hereto, except if otherwise required by a Taxing authority.
SECTION
13.02.
Record Retention Policy.
Without limiting the foregoing, each of the
Parties hereto agrees that it shall retain copies of any books and records in its possession as required by any record retention agreement in effect from time to time, between AXP and the IRS or any
other Taxing authority.
SECTION
13.03.
Tax Attributes.
Ameriprise shall maintain and provide to AXP upon
request information which will enable AXP to determine, clarify or verify the adjusted book and Tax bases of the Ameriprise stock held by AXP, Ameriprise's assets, both tangible and intangible,
including the stock of all directly and indirectly owned subsidiaries of Ameriprise which were members of the Ameriprise Group or an Ameriprise Combined Group at any time during Affiliation Years or
Combined Years, and the adjusted book and Tax bases of all assets, both tangible and intangible, of such subsidiaries. In addition, Ameriprise shall maintain and provide to AXP upon request all
relevant information for the determination of earnings and profits of any members of the Ameriprise Group, in accordance with applicable provisions of the Code and the Treasury Regulations thereunder.
21
ARTICLE XIV
COMPENSATION AND EMPLOYEE BENEFITS
Section 14.01.
General.
For U.S. federal, applicable U.S. state and local
income and other Tax purposes, all deductions in respect of compensation and employee benefits, other than AXP Stock-Based Awards as provided below, whether on or before or after the Distribution
Date, shall be allocated to AXP (or its appropriate subsidiary) or Ameriprise (or its appropriate subsidiary) based on the entity which, directly or indirectly, provides the cash or other
consideration to its employees, former employees or other service providers or any individual whose rights are derived from such individual's relationship with such employee, former employee or
service provider.
SECTION
14.02.
AXP Stock-Based Awards.
For U.S. federal, applicable U.S. state and
local income and other Tax purposes, all deductions in respect of AXP Stock-Based Awards, whether on or before or after the Distribution Date, shall be allocated as follows: (i) deductions in
respect of AXP Options that are exercised on or before the Distribution Date ("
Exercised AXP Options
") shall be allocated to AXP (and shall accordingly not be taken into
account in computing Adjusted Separate Ameriprise Group Federal Tax Liability) except for the amount of deductions (A) reflected in net U.S. federal income deferred Tax assets that are properly
recorded on the Ameriprise Group's books in respect of such Exercised AXP Options immediately before their exercise pursuant to SFAS 123 or SFAS 123(R) as adopted by AXP
("
SFAS Exercised AXP Options
") or (B) actually realized upon the exercise of such SFAS 123 Exercised AXP Options, whichever is less, and
(ii) deductions in respect of AXP Options that are exercised after the Distribution Date or in respect of AXP Stock-Based Awards (other than AXP Options) shall be allocated between AXP (or its
appropriate subsidiary that was a direct employer of record of the holder of such award during the Vesting Period) and Ameriprise (or its appropriate subsidiary that was a direct employer of record of
the holder of such award during the Vesting Period) pro rata based on their respective Vesting Ratios.
SECTION
14.03.
Reporting of Deductions.
Unless otherwise required by law, AXP and
Ameriprise shall for themselves and their appropriate subsidiaries compute their respective Tax liability and file all applicable Tax Returns in accordance with the allocations under Sections 14.01
and 14.02 above. In the event that any deduction allocated under such Sections to one entity is subsequently required by law to be reported by another entity for Tax purposes, AXP or Ameriprise shall
pay the entity to which the deduction was allocated under such Sections such amounts as are necessary to put such entity in the same position, on an after-Tax basis, as it would have been
if the allocation under such Sections had been respected.
SECTION
14.04.
Employment Taxes and Tax Reporting.
To the extent that AXP,
Ameriprise or any of their subsidiaries is allocated a deduction for Tax purposes under Sections 14.01 and 14.02 above or otherwise, the entity to which the deduction is allocated shall be solely
responsible for satisfying any
withholding and employment Tax liabilities and Tax reporting obligations in respect of the compensation that corresponds to such deduction.
SECTION
14.05.
Determinations.
All determinations necessary to effect this
Article XIV, including those related to the Vesting Period and Vesting Ratios, will be made by AXP in good faith.
ARTICLE XV
MISCELLANEOUS
SECTION
15.01.
Notices.
All notices, requests, claims, demands and other
communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally
22
or
by facsimile transmission or mailed (first class postage prepaid) to the Parties at the following addresses or facsimile numbers:
If
to AXP or any member of the AXP Group, to:
American
Express Company
200 Vesey Street
New York, New York 10285
Attn: Gilbert E. Ahye
with
a copy to:
American
Express Company
200 Vesey Street
New York, New York 10285
Attn: Director of Tax
If
to Ameriprise or any member of the Ameriprise Group, to:
Ameriprise
Financial, Inc.
707 2
nd
Avenue, South
Minneapolis, Minnesota 55474
Attn: Walter Berman
with
a copy to:
Ameriprise
Financial, Inc.
707 2
nd
Avenue, South
Minneapolis, Minnesota 55474
Attn: Director of Tax
All
such notices, requests and other communications will (i) if delivered personally to the address as provided in this section, be deemed given upon delivery, (ii) if delivered by
facsimile transmission to the facsimile number as provided in this section, be deemed given upon receipt and (iii) if delivered by mail in the manner described above to the address as provided
in this section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other Person to whom a copy of such notice, request or
other communication is to be delivered pursuant to this section). Any Party from time to time may change its address, facsimile number or other information for the purpose of notices to that Party by
giving notice specifying such change to the other Party.
SECTION
15.02.
Complete Agreement; Representations.
(a) This Agreement,
together with any exhibits and schedules hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof and shall supersede all previous negotiations,
commitments and writings with respect to such subject matter.
(b) AXP
represents on behalf of itself and each other member of the AXP Group and Ameriprise represents on behalf of itself and each other member of the Ameriprise Group as
follows:
(i) each
such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform
this Agreement to which it is a Party and to consummate the transactions contemplated by this Agreement; and
(ii) this
Agreement has been duly executed and delivered by such Person (if such Person is a Party) and constitutes a valid and binding agreement of it enforceable in
accordance with the terms thereof (assuming the due execution and delivery thereof by the other Party) except as such
23
enforceability
may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws affecting creditors' rights generally and by general equitable principles.
SECTION
15.03.
Amendment, Modification, or Waiver.
(a) This Agreement may be
amended, supplemented, modified or superseded only by a written instrument signed by duly authorized signatories of the Parties.
(b) Any
term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set
forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. No waiver by any Party of any term or condition of this Agreement, in any one or more
instances, shall be deemed or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion. All remedies, either under this Agreement or by law or
otherwise afforded, will be cumulative and not alternative.
SECTION
15.04.
Severability.
If any one or more of the provisions of this Agreement
shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement.
SECTION
15.05.
No Assignment; Binding Effect; No Third-Party
Beneficiaries.
(a) Neither this Agreement nor any right, interest or obligation hereunder may be assigned by either Party hereto without the prior written consent of
the other Party hereto and any attempt to do so will be void. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties hereto and
their respective successors and assigns.
(b) Except
for provisions relating to Affiliates and the provisions of Article V relating to Tax-Related Losses, the terms and provisions of this
Agreement are intended solely for the benefit of each Party hereto and their respective Affiliates, successors or permitted assigns, and it is not the intention of the Parties to confer third-party
beneficiary rights upon any other Person.
(c) Notwithstanding
anything herein to the contrary, unless the context indicates otherwise, if an obligation is imposed on AXP or Ameriprise hereunder it shall cause any
Person that directly or indirectly controls or is controlled by it to comply therewith to the extent reasonably necessary to carry out such obligation. "Control" for these purposes shall have the same
meaning as that set forth under the definition of "Affiliate".
SECTION
15.06.
Headings.
The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
SECTION
15.07.
Counterparts.
This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of the counterparts together shall constitute one and the same instrument.
SECTION
15.08.
Governing Law.
This Agreement and any dispute arising out of, in
connection with or relating to this Agreement shall be governed by and construed in accordance with the Laws of the State of New York, without giving effect to the conflicts of laws principles
thereof.
24
IN
WITNESS WHEREOF, the Parties hereto have entered into this Agreement as of the date first above written.
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AMERICAN EXPRESS COMPANY
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By:
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/s/ Gilbert E. Ahye
Name: Gilbert E. Ahye
Title: Senior Vice President
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AMERIPRISE FINANCIAL, INC.
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By:
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/s/ Walter S. Berman
Name: Walter S. Berman
Title: Executive Vice President and Chief Financial Officer
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25
QuickLinks
TAX ALLOCATION AGREEMENT DATED AS OF SEPTEMBER 30, 2005 BY AND BETWEEN AMERICAN EXPRESS COMPANY AND AMERIPRISE FINANCIAL, INC.
FORM OF TAX ALLOCATION AGREEMENT
ARTICLE I DEFINITIONS AND STANDARDS
ARTICLE II U.S. CONSOLIDATED FEDERAL INCOME TAX LIABILITIES
ARTICLE III U.S. COMBINED STATE AND LOCAL INCOME TAX LIABILITIES
ARTICLE IV SEPARATE TAX RETURN OBLIGATIONS
ARTICLE V TAX-FREE STATUS OF DISTRIBUTION
ARTICLE VI DUAL CONSOLIDATED LOSSES
ARTICLE VII CARRYOVER AND CARRYBACK ITEMS
ARTICLE VIII U.S. FEDERAL INCOME TAX ADJUSTMENTS
ARTICLE IX U.S. FEDERAL INCOME TAX PROCEEDINGS
ARTICLE X PAYMENTS
ARTICLE XI TAX RETURNS
ARTICLE XII POST-AFFILIATION YEARS AND POST-COMBINED YEARS
ARTICLE XIII BOOKS AND RECORDS
ARTICLE XIV COMPENSATION AND EMPLOYEE BENEFITS
ARTICLE XV MISCELLANEOUS
Exhibit 10.3
EMPLOYEE BENEFITS
AGREEMENT
BY AND BETWEEN
AMERICAN EXPRESS
COMPANY
AND
AMERIPRISE
FINANCIAL, INC.
DATED AS OF
SEPTEMBER 30, 2005
EMPLOYEE BENEFITS
AGREEMENT
This EMPLOYEE BENEFITS AGREEMENT (the “
Agreement
”),
dated as of September 30, 2005 is by and between American Express Company, a
New York corporation (“
AXP
”), and Ameriprise Financial, Inc., a Delaware
corporation (“
Ameriprise
”, and together with AXP, each a “
Party
”
and collectively, the “
Parties
”).
WHEREAS, the Board of Directors of AXP has determined
that it is in the best interests of AXP to separate the Ameriprise Business and
the AXP Business into two independent public companies on the terms and subject
to the conditions set forth in the Separation and Distribution Agreement, in
order to resolve systemic issues related to the allocation of capital and
management resources between the Ameriprise Business and the AXP Business, and
give Ameriprise greater flexibility to manage, invest in, and expand the
Ameriprise Business, while ensuring that AXP can focus its time and resources
on the development of the AXP Business;
WHEREAS, in furtherance of the foregoing, AXP has
announced its intention to distribute all of the shares of common stock, par
value $0.01 per share, of Ameriprise (“
Ameriprise Common Stock
”) owned
by AXP to the holders of AXP Common Stock by means of the Distribution;
WHEREAS, in furtherance of the foregoing, AXP and
Ameriprise have entered into a Separation and Distribution Agreement, dated as
of August 24, 2005 (the “
Separation and Distribution Agreement
”), and
other Ancillary Agreements that will govern certain matters relating to the
Separation and the relationship of AXP, Ameriprise and their respective
Affiliates prior to and following the Distribution Date; and
WHEREAS, pursuant to the Separation and Distribution
Agreement, AXP and Ameriprise have agreed to enter into this Agreement for the
purpose of allocating Assets, Liabilities and responsibilities with respect to
certain employee compensation and benefit plans and programs between and among
them.
NOW, THEREFORE, in consideration of the premises and
of the respective agreements and covenants contained in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
1.1
Definitions
. Capitalized terms used, but not defined
herein shall have the meanings assigned to such terms in the Separation and Distribution
Agreement and the following terms shall have the following meanings:
“AEB” shall have the meaning ascribed thereto in
Section 5.2(c)(i) of this Agreement.
“AEFC RETIREE MEDICAL ELIGIBLE” shall have the meaning
ascribed thereto in Section 5.2(c)(ii) of this Agreement.
“AGREEMENT”
shall have the meaning ascribed thereto in the
preamble to this Agreement.
“AMERIPRISE” shall have the meaning ascribed thereto
in the preamble to this Agreement.
“AMERIPRISE 401(k)” shall have the meaning ascribed
thereto in Section 4.1(a) of this Agreement.
“AMERIPRISE ACTUARY” means an independent actuary
selected by Ameriprise.
“AMERIPRISE BENEFIT PLAN” means any Benefit Plan
sponsored, maintained or contributed to by any member of the Ameriprise Group
including, without limitation, the Ameriprise Retirement Plan, the Ameriprise
401(k), the Ameriprise Reimbursement Account Plan, the Ameriprise SRP, the
Ameriprise Severance Plans, the Ameriprise Retiree Medical Program, the
Ameriprise Retained Welfare Plans and the Ameriprise Welfare Plans.
“AMERIPRISE COMMON STOCK” shall have the meaning
ascribed thereto in the recitals to this Agreement.
“AMERIPRISE DEFERRED COMPENSATION PLANS” means,
collectively, the Ameriprise Financial Deferred Compensation Plan and the Ameriprise
Financial Deferred Equity Program for Independent Financial Advisors.
“AMERIPRISE EMPLOYEE” means any individual who,
immediately following the Distribution Date, will be employed by Ameriprise or
any member of the Ameriprise Group in a capacity considered by Ameriprise to be
common law employment, including active employees and employees on vacation and
approved leave of absence (including maternity, paternity, family, sick,
short-term or long-term disability leave, qualified military service under the
Uniformed Services Employment and Reemployment Rights Act of 1994, and leave
under the Family Medical Leave Act and other approved leaves and any person on
serial severance).
“AMERIPRISE LOI” shall have the meaning ascribed
thereto in Section 7.4(b) of this Agreement.
“AMERIPRISE OPTION” shall have the meaning ascribed
thereto in Section 7.2(c) of this Agreement.
“AMERIPRISE PARTICIPANT” means any individual who,
immediately following the Distribution Date, is an Ameriprise Employee, a
Former Ameriprise Employee, or a beneficiary, dependent or alternate payee of
any of the foregoing. For purposes of
the Ameriprise Welfare Plans only, “Ameriprise Participant” shall also include
individuals categorized by Ameriprise as “qualifying P2 55/10 advisors” or as
“members of the field organization” who were on an approved leave of absence as
of March 22, 2000;
provided
,
that
the treatment of any such
individual as an Ameriprise Participant shall be limited to those Ameriprise
Welfare Plans that are analogous to the AXP Welfare Plans under which such
individual was covered as of the Distribution Date.
2
“AMERIPRISE PG AWARDS” shall have the meaning ascribed
thereto in Section 7.5(a) of this Agreement.
“AMERIPRISE PLAN PARTICIPANTS” shall have the meaning
ascribed thereto in Section 3.1 of this Agreement.
“AMERIPRISE PRICE RATIO” means the quotient obtained
by dividing the Ameriprise Stock Value by the AXP Pre-Distribution Stock Value.
“AMERIPRISE REIMBURSEMENT ACCOUNT PLAN” shall have the
meaning ascribed thereto in Section 5.2(d) of this Agreement.
“AMERIPRISE RETIREE MEDICAL PROGRAM” shall have the
meaning ascribed thereto in Section 5.2(c)(ii) of this Agreement.
“AMERIPRISE RETAINED WELFARE PLANS” shall have the
meaning ascribed thereto in Section 5.1 of this Agreement.
“AMERIPRISE RETIREMENT PLAN” shall have the meaning
ascribed thereto in Section 3.1 of this Agreement.
“AMERIPRISE SERVICE PLANS” means, collectively, the
Ameriprise Retirement Plan, the Ameriprise 401(k), and the Ameriprise Severance
Plans.
“AMERIPRISE SEVERANCE PLANS” shall have the meaning
ascribed thereto in Section 8.4(a) of this Agreement.
“AMERIPRISE SHARE RATIO” means the quotient obtained
by dividing the AXP Pre-Distribution Stock Value by the Ameriprise Stock Value.
“AMERIPRISE SRP” shall have the meaning ascribed
thereto in Section 6.1(a) of this Agreement.
“AMERIPRISE STOCK PLAN” shall have the meaning
ascribed thereto in Section 2.5 of this Agreement.
“AMERIPRISE STOCK VALUE” means the official NYSE Only
closing price of Ameriprise trading “when issued” on September 30, 2005 as
reported by the NYSE.
“AMERIPRISE UK ACTUARY” means an independent UK
actuary selected by Ameriprise.
“AMERIPRISE UK PLAN PARTICIPANTS” shall have the
meaning ascribed thereto in Section 9.1(a) of this Agreement.
“AMERIPRISE UK RETIREMENT PLAN” shall have the meaning
ascribed thereto in Section 9.1(a) of this Agreement.
3
“AMERIPRISE WELFARE PLANS” shall have the meaning
ascribed thereto in Section 5.2(a) of this Agreement.
“AMP KEL CASH BENEFIT” shall have the meaning ascribed
thereto in Section 5.5(b) of this Agreement.
“AXP”
shall have the meaning ascribed thereto in the
preamble to this Agreement.
“AXP ACTUARY” means Towers, Perrin, Forster, and
Crosby, Inc. (New York), or any other independent actuary appointed by AXP.
“AXP BENEFIT PLAN” means any Benefit Plan sponsored,
maintained or contributed to by AXP or any of its Affiliates including, without
limitation, the AXP Retirement Plan, the AXP ISP, the AXP Reimbursement Account
Plan, the AXP SRP, the AXP Severance Plans, the AXP Retiree Medical Program,
and the AXP Welfare Plans.
“AXP COMMITTEE” means the Compensation and Benefits
Committee of the Board of Directors of AXP.
“AXP DC PARTICIPANTS” shall have the meaning ascribed
thereto in Section 8.2(a) of this Agreement.
“AXP DC PARTICIPANT ACCOUNTS” shall have the meaning
ascribed thereto in Section 8.2(a) of this Agreement.
“AXP DEFERRED COMPENSATION PLANS” means, collectively,
those deferred compensation plans and arrangements set forth on Schedule A
attached hereto.
“AXP EMPLOYEE”
means any individual who, immediately
following the Distribution Date, will be employed by AXP or any member of the
AXP Group in a capacity considered by AXP to be common law employment,
including active employees and employees on vacation and approved leave of
absence (including maternity, paternity, family, sick, short-term or long-term
disability leave, qualified military service under the Uniformed Services
Employment and Reemployment Rights Act of 1994, and leave under the Family
Medical Leave Act and other approved leaves and any person on serial
severance).
“AXP ISP” means the American Express Incentive Savings
Plan.
“AXP KEL” shall have the meaning ascribed thereto in
Section 5.5(a) of this Agreement.
“AXP LOI” shall have the meaning ascribed thereto in
Section 7.4(a) of this Agreement.
“AXP OPTION” shall have the meaning ascribed thereto
in Section 7.2(b) of this Agreement.
“AXP PARTICIPANT” means any individual
who, immediately following the Distribution Date, is an AXP Employee, a Former
AXP Employee or a beneficiary, dependent or alternate payee of any of the
foregoing.
4
“AXP POST-DISTRIBUTION STOCK VALUE” means the official
NYSE Only adjusted closing price of AXP on September 30, 2005 as reported by
the NYSE.
“AXP PRE-DISTRIBUTION STOCK VALUE” means the official
NYSE Only closing price of AXP on September 30, 2005 as reported by the NYSE.
“AXP PRICE RATIO” means the quotient obtained by
dividing the AXP Post-Distribution Stock Value by the AXP Pre-Distribution
Stock Value.
“AXP REIMBURSEMENT ACCOUNT PLAN” shall have the
meaning ascribed thereto in Section 5.2(d) of this Agreement.
“AXP RESTRICTED STOCK” shall have the meaning ascribed
thereto in Section 7.3(a) of this Agreement.
“AXP RETAINED CLAIM” shall have the meaning ascribed
thereto in Section 8.5(a) of this Agreement.
“AXP RETIREE MEDICAL PROGRAM”
shall have the meaning ascribed thereto in
Section 5.2(c) of this Agreement.
“AXP RETIREMENT PLAN” means the American Express
Retirement Plan.
“AXP SERVICE PLANS” means, collectively, the AXP
Retirement Plan, the AXP ISP, and the AXP Severance Plans.
“AXP SEVERANCE PLANS”
means, collectively, the American Express
Senior Executive Severance Plan and the American Express Severance Pay Plan.
“AXP SHARE RATIO” means the quotient obtained by
dividing the AXP Pre-Distribution Stock Value by the AXP Post-Distribution
Stock Value.
“AXP SRP” means the American Express Supplemental
Retirement Plan.
“AXP STOCK PLANS” means, collectively, the American
Express Company 1989 Long-Term Incentive Plan and the American Express Company
1998 Incentive Compensation Plan and any other stock option or stock incentive
compensation plan or arrangement for employees, officers, or independent
contractors of AXP, as amended.
“AXP UK
ACTUARY” means Towers, Perrin, Forster, and Crosby, Inc. (United Kingdom), or
any other independent actuary appointed by AXP.
“AXP UK PLAN” means the American Express UK Pension
Plan.
“AXP WELFARE PLANS” shall have the
meaning ascribed thereto in Section 5.2(a) of this Agreement.
“BENEFIT PLAN”
shall mean, with respect to an entity, each
plan, program, arrangement, agreement or commitment that is an employment,
consulting, non-competition or
5
deferred compensation agreement, or an executive compensation,
incentive bonus or other bonus, employee pension, profit-sharing, savings,
retirement, supplemental retirement, stock option, stock purchase, stock
appreciation rights, restricted stock, other equity-based compensation,
severance pay, salary continuation, life, health, hospitalization, sick leave,
vacation pay, disability or accident insurance plan, corporate-owned or key-man
life insurance or other employee benefit plan, program, arrangement, agreement
or commitment, including any “employee benefit plan” (as defined in Section
3(3) of ERISA), sponsored or maintained by such entity (or to which such entity
contributes or is required to contribute).
“CHQ” shall have the meaning ascribed thereto in
Section 5.2(c)(i) of this Agreement.
“CHQ/AEB/TRS RETIREE MEDICAL ELIGIBLE” shall have the
meaning ascribed thereto in Section 5.2(c)(i) of this Agreement.
“COBRA”
means the continuation coverage requirements
for “group health plans” under Title X of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and as codified in Code Section 4980B
and Sections 601 through 608 of ERISA, and any similar state group health plan
continuation Law, together with all regulations and proposed regulations
promulgated thereunder.
“CODE”
means the United States Internal Revenue Code
of 1986, as amended.
“CONTROL” means, as to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.
The term “
Controlled
” shall have a correlative meaning.
“DELAYED PRICE RATIO” means, with respect to a Delayed
Transfer Employee, the quotient obtained by dividing (i) the price at which
Ameriprise Common Stock first trades on the NYSE immediately after such Delayed
Transfer Employee’s Transfer Date, as determined by the AXP Committee, by (ii)
the price at which AXP Common Stock last trades on the NYSE immediately prior
to such Delayed Transfer Employee’s Transfer Date, as determined by the AXP
Committee.
“DELAYED SHARE RATIO” means, with respect to a Delayed
Transfer Employee, the quotient obtained by dividing (i) the price at which AXP
Common Stock last trades on the NYSE immediately prior to such Delayed Transfer
Employee’s Transfer Date, as determined by the AXP Committee, by (ii) the price
at which Ameriprise Common Stock first trades on the NYSE immediately after
such Delayed Transfer Employee’s Transfer Date, as determined by the AXP
Committee.
“DELAYED TRANSFER AMERIPRISE LOI” shall have the
meaning ascribed thereto in Section 7.4(d)(ii) of this Agreement.
“DELAYED TRANSFER AMERIPRISE OPTION” shall have the
meaning ascribed thereto in Section 7.2(e)(ii) of this Agreement.
6
“DELAYED TRANSFER AMERIPRISE RESTRICTED STOCK” shall
have the meaning ascribed thereto in Section 7.3(d)(ii) of this Agreement.
“DELAYED TRANSFER AXP LOI” shall have the meaning
ascribed thereto in Section 7.4(d)(i) of this Agreement.
“DELAYED TRANSFER AXP OPTION” shall have the meaning
ascribed thereto in Section 7.2(e)(i) of this Agreement.
“DELAYED TRANSFER AXP RESTRICTED STOCK” shall have the
meaning ascribed thereto in Section 7.3(d)(i) of this Agreement.
“DELAYED TRANSFER CALCULATION DATE” shall have the
meaning ascribed thereto in Section 3.3(b)(i) of this Agreement.
“DELAYED TRANSFER EMPLOYEES” shall mean those AXP
Employees (and the beneficiaries, dependents or alternate payees of such
Persons), as set forth on Schedule B (which Schedule may be amended by mutual
agreement of the Parties at any time prior to the first anniversary of the
Distribution Date), who are considered by the Parties to be important to the
Ameriprise Business and whose transfer from AXP to the Ameriprise Group in
connection with the Separation and Distribution will be delayed, due to certain
business constraints, until after the Distribution Date but prior to the first
anniversary of the Distribution Date (or such later date as mutually agreed to
by the Parties).
“DETRIMENTAL CONDUCT PROVISIONS” means (i) the
Detrimental Conduct Provisions Attachment to the American Express Company 1998
Incentive Compensation Plan Master Agreement (as amended), effective as of
February 26, 2001; (ii) the Detrimental Conduct Provisions Attachment to the
American Express Company 1989 Long-Term Incentive Plan Master Agreement (as
amended), effective as of January 1, 1998; (iii) any Consent to the Application
of Forfeiture and Detrimental Conduct Provisions to Incentive Compensation Plan
Awards to which an Ameriprise Participant is a party; and (iv) any other
similar detrimental conduct provisions applicable to outstanding AXP long-term
incentive awards issued under the AXP Stock Plans, in each case as in effect
from time to time.
“DOL” means the United States Department of Labor.
“ERISA”
means the Employee Retirement Income Security
Act of 1974, as amended.
“ERISA AFFILIATE” means with respect to any Person,
each business or entity which is a member of a “controlled group of
corporations,” under “common control” or a member of an “affiliated service
group” with such Person within the meaning of Sections 414(b), (c) or (m) of
the Code, or required to be aggregated with such Person under Section 414(o) of
the Code, or under “common control” with such Person within the meaning of
Section 4001(a)(14) of ERISA.
“ESTIMATED DELAYED TRANSFER AMOUNT” shall have the
meaning ascribed thereto in Section 3.3(b)(ii) of this Agreement.
7
“ESTIMATED RETIREMENT PLAN TRANSFER AMOUNT” shall have
the meaning ascribed thereto in Section 3.2(b)(ii) of this Agreement.
“EXCLUDED INVESTMENTS” shall have the meaning ascribed
thereto in Section 3.2(b)(iii) of this Agreement.
“FINAL DELAYED TRANSFER AMOUNT” shall have the meaning
ascribed thereto in Section 3.3(b)(ii) of this Agreement.
“FINAL DELAYED TRANSFER DATE” shall have the meaning
ascribed thereto in Section 3.3(b)(iii) of this Agreement.
“FINAL RETIREMENT PLAN TRANSFER AMOUNT” shall have the
meaning ascribed thereto in Section 3.2(b)(iv) of this Agreement.
“FINAL TRANSFER DATE” shall have the meaning ascribed
thereto in Section 3.2(b)(v) of this Agreement.
“FORMER AMERIPRISE EMPLOYEE”
means, as of the Distribution Date, any former
employee of AXP or an Affiliate, including retired, deferred vested, non-vested
and other inactive terminated individuals, whose most recent active employment
with AXP or an Affiliate was with a member of the Ameriprise Group and such
active employment has ended on or before the Distribution Date.
“FORMER AXP EMPLOYEE”
means, as of the Distribution Date, any former
employee of AXP or an Affiliate, including retired, deferred vested, non-vested
and other inactive terminated individuals, whose most recent active employment
with AXP or an Affiliate was with a member of the AXP Group.
“HIPAA”
means the Health Insurance Portability and
Accountability Act of 1996, as amended.
“INITIAL CASH TRANSFER” shall have the meaning
ascribed thereto in Section 3.2(b)(iii) of this Agreement.
“INITIAL TRANSFER AMOUNT” shall have the meaning
ascribed thereto in Section 3.2(b)(iii) of this Agreement.
“INITIAL TRANSFER DATE” shall have the meaning
ascribed thereto in Section 3.2(b)(iii) of this Agreement.
“IRS” means the United States Internal Revenue
Service.
“MEASUREMENT DATE” shall have the meaning ascribed
thereto in Section 7.2(b) of this Agreement.
8
“OUTSTANDING PG AWARDS” shall mean, collectively, the
PG-XIV, PG-XV, and PG-XVI awards granted pursuant to the 1998 American Express
Company Incentive Compensation Plan and any related agreement.
“PARTICIPATING COMPANY”
means AXP or any Person (other than an
individual) participating in an AXP Benefit Plan.
“PARTIES” shall have the meaning ascribed thereto in
the preamble to this Agreement.
“PAYMENT DATE” means the fifth business day after the
date on which the conditions set forth in Section 9.1(c)(ii) of this Agreement
have been fulfilled and satisfied or such other date as the Parties may agree
to in writing.
“PRE-DISTRIBUTION CLAIM PERIOD” shall have the meaning
ascribed thereto in Section 5.2(g)(ii) of this Agreement.
“PRE-DISTRIBUTION DATE CLAIMS” shall have the meaning
ascribed thereto in Section 5.2(g)(ii) of this Agreement.
“REMAINING AXP LOI” shall have the meaning ascribed
thereto in Section 7.4(a) of this Agreement.
“REMAINING AXP OPTION” shall have the meaning ascribed
thereto in Section 7.2(b) of this Agreement.
“REMAINING AXP RESTRICTED STOCK” shall have the
meaning ascribed thereto in Section 7.3(a) of this Agreement.
“REVISED RETIREMENT PLAN TRANSFER AMOUNT”
shall have the meaning ascribed thereto in Section 3.2(b)(iv) hereof.
“RUN-OUT COVERAGE OPTIONS” shall have the meaning
ascribed thereto in Section 5.2(g)(ii) of this Agreement.
“SECURITIES ACT” means the Securities Act of 1933, as
amended.
“SEPARATION AND DISTRIBUTION AGREEMENT”
shall have the meaning ascribed thereto in the
recitals to this Agreement.
“SERIAL SEVERANCE EMPLOYEE” means any Former Ameriprise
Employee who, as of the Distribution Date or such later date as determined by
Ameriprise in its sole discretion, (i) has executed and delivered to AXP or
Ameriprise, as appropriate, a written severance agreement, and (ii) who is
entitled to receive the payment of severance benefits on a serial basis
pursuant to such severance agreement.
“SERVICE CREDITING DATE” shall have the meaning
ascribed thereto in Section 2.4(b)(i) of this Agreement.
9
“TRANSFER AMOUNT” means the UK Transfer Amount,
adjusted in accordance with the provisions of the Actuary’s Letter.
“TRANSFER DATE” shall mean, with respect to a Delayed
Transfer Employee, the date that such Delayed Transfer Employee commences
active employment with a member of the Ameriprise Group.
“TRS” shall have the meaning ascribed thereto in
Section 5.2(c)(i) of this Agreement.
“TRUE-UP AMOUNT” shall have the meaning ascribed
thereto in Section 3.2(b)(v) of this Agreement.
“UK ACTUARY’S LETTER” means the letter from the AXP UK
Actuary to the Ameriprise UK Actuary, a copy of which is attached hereto as
Exhibit A.
“UK TRANSFER AMOUNT” means the amount determined as
such in accordance with the provisions of the UK Actuary’s Letter.
“UNVESTED AXP OPTION” shall have the meaning ascribed
thereto in Section 7.2(c) of this Agreement.
“U.S.”
means the United States of America.
1.2
General
Interpretive Principles
. (a) Words
in the singular shall include the plural and vice versa, and words of one
gender shall include the other gender, in each case, as the context requires;
(b) the terms “hereof,” “herein,” and “herewith” and words of similar import
shall, unless otherwise stated, be construed to refer to this Agreement and not
to any particular provision of this Agreement, and references to Article,
Section, paragraph, Exhibit, and Schedule are references to the Articles,
Sections, paragraphs, Exhibits, and Schedules to this Agreement unless
otherwise specified; (c) the word “including” and words of similar import when
used in this Agreement shall mean “including, without limitation,” unless
otherwise specified; and (d) any reference to any federal, state, local or
non-U.S. statute or Law shall be deemed to also refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires.
ARTICLE II
GENERAL PRINCIPLES
2.1 ASSUMPTION AND RETENTION OF
LIABILITIES; RELATED ASSETS
.
(a) As of the Effective Time, except as
otherwise expressly provided for in this Agreement, AXP shall, or shall cause
one or more members of the AXP Group to, assume or retain and AXP hereby agrees
to pay, perform, fulfill and discharge, in due course in full (i) all
Liabilities under all AXP Benefit Plans, (ii) all Liabilities with respect to
the employment, service, termination of employment or termination of service of
all AXP Employees, Former AXP Employees, their dependents and beneficiaries,
and other service providers (including any individual who is, or was, an
independent contractor, temporary employee, temporary service worker,
consultant, freelancer, agency employee, leased employee, on-call worker,
incidental
10
worker, or nonpayroll worker of any member of the AXP
Group or in any other employment, non-employment, or retainer arrangement, or
relationship with any member of the AXP Group), in each case to the extent
arising in connection with or as a result of employment with or the performance
of services for any member of the AXP Group, and (iii) any other Liabilities or
obligations expressly assigned to AXP or any of its Affiliates under this
Agreement. For purposes of
clarification, the Liabilities assumed or retained by the AXP Group as provided
for in this Section 2.1(a) are intended to be AXP Liabilities as such term is
defined in the Separation and Distribution Agreement.
(b) As of the Effective Time, except as
otherwise expressly provided for in this Agreement, Ameriprise shall, or shall
cause one or more members of the Ameriprise Group to, assume or retain, as
applicable, and Ameriprise hereby agrees to pay, perform, fulfill and
discharge, in due course in full (i) all Liabilities under all Ameriprise
Benefit Plans, (ii) all Liabilities with respect to the employment, service,
termination of employment or termination of service of all Ameriprise
Employees, Former Ameriprise Employees, their dependents and beneficiaries and
other service providers (including any individual who is, or was, an
independent contractor, temporary employee, temporary service worker,
consultant, freelancer, agency employee, leased employee, on-call worker,
incidental worker, or nonpayroll worker of any member of the Ameriprise Group
or in any other employment, non-employment, or retainer arrangement, or
relationship with any member of the Ameriprise Group), and (iii) any other
Liabilities or obligations expressly assigned to Ameriprise or any of its
Affiliates under this Agreement. For
purposes of clarification, the Liabilities assumed or retained by the
Ameriprise Group as provided for in this Section 2.1(b) are intended to be
Ameriprise Liabilities as such term is defined in the Separation and
Distribution Agreement.
(c) From
time to time after the Distribution, Ameriprise shall promptly reimburse AXP,
upon AXP’s reasonable request and the presentation by AXP of such
substantiating documentation as Ameriprise shall reasonably request, for the
cost of any obligations or Liabilities satisfied by AXP or its Affiliates that
are, or that have been made pursuant to this Agreement, the responsibility of
Ameriprise or any of its Affiliates.
(d) From
time to time after the Distribution, AXP shall promptly reimburse Ameriprise,
upon Ameriprise’s reasonable request and the presentation by Ameriprise of such
substantiating documentation as AXP shall reasonably request, for the cost of
any obligations or Liabilities satisfied by Ameriprise that are, or that have
been made pursuant to this Agreement, the responsibility of AXP or its
Affiliates.
2.2 AMERIPRISE PARTICIPATION IN AXP
BENEFIT PLANS
.
Except as otherwise expressly provided for in this Agreement or as
otherwise expressly agreed to in writing between the Parties, (i) effective as
of the Effective Time, Ameriprise and each member of the Ameriprise Group shall
cease to be a Participating Company in any AXP Benefit Plan, and (ii) each (A)
Ameriprise Participant and any other service providers (including any
individual who is, or was, an independent contractor, temporary employee,
temporary service worker, consultant, freelancer, agency employee, leased
employee, on-call worker, incidental worker, or nonpayroll worker of any member
of the AXP Group or the Ameriprise Group or in any other employment,
non-employment, or retainer arrangement, or relationship with any member of the
AXP Group or the Ameriprise Group), effective as of the Effective Time, and (B)
Delayed
11
Transfer Employee, effective as of such Delayed
Transfer Employee’s Transfer Date, shall cease to participate in, be covered
by, accrue benefits under, be eligible to contribute to or have any rights
under any AXP Benefit Plan, and AXP and Ameriprise shall take all necessary
action to effectuate each such cessation.
2.3 COMPARABLE COMPENSATION AND
BENEFITS. Except as otherwise agreed to
by AXP, (i) with respect to an Ameriprise Employee, for the one-year period
commencing on the Distribution Date and ending on the one-year anniversary of
such date and (ii) with respect to a Delayed Transfer Employee whose Transfer
Date occurs prior to the one-year anniversary of the Distribution Date, for the
period commencing on such Delayed Transfer Employee’s Transfer Date and ending
on the one-year anniversary of the Distribution Date, Ameriprise (acting
directly or through its Affiliates) intends to provide such Ameriprise
Employees and Delayed Transfer Employees with compensation opportunities
(including, without limitation, salary, wages, commissions and bonus
opportunities) and employee benefits that are substantially comparable, in the
aggregate, to the compensation opportunities and employee benefits to which
such Ameriprise Employees and Delayed Transfer Employees were entitled to
immediately prior to the Distribution Date.
2.4 SERVICE RECOGNITION
.
(a)
Pre-Distribution
Service Credit
. Ameriprise shall
give each Ameriprise Participant and Delayed Transfer Employee full credit for
purposes of eligibility, vesting, determination of level of benefits, and, to
the extent applicable, benefit accruals under any Ameriprise Benefit Plan for
such Ameriprise Participant’s or Delayed Transfer Employee’s service with any
member of the AXP Group prior to the Distribution Date or applicable Transfer
Date to the same extent such service was recognized by the applicable AXP
Benefit Plans immediately prior to the Distribution Date or applicable Transfer
Date;
provided
,
however
, that such service shall not be
recognized to the extent that such recognition would result in the duplication
of benefits.
(b)
Post-Distribution Reciprocal
Service Crediting
. Each of AXP and
Ameriprise (acting directly or through their respective Affiliates) shall cause
each of the AXP Service Plans and the Ameriprise Service Plans, respectively,
to provide the following service crediting rules effective as of the Distribution
Date:
(i) If
an AXP Employee who participates in any of the AXP Service Plans becomes
employed by a member of the Ameriprise Group prior to the first anniversary of
the Distribution Date (or such later date as mutually agreed to by the Parties)
(the “
Service Crediting Date
”) and such AXP Employee is continuously
employed by the AXP Group from the Distribution Date through the date such AXP
Employee commences active employment with a member of the Ameriprise Group,
then such AXP Employee’s service with the AXP Group following the Distribution
Date shall be recognized for purposes of eligibility, vesting and level of
benefits under the appropriate Ameriprise Service Plans, in each case to the
same extent as such AXP Employee’s service with the AXP Group was recognized
under the corresponding AXP Service Plans.
12
(ii)
If an AXP Employee who
participates in any of the AXP Service Plans becomes employed by a member of
the Ameriprise Group either (A) on or after the Service Crediting Date or (B)
without having been continuously employed by the AXP Group from the
Distribution Date through the date such AXP Employee commences active
employment with a member of the Ameriprise Group, then, except to the extent
required by applicable Law, such individual’s service with the AXP Group
following the Distribution Date will not be recognized for any purpose under
any Ameriprise Service Plan.
(iii) If
an Ameriprise Employee who participates in any of the Ameriprise Service Plans
becomes employed by a member of the AXP Group prior to the Service Crediting
Date and such Ameriprise Employee is continuously employed by the Ameriprise
Group from the Distribution Date through the date such Ameriprise Employee
commences active employment with a member of the AXP Group, then such
Ameriprise Employee’s service with the Ameriprise Group following the
Distribution Date shall be recognized for purposes of eligibility, vesting and
level of benefits under the appropriate AXP Service Plans, in each case to the
same extent as such Ameriprise Employee’s service with the Ameriprise Group was
recognized under the corresponding Ameriprise Service Plans.
(iv) If
an Ameriprise Employee who participates in any of the Ameriprise Service Plans
becomes employed by a member of the AXP Group either (A) on or after the
Service Crediting Date or (B) without having been continuously employed by the
Ameriprise Group from the Distribution Date through the date such Ameriprise
Employee commences active employment with a member of the AXP Group, then the
corresponding AXP Service Plans will only take into consideration such
individual’s service with the AXP Group and the Ameriprise Group, in each case,
prior to the Distribution Date and, thus, except to the extent required by
applicable Law, such Ameriprise Employee’s service with the Ameriprise Group
following the Distribution Date will not be recognized for any purpose under
any AXP Service Plan.
(v) Notwithstanding anything in this
Agreement to the contrary, for the one (1) year period commencing on the
Distribution Date, the AXP Service Plans and the Ameriprise Service Plans shall
provide that no break in service occurs with respect to any AXP Employee or
Ameriprise Employee who is hired or rehired by any member of the Ameriprise
Group or the AXP Group after the termination of such AXP Employee’s or
Ameriprise Employee’s employment with either the AXP Group or the Ameriprise
Group within such one (1) year period.
2.5 APPROVAL BY AXP AS SOLE STOCKHOLDER
. Effective as of the Distribution Date,
Ameriprise shall have adopted the Ameriprise Financial 2005 Incentive
Compensation Plan (the “
Ameriprise Stock Plan
”) which shall permit the
issuance of long-term incentive awards that have material terms and conditions
substantially similar to those long-term incentive awards issued under the
relevant AXP Stock Plans
that are to be substituted with Ameriprise long-term incentive awards
in connection with the Distribution. The
Ameriprise Stock Plan shall be
approved prior to the
Distribution by AXP as Ameriprise’s sole shareholder.
ARTICLE III
U.S. QUALIFIED DEFINED BENEFIT PLAN
13
3.1 ESTABLISHMENT OF AMERIPRISE
PLAN. Effective as of the Distribution
Date, Ameriprise shall, or shall have caused one or more members of the
Ameriprise Group to, establish a defined benefit pension plan and related trust
to provide retirement benefits to Ameriprise Participants who immediately prior
to the Distribution Date were participants in, or entitled to present or future
benefits (whether or not vested) under, the AXP Retirement Plan (such defined
benefit pension plan, the “
Ameriprise Retirement Plan
” and such
Ameriprise Participants, the “
Ameriprise Plan Participants
”). Ameriprise shall be responsible for taking
all necessary, reasonable, and appropriate action to establish, maintain and
administer the Ameriprise Retirement Plan so that it is qualified under Section
401(a) of the Code and that the related trust thereunder is exempt under
Section 501(a) of the Code.
Notwithstanding the above, u
ntil October 18,
2005, all benefits payable to Ameriprise Plan Participants (including benefits
that have accrued under the Ameriprise Retirement Plan following the Distribution
Date) shall be paid from the AXP Retirement Plan.
Ameriprise
(acting directly or through its Affiliates) shall be responsible for any and
all Liabilities (including Liability for funding) and other obligations with
respect to the Ameriprise Retirement Plan.
3.2 AMERIPRISE PARTICIPANTS
(a)
Assumption
of AXP Retirement Plan Liabilities
.
Effective as of the Initial Transfer Date, Ameriprise (acting directly
or through its Affiliates) hereby agrees to cause the Ameriprise Retirement
Plan to assume, and to fully perform, pay and discharge, all accrued benefits
under the AXP Retirement Plan relating to all Ameriprise Plan Participants as
of the Distribution Date (inclusive of benefits paid by the AXP Retirement Plan
to Ameriprise Plan Participants following the Distribution Date, but prior to
the Initial Transfer Date in accordance with Section 3.1 above, but excluding
benefits attributable to lost participants).
(b)
Transfer
of AXP Retirement Plan Assets
.
(i) The Parties intend that the portion
of the AXP Retirement Plan covering Ameriprise Plan Participants (excluding
forfeitures attributable to lost participants) shall be transferred to the
Ameriprise Retirement Plan in accordance with Section 414(l) of the Code,
Treasury Regulation Section 1.414(l)-1, and Section 208 of ERISA. No later than thirty (30) days prior to the
Distribution Date, AXP and Ameriprise (acting directly or through their
respective Affiliates) shall, to the extent necessary, file an IRS Form 5310-A
regarding the transfer of Assets and Liabilities from the AXP Retirement Plan
to the Ameriprise Retirement Plan.
(ii) As soon as reasonably practicable
following the Distribution Date, AXP shall cause the AXP Actuary to determine
the estimated value, as of the Distribution Date, of the Assets to be
transferred to the Ameriprise Retirement Plan in accordance with the
assumptions and valuation methodology set forth on Schedule C attached hereto
(the “
Estimated Retirement Plan Transfer Amount
”).
(iii) On or before October 18, 2005, AXP
shall transfer to the Ameriprise Retirement Plan an amount in cash at least
sufficient to fund benefit payments reasonably projected to be required under
the Ameriprise Retirement Plan prior to the Initial Transfer Date (the “
Initial
Cash Transfer
”). Within thirty (30)
days (or such later time as mutually agreed to by
14
the Parties) following
the determination of the Estimated Retirement Plan Transfer Amount, AXP and
Ameriprise (each acting directly or through their respective Affiliates) shall
cooperate in good faith to cause an initial transfer of Assets (the date of
such transfer, the “
Initial Transfer Date
”) from the AXP Retirement Plan
to the Ameriprise Retirement Plan in an amount equal to ninety percent (90%) of
the Estimated Retirement Plan Transfer Amount minus the Initial Cash Transfer,
adjusted to reflect earnings or losses during the period from the Distribution
Date to the Initial Transfer Date (such amount, the “
Initial Transfer Amount
”). Such earnings or losses shall be determined
based on the actual rate of return of the AXP Retirement Plan without regard to
those investments set forth on Schedule D attached hereto (the “
Excluded
Investments
”) for the period commencing on the Distribution Date and ending
on the last calendar day of the month ending immediately prior to the Initial
Transfer Date. Earnings or losses for
the period from such last day of the month to the Initial Transfer Date shall
be based on a blended index (thirty-seven percent (37%) S&P 500 Index,
twenty percent (20%) Russell 2000 Index, twenty-two percent (22%) MSCI EAFE
Index, and twenty-one percent (21%) Lehman Aggregate Bond Index) determined as
of the date that is as close as administratively practicable to the Initial
Transfer Date, but in no event more than five (5) business days prior to the
Initial Transfer Date. AXP shall satisfy
its obligation pursuant to this Section 3.2(b)(iii) by transferring Assets, in
kind, equal to the Initial Transfer Amount consisting of a pro rata percentage
(rounded up or down to the nearest whole lot or distributable unit) of all
investments, excluding the Excluded Investments, under the AXP Retirement Plan.
(iv) Within ninety (90) days following the
Initial Transfer Date, AXP shall cause the AXP Actuary to provide Ameriprise
with a revised calculation of the value, as of the Distribution Date, of the
Assets to be transferred to the Ameriprise Retirement Plan determined in
accordance with the assumptions and valuation methodology set forth on Schedule
C attached hereto (the “
Revised Retirement Plan Transfer Amount
”). Ameriprise may submit, at its sole cost and
expense, the Revised Retirement Plan Transfer Amount to the Ameriprise Actuary
for verification;
provided
,
that
, such verification process and
any calculation performed by the Ameriprise Actuary in connection therewith
shall be performed solely on the basis of the assumptions and valuation
methodology set forth on Schedule C attached hereto. Furthermore, the AXP Actuary and Ameriprise
Actuary shall cooperate in good faith to ensure that any such verification
process is performed in a timely manner.
In the event the Ameriprise Actuary determines that the value, as of the
Distribution Date, of the Assets to be transferred to the Ameriprise Retirement
Plan differs from the Revised Retirement Plan Transfer Amount, the Ameriprise
Actuary and AXP Actuary shall use good faith efforts to reconcile any such
difference. If the Ameriprise Actuary
and the AXP Actuary fail to reconcile such difference and (A) the Ameriprise
Actuary’s calculation is within two percent (2%) of the Revised Retirement Plan
Transfer Amount, the average of the Revised Retirement Plan Transfer Amount and
the Ameriprise Actuary’s calculation shall be used; or (B) the difference between
the Ameriprise Actuary’s calculation and the Revised Retirement Plan Transfer
Amount exceeds two percent (2%), the Ameriprise Actuary and the AXP Actuary
shall jointly designate a third, independent actuary whose calculation of the
value, as of the Distribution Date, of the Assets to be transferred to the
Ameriprise Retirement Plan shall be final and binding;
provided
,
that
,
such calculation must be performed in accordance with the assumptions and
valuation methodology set forth on Schedule C attached hereto;
and
,
provided
,
further
, that such value shall be between the value determined by the
Ameriprise Actuary and the Revised Retirement Plan Transfer Amount or equal to
either such value. AXP and Ameriprise
shall each pay one-half of the costs incurred in
15
connection with the
retention of such independent actuary.
The final, verified value, as of the Distribution Date, of the Assets to
be transferred to the Ameriprise Retirement Plan as determined in accordance
with this Section 3.2(b)(iv) shall be referred to herein as the “
Final
Retirement Plan Transfer Amount
.”
(v) Within forty-five (45) days of the
determination of the Final Retirement Plan Transfer Amount, AXP shall cause the
AXP Retirement Plan to transfer to the Ameriprise Retirement Plan (the date of
such transfer, the “
Final Transfer Date
”) an amount, in cash, equal to
(A) the Final Retirement Plan Transfer Amount minus (B) the sum of (1) the
Initial Transfer Amount, (2) the Initial Cash Transfer, and (3) the aggregate
amount of payments made from the AXP Retirement Plan to Ameriprise Plan
Participants in order to satisfy any benefit obligation with respect to such
Ameriprise Plan Participants during the period commencing on the Distribution Date
and ending on the date of the Initial Cash Transfer (such amount the “
True-Up
Amount
”);
provided
,
that
, the True-Up Amount shall be
adjusted to reflect earnings or losses as described below; and
provided
,
further
, that in the event the sum of clauses (1), (2) and (3) above is
greater than the Final Retirement Plan Transfer Amount, AXP shall not be
required to cause any such additional transfer and instead Ameriprise shall be
required to cause a transfer of cash from the Ameriprise Retirement Plan to the
AXP Retirement Plan in amount equal to the amount by which the sum of clauses
(1), (2) and (3) above exceeds the Final Retirement Plan Transfer Amount. The parties hereto acknowledge that the AXP
Retirement Plan’s transfer of the True-Up Amount to the Ameriprise Retirement
Plan shall be in full settlement and satisfaction of the obligations of AXP and
AXP Retirement Plan to transfer Assets to the Ameriprise Retirement Plan
pursuant to this Section 3.2(b).
The True-Up Amount shall
be paid from the AXP Retirement Plan to the Ameriprise Retirement Plan, in
cash, and adjusted to reflect earnings or losses during the period from the
Distribution Date to the Final Transfer Date.
Such earnings or losses shall be determined based on the actual rate of
return of the AXP Retirement Plan without regard to the Excluded Investments
for the period commencing on the Distribution Date and ending on the last
calendar day of the month ending immediately prior to the Final Transfer
Date. Earnings or losses for the period
from such last day of the month to the Final Transfer Date shall be based on a
blended index (thirty-seven percent (37%) S&P 500 Index, twenty percent
(20%) Russell 2000 Index, twenty-two percent (22%) MSCI EAFE Index, and
twenty-one percent (21%) Lehman Aggregate Bond Index) determined as of the date
that is as close as administratively practicable to the Final Transfer Date,
but in no event more than five (5) business days prior to the Final Transfer
Date. In the event that Ameriprise is
obligated to cause the Ameriprise Retirement Plan to reimburse the AXP
Retirement Plan pursuant to this Section 3.2(b)(v), such reimbursement shall be
performed in accordance with the same principles set forth herein with respect
to the payment of the True-Up Amount.
(c)
Continuation
of Elections
. As of the Distribution
Date, Ameriprise (acting directly or through its Affiliates) shall cause the
Ameriprise Retirement Plan to recognize and maintain all existing elections,
including, but not limited to, beneficiary designations, payment form elections
and rights of alternate payees under qualified domestic relations orders with
respect to Ameriprise Plan Participants under the AXP Retirement Plan.
16
(d)
Terminated
Non-Vested Employees
.
Notwithstanding anything herein to the contrary, the Ameriprise
Retirement Plan shall fully restore the hypothetical account of any individual
who becomes employed by any member of the Ameriprise Group following the
Distribution Date and whose employment with the AXP Group terminated on or
before the Distribution Date with no vested benefit under the AXP Retirement
Plan;
provided
,
that
, pursuant to AXP’s existing practices and
policies, such individual would have been entitled to restoration of such
individual’s hypothetical account under the AXP Retirement Plan had such
individual been re-employed by a member of the AXP Group rather than by a
member of the Ameriprise Group.
(e)
Lost
Participants
. AXP hereby
acknowledges and agrees that it shall cause the AXP Retirement Plan to retain
responsibility for all Liabilities and fully perform, pay and discharge all
obligations, when such obligations become due, relating to benefits
attributable to any lost participant in the AXP Retirement Plan as of the
Distribution Date.
3.3 DELAYED
TRANSFER EMPLOYEES.
(a)
Assumption
of AXP Retirement Plan Liabilities
.
With respect to each Delayed Transfer Employee, effective as of such
Delayed Transfer Employee’s Transfer Date, Ameriprise (acting directly or
through its Affiliates) shall cause the Ameriprise Retirement Plan to assume,
and to fully perform, pay and discharge, all benefits accrued under the AXP
Retirement Plan relating to such Delayed Transfer Employee through such Delayed
Transfer Employee’s Transfer Date.
(b)
Transfer
of AXP Retirement Plan Assets
.
(i) The parties intend that the portion of the
AXP Retirement Plan covering Delayed Transfer Employees shall be transferred to
the Ameriprise Retirement Plan in accordance with Section 414(l) of the Code, Treasury
Regulation Section 1.414(l)-1, and Section 208 of ERISA. No later than thirty (30) days prior to the
first anniversary of the Distribution Date (or such other date as mutually
agreed to by the parties) (the “
Delayed Transfer Calculation Date
”), AXP
and Ameriprise (acting directly or through their respective Affiliates) shall,
to the extent necessary, file an IRS Form 5310-A regarding the transfer of
Assets and Liabilities from the AXP Retirement Plan to the Ameriprise
Retirement Plan with respect to the Delayed Transfer Employees.
(ii) No later than ninety (90) days
following the Delayed Transfer Calculation Date, the AXP Actuary shall
determine the value of the Assets to be transferred to the Ameriprise
Retirement Plan with respect to the Delayed Transfer Employees in accordance
with the assumptions and valuation methodology set forth on Schedule C attached
hereto with respect to the Delayed Transfer Employees (the “
Estimated
Delayed Transfer Amount
”).
Ameriprise may submit, at its sole cost and expense, the Estimated
Delayed Transfer Amount to the Ameriprise Actuary for verification;
provided
,
that
, such verification process and any calculation performed by the
Ameriprise Actuary in connection therewith shall be performed solely on the
basis of the assumptions and valuation methodology set forth on Schedule C
attached hereto. Furthermore, the AXP
Actuary and Ameriprise Actuary shall cooperate in good faith to ensure that any
such verification process is performed in a timely manner. In the event the Ameriprise
17
Actuary determines that
the value of the Assets to be transferred to the Ameriprise Retirement Plan
differs from the Estimated Delayed Transfer Amount, the Ameriprise Actuary and
AXP Actuary shall use good faith efforts to reconcile any such difference. If the Ameriprise Actuary and the AXP Actuary
fail to reconcile such difference and (A) the Ameriprise Actuary’s calculation
is within two percent (2%) of the Estimated Delayed Transfer Amount, the
average of the Estimated Delayed Transfer Amount and the Ameriprise Actuary’s
calculation shall be used; or (B) the difference between the Ameriprise
Actuary’s calculation and the Estimated Delayed Transfer Amount exceeds two
percent (2%), the Ameriprise Actuary and the AXP Actuary shall jointly
designate a third, independent actuary whose calculation of the value of the
Assets to be transferred to the Ameriprise Retirement Plan shall be final and
binding;
provided
,
that
, such calculation must be performed in
accordance with the assumptions and valuation methodology set forth on Schedule
C attached hereto;
and
,
provided
,
further
, that such value
shall be between the value determined by the Ameriprise Actuary and the
Estimated Delayed Transfer Amount or equal to either such value. AXP and Ameriprise shall each pay one-half of
the costs incurred in connection with the retention of such independent
actuary. The final, verified value of
the Assets to be transferred to the Ameriprise Retirement Plan as determined in
accordance with this Section 3.3(b)(ii) shall be referred to herein as the “
Final
Delayed Transfer Amount
.”
(iii) Within thirty (30) days following the
determination of the Final Delayed Transfer Amount, AXP shall cause the AXP
Retirement Plan to transfer to the Ameriprise Retirement Plan (the date of such
transfer, the “
Final Delayed Transfer Date
”) an amount, in cash, equal
to the Final Delayed Transfer Amount, adjusted to reflect earnings or losses
during the period from the Delayed Transfer Calculation Date through the Final
Delayed Transfer Date. Such earnings or
losses shall be determined based on the actual rate of return of the AXP
Retirement Plan without regard to the Excluded Investments for the period
commencing on the Delayed Transfer Calculation Date and ending on the last
calendar day of the month ending immediately prior to the Final Delayed
Transfer Date. Earnings or losses for
the period from such last day of the month to the Final Delayed Transfer Date
shall be based on a blended index (thirty-seven percent (37%) S&P 500
Index, twenty percent (20%) Russell 2000 Index, twenty-two percent (22%) MSCI
EAFE Index, and twenty-one percent (21%) Lehman Aggregate Bond Index)
determined as of the date that is as close as administratively practicable to
the Final Delayed Transfer Date, but in no event more than five (5) business
days prior to the Final Delayed Transfer Date.
(d)
Continuation
of Elections
. As of each Delayed
Transfer Employee’s Transfer Date, Ameriprise (acting directly or through its
Affiliates) shall cause the Ameriprise Retirement Plan to recognize and
maintain all existing elections including, but not limited to, beneficiary
designations, payment form elections and rights of alternate payees under
qualified domestic relations orders with respect to such Delayed Transfer
Employee under the AXP Retirement Plan.
3.4 AMERICAN
EXPRESS FUNDED PENSION PLAN.
Notwithstanding anything herein to the contrary, all Liabilities and
other obligations accrued prior to May 1, 1985 under the American Express
Funded Pension Plan shall at all times remain Liabilities and obligations of
AXP regardless of whether such Liabilities or obligations relate to any
Ameriprise Participant or Delayed Transfer Employee.
18
ARTICLE IV
U.S. QUALIFIED
DEFINED CONTRIBUTION PLAN
4.1 THE
AMERICAN EXPRESS INCENTIVE SAVINGS PLAN
(a)
Establishment
of the Ameriprise 401(k)
. Effective
as of the Distribution Date, Ameriprise shall, or shall have caused one of its
Affiliates to, establish a defined contribution plan and trust for the benefit
of Ameriprise Participants (the “
Ameriprise 401(k)
”). Ameriprise shall be responsible for taking
all necessary, reasonable and appropriate action to establish, maintain and administer
the Ameriprise 401(k) so that it is qualified under Section 401(a) of the Code
and that the related trust thereunder is exempt under Section 501(a) of the
Code. Ameriprise (acting directly or
through its Affiliates) shall be responsible for any and all Liabilities
(including Liability for funding) and other obligations with respect to the
Ameriprise 401(k).
(b)
Transfer
of AXP ISP Assets
.
(i) Ameriprise Participants. As soon as reasonably practicable (but not
later than thirty (30) days) following the Distribution Date, AXP shall cause
the accounts (including any outstanding loan balances and forfeitures, but
excluding forfeitures attributable to lost participants) in the AXP ISP
attributable to Ameriprise Participants and all of the Assets in the AXP ISP
related thereto to be transferred in-kind to the Ameriprise 401(k), and
Ameriprise shall cause the Ameriprise 401(k) to accept such transfer of
accounts and underlying Assets and, effective as of the date of such transfer,
to assume and to fully perform, pay and discharge, all obligations of the AXP
ISP relating to the accounts of Ameriprise Participants (to the extent the
Assets related to those accounts are actually transferred from the AXP ISP to
the Ameriprise 401(k)) as of the Distribution Date. The transfer of Assets shall be conducted in
accordance with Section 414(l) of the Code, Treasury Regulation Section
1.414(1)-1, and Section 208 of ERISA.
(ii) Delayed Transfer Employees. As soon as reasonably practicable (but not
later than thirty (30) days) following a Delayed Transfer Employee’s Transfer
Date, AXP shall cause the accounts (including any outstanding loan balances) in
the AXP ISP attributable to such Delayed Transfer Employee and all of the
Assets in the AXP ISP related thereto to be transferred in-kind to the
Ameriprise 401(k), and Ameriprise shall cause the Ameriprise 401(k) to accept
such transfer of accounts and underlying Assets and, effective as of the date
of such transfer, to assume and to fully perform, pay and discharge, all obligations
of the AXP ISP relating to the accounts of such Delayed Transfer Employee (to
the extent the Assets related to such accounts are actually transferred from
the AXP ISP to the Ameriprise 401(k)) as of such Transfer Date. The transfer of Assets shall be conducted in
accordance with Section 414(l) of the Code, Treasury Regulation Section
1.414(l)-1, and Section 208 of ERISA.
(c)
Continuation of Elections
. As of (i) the Distribution Date with respect
to Ameriprise Participants, and (ii) a Delayed Transfer Employee’s Transfer
Date with respect to the Delayed Transfer Employees, Ameriprise (acting
directly or through its Affiliates) shall cause the Ameriprise 401(k) to
recognize and maintain all elections, including, but not limited to, deferral, investment
and payment form elections, beneficiary designations, and the rights of
19
alternate payees under qualified domestic relations orders with respect
to Ameriprise Participants or Delayed Transfer Employees, as applicable, under
the AXP ISP;
provided
,
that
, investment elections relating to the
American Express Company Stock Fund under the AXP ISP shall be deemed to apply
to the Ameriprise Financial Stock Fund under the Ameriprise 401(k).
(d)
Employer
Securities
. AXP and Ameriprise each
agrees to ensure that the shares of both Ameriprise Common Stock and AXP Common
Stock held in both the AXP ISP and the Ameriprise 401(k) are maintained in
compliance with all requirements of applicable Law.
(e)
Form
5310-A
. No later than thirty (30)
days prior to (i) the Distribution Date or, (ii) with respect to each Delayed
Transfer Employee, the date on which Assets and Liabilities associated with
such Delayed Transfer Employee under the AXP ISP transfer to the Ameriprise
401(k) in accordance with Section 4.1(b)(ii) above, AXP and Ameriprise (each
acting directly or through their respective Affiliates) shall, to the extent
necessary, file IRS Form 5310-A regarding the transfer of Assets and
Liabilities from the AXP ISP to the Ameriprise 401(k) as discussed in this
Article IV.
(f)
Terminated
Non-Vested Employees
.
Notwithstanding anything herein to the contrary, the Ameriprise 401(k)
shall fully restore the unvested portion of the account of any individual who
becomes employed by any member of the Ameriprise Group following the
Distribution Date and whose employment with the AXP Group (inclusive of
Ameriprise) terminated on or before the Distribution Date with a portion of
such individual’s benefits under the AXP ISP not being vested;
provided
,
that,
pursuant to AXP’s existing practices and policies, such individual
would have been entitled to the restoration of the unvested portion of such
individual’s AXP ISP account had such individual been rehired by a member of
the AXP Group rather than a member of the Ameriprise Group.
(g)
Lost
Participants
. AXP hereby
acknowledges and agrees that it shall cause the AXP ISP to retain
responsibility for all Liabilities and fully perform, pay and discharge all
obligations, when such obligations become due, relating to benefits
attributable to any lost participant in the AXP ISP as of the Distribution
Date.
4.2 CONTRIBUTIONS
AS OF THE DISTRIBUTION DATE. All
contributions payable to the AXP ISP with respect to employee deferrals, matching
contributions and AXP stock contributions for Ameriprise Participants through
the Distribution Date and for Delayed Transfer Employees through the date on
which such Delayed Transfer Employees cease providing services to a member of
the AXP Group, determined in accordance with the terms and provisions of the
AXP ISP, ERISA and the Code, shall be paid by AXP to the AXP ISP prior to the
date of the Asset transfer described in Sections 4.1(b)(i) and (ii) above.
ARTICLE V
U.S. HEALTH AND
WELFARE PLANS
5.1 HEALTH
AND WELFARE PLANS MAINTAINED BY THE AMERIPRISE GROUP PRIOR TO THE DISTRIBUTION
DATE. Following the Distribution Date,
Ameriprise (acting directly or through its Affiliates) shall retain, and AXP
shall have no obligation whatsoever with regard to, all obligations and
Liabilities under, or with respect to, the
20
health and welfare plans
maintained by Ameriprise or any of its Affiliates that are listed on Schedule E
attached hereto (the “
Ameriprise Retained Welfare Plans
”).
5.2 HEALTH
AND WELFARE PLANS MAINTAINED BY AXP PRIOR TO THE DISTRIBUTION DATE.
(a)
Establishment
of the Ameriprise Welfare Plans
. AXP
or one or more of its Affiliates maintain each of the health and welfare plans
set forth on Schedule F attached hereto (the “
AXP Welfare Plans
”) for
the benefit of eligible AXP Participants and Ameriprise Participants. Effective as of the Distribution Date,
Ameriprise shall, or shall cause an Ameriprise Affiliate to, adopt, for the
benefit of eligible Ameriprise Participants, health and welfare plans, the
terms of which are substantially comparable, in the aggregate, to the terms of
the AXP Welfare Plans as in effect immediately prior to the Distribution Date
(collectively, the “
Ameriprise Welfare Plans
”).
(b)
Terms
of Participation in Ameriprise Welfare Plans
. Ameriprise (acting directly or through its
Affiliates) shall cause all Ameriprise Welfare Plans to (i)
waive
all limitations as to preexisting conditions, exclusions, and service
conditions with respect to participation and coverage requirements applicable
to Ameriprise Participants and Delayed Transfer Employees, other than
limitations that were in effect with respect to (A) Ameriprise Participants as
of the Distribution Date and (B) each Delayed Transfer Employee as of such
Delayed Transfer Employee’s Transfer Date, in each case under the AXP Welfare
Plans
, (ii) honor any deductible, out-of-pocket maximum, and co-payment
incurred by Ameriprise Participants and Delayed Transfer Employees under the
AXP Welfare Plans in which they participated immediately prior to the
Distribution Date or such Transfer Date, as the case may be, in satisfying any
applicable deductible or out-of-pocket requirements under any Ameriprise
Welfare Plans during the same plan year in which such deductible, out-of-pocket
maximums and co-payments were made, (iii) waive any waiting period limitation
or evidence of insurability requirement that would otherwise be applicable to
an Ameriprise Participant following the Distribution Date or Delayed Transfer
Employee following such Delayed Transfer Employee’s Transfer Date, to the
extent such Ameriprise Participant or Delayed Transfer Employee, as applicable,
had satisfied any similar limitation under the analogous AXP Welfare Plan, and
(iv) other than with respect to the Ameriprise Welfare Plan that is comparable
to the American Express Vision Care Plan, provide each Ameriprise Participant
and Delayed Transfer Employee with new annual and lifetime maximums.
(c)
Retiree Medical Eligibility
.
(i) AXP Retiree Medical Program. Notwithstanding anything herein to the
contrary, for so long as it maintains the AXP Retiree Medical Program described
in Schedule G attached hereto, as may be amended from time to time, (the “
AXP
Retiree Medical Program
”), AXP shall cause the AXP Retiree Medical Program
to contain provisions regarding eligibility and service crediting that ensure
that Ameriprise Participants and Delayed Transfer Employees who, as of the
Distribution Date or Transfer Date, as applicable, were eligible to immediately
commence benefits under the AXP Retiree Medical Program under the cost of
coverage provisions applicable to retirees of American Express Corporate
Headquarters (“
CHQ
”), American Express Bank Ltd (“
AEB
”), or
American Express Travel Related Services Company,
21
Inc,
(“
TRS
”) (the “
CHQ/AEB/TRS Retiree Medical Eligible
”) remain
eligible for benefits under the AXP Retiree Medical Program after the
Distribution Date or the relevant Transfer Date, as applicable. In addition, AXP shall cause the AXP Retiree
Medical Program to contain provisions regarding eligibility and service
crediting that ensure that Ameriprise Participants who, during the period
commencing on February 1, 2005, and ending immediately prior to the
Distribution Date, transferred employment from an AXP Affiliate at which they
were CHQ/AEB/TRS Retiree Medical Eligible to an AXP Affiliate at which they
were no longer CHQ/AEB/TRS Retiree Medical Eligible, remain eligible for
benefits under the AXP Retiree Medical Program after the Distribution Date.
(ii) Ameriprise
Retiree Medical Program. Notwithstanding anything herein to the
contrary, for so long as it maintains the retiree medical program established
pursuant to Section 5.2(a) above (the “
Ameriprise Retiree Medical Program
”),
as may be amended from time to time, Ameriprise shall cause the Ameriprise
Retiree Medical Program to contain provisions regarding eligibility and service
crediting that ensure that: (A) AXP Participants who, as of the Distribution
Date, were eligible to immediately commence benefits under the AXP Retiree
Medical Program under the cost of coverage provisions applicable to retirees of
American Express Financial Corporation (the “
AEFC Retiree Medical Eligible
”);
and Ameriprise Employees who become members of the AXP Group prior to the first
anniversary of the Distribution Date (or such later date as mutually agreed to
by the Parties) who, as of such transfer date were eligible to immediately
commence benefits under the Ameriprise Retiree Medical Program are eligible for
benefits under the Ameriprise Retiree Medical Program as of the Distribution
Date or later transfer date, as applicable.
In addition, Ameriprise shall cause the Ameriprise Retiree Medical
Program to contain provisions regarding eligibility and service crediting that
ensure that AXP Participants who, during the period commencing on February 1,
2005, and ending immediately prior to the Distribution Date, transferred
employment from an AXP Affiliate at which they were AEFC Retiree Medical
Eligible to an AXP Affiliate at which they were not AEFC Retiree Medical
Eligible, are eligible for benefits under the Ameriprise Retiree Medical
Program as of the Distribution Date.
(d)
Reimbursement
Account Plan
. Effective as of the
Distribution Date, Ameriprise (acting directly or through its Affiliates) shall
have established a health and dependent care reimbursement account plan (the “
Ameriprise
Reimbursement Account Plan
”) with features that are comparable to those
contained in the health and dependent care reimbursement account plan
maintained by AXP for the benefit of Ameriprise Participants immediately prior
to the Distribution Date (the “
AXP Reimbursement Account Plan
”). With respect to Ameriprise Participants,
effective as of the Effective Time, Ameriprise (acting directly or through its
Affiliates) shall assume responsibility for administering all reimbursement
claims of Ameriprise Participants with respect to calendar year 2005, whether
arising before, on, or after the Distribution Date, under the Ameriprise
Reimbursement Account Plan. With respect
to each Delayed Transfer Employee, effective as of each such Delayed Transfer
Employee’s Transfer Date, Ameriprise (acting directly or through its
Affiliates) shall assume responsibility for administering all reimbursement
claims of such Delayed Transfer Employee with respect to the calendar year in
which such Delayed Transfer Employee’s Transfer Date occurs, whether arising
before, on, or after such Transfer Date, under the Ameriprise Reimbursement
Account Plan. With respect to Ameriprise
Participants, as soon as practicable but no more than 45 days following the
Distribution Date, AXP shall cause to be transferred to Ameriprise an amount in
22
cash equal to (i) the sum
of all contributions to the AXP Reimbursement Account Plan made with respect to
calendar year 2005 by or on behalf of any Ameriprise Participant prior to the
Distribution Date, reduced by (ii) the sum of all claims incurred in calendar
year 2005 and paid by the AXP Reimbursement Account Plan with respect to such
Ameriprise Participants prior to the Distribution Date. With respect to each Delayed Transfer
Employee, as soon as practicable but no more than forty five (45) days
following the Delayed Transfer Calculation Date, AXP shall cause to be
transferred to Ameriprise an amount in cash equal to (i) the sum of all
contributions to the AXP Reimbursement Account Plan made by or on behalf of
such Delayed Transfer Employee prior to his or her Transfer Date with respect
to the calendar year in which his or her Transfer Date occurs, reduced by (ii)
the sum of all claims incurred by such Delayed Transfer Employee during the
calendar year in which such Delayed Transfer Employee’s Transfer Date occurs
and paid by the AXP Reimbursement Account Plan prior to such Transfer Date.
(e)
Continuation
of Elections
. With respect to
Ameriprise Participants, as of the Distribution Date, Ameriprise (acting
directly or through its Affiliates) shall cause the Ameriprise Welfare Plans to
recognize and maintain all elections and designations (including, without
limitation, all coverage and contribution elections and beneficiary
designations) made by Ameriprise Participants under, or with respect to, the
AXP Welfare Plans and apply such elections and designations under the
Ameriprise Welfare Plans for the remainder of the period or periods for which
such elections or designations are by their original terms applicable, to the
extent such election or designation is available under the corresponding
Ameriprise Welfare Plan. With respect to
each Delayed Transfer Employee, as of such Delayed Transfer Employee’s Transfer
Date, Ameriprise (acting directly or through its Affiliates) shall cause the
Ameriprise Welfare Plans to recognize and maintain all elections and
designations (including, without limitation, all coverage and contribution
elections and beneficiary designations) made by such Delayed Transfer Employee
under, or with respect to, the AXP Welfare Plans and apply such elections and
designations under the Ameriprise Welfare Plans for the remainder of the period
or periods for which such elections or designations are by their original terms
applicable, to the extent such election or designation is available under the
corresponding Ameriprise Welfare Plan.
(f)
COBRA
and HIPAA
. Effective as of the
Effective Time, Ameriprise (acting directly or through its Affiliates) shall
assume, or shall have caused the Ameriprise Welfare Plans to assume,
responsibility for compliance with the health care continuation coverage
requirements of COBRA with respect to Ameriprise Participants who, as of the
day prior to the Distribution Date, were covered under an AXP Welfare Plan pursuant
to COBRA. Effective as of a Delayed
Transfer Employee’s Transfer Date, Ameriprise (acting directly or through its
Affiliates) shall assume, or shall have caused the Ameriprise Welfare Plans to
assume, responsibility for compliance with the health care continuation
coverage requirements of COBRA with respect to such Delayed Transfer Employee
to the extent such Delayed Transfer Employee was, as of the day prior to such
Delayed Transfer Employee’s Transfer Date, covered under an AXP Welfare Plan
pursuant to COBRA. AXP (acting directly
or through its Affiliates) shall be responsible for administering compliance
with the certificate of creditable coverage requirements of HIPAA applicable to
the AXP Welfare Plans with respect to Ameriprise Participants and Delayed
Transfer Employees. The Parties hereto
agree that neither the Distribution nor a Delayed Employee’s transfer of employment
on such Delayed Transfer
23
Employee’s Transfer Date
shall constitute a COBRA qualifying event for any purposes of COBRA.
(g)
Liabilities
.
(i) Insured Benefits. With respect to employee welfare and fringe
benefits that are provided through the purchase of insurance, AXP shall cause
the AXP Welfare Plans to fully perform, pay and discharge all claims of (A)
Ameriprise Participants that are incurred prior to the Distribution Date and
(B) each Delayed Transfer Employee that are incurred prior to such Delayed
Transfer Employee’s Transfer Date and Ameriprise shall cause the Ameriprise
Welfare Plans to fully perform, pay and discharge all claims of (A) Ameriprise
Participants that are incurred on or after the Distribution Date and (B) each
Delayed Transfer Employee that are incurred on or after such Delayed Transfer
Employee’s Transfer Date.
(ii) Self-Insured Benefits. With respect to employee welfare and
fringe benefits that are provided on a self-insured basis, except as otherwise
provided herein, Ameriprise (acting directly or through its Affiliates) shall
fully perform, pay and discharge, under the Ameriprise Welfare Plans, all
claims of (A) Ameriprise Participants from and after the Distribution Date that
are incurred on or after the Distribution Date and (B) each Delayed Transfer
Employee from and after such Delayed Transfer Employee’s Transfer Date that are
incurred on or after such Delayed Transfer Employee’s Transfer Date. Except as provided otherwise herein, from and
after the Distribution Date (or, in the case of a Delayed Transfer Employee,
such Delayed Transfer Employee’s Transfer Date), Ameriprise shall reimburse AXP
for all self-insured vision benefit claims paid by the AXP Welfare Plans or AXP
which were (A) claims of Ameriprise Participants incurred but not paid prior to
the Distribution Date or (B) claims of any Delayed Transfer Employees incurred
but not paid prior to such Delayed Transfer Employee’s Transfer Date. AXP shall submit a monthly written invoice to
Ameriprise detailing Ameriprise’s Liability for such claims. Ameriprise shall have the right, at its own expense,
to audit, or to cause an inspection body selected by Ameriprise and composed of
members with appropriate professional qualifications to audit, such invoices in
a commercially reasonable manner during normal AXP business hours. Notwithstanding the above, from and after the
Distribution Date, Ameriprise (acting directly or through its Affiliates) shall
reimburse AXP for its proportionate share of the Liability, as calculated
below, with respect to self-insured medical and dental benefits under the AXP
Welfare Plans that were incurred prior to the Distribution Date, but submitted
to, or paid by, the AXP Welfare Plans or AXP during the twenty-four month
period beginning on the Distribution Date (the “
Pre-Distribution Claim
Period
”, and such claims, the “
Pre-Distribution Date Claims
”). Claims submitted to the AXP Welfare Plans or
AXP after the expiration of the Pre-Distribution Claim Period shall be the sole
liability of the AXP Welfare Plans and AXP.
Ameriprise’s proportionate share of the Pre-Distribution Date Claims
shall be determined separately on a monthly basis for each of the self-insured
medical plan coverage options set forth on Schedule H attached hereto (the “
Run-Out
Coverage Options
”), beginning with the month following the Distribution
Date, by multiplying the Pre-Distribution Date Claims paid under such Run-Out
Coverage Option during the month by the applicable percentage set forth on
Schedule H attached hereto with respect to such Run-Out Coverage Option. AXP shall submit a monthly written invoice to
Ameriprise detailing Ameriprise’s portion of the Pre-Distribution Date
Claims. Ameriprise shall have the right,
at its own expense, to audit, or to cause an inspection body selected by
Ameriprise and composed of members with appropriate
24
professional
qualifications to audit, such invoices in a commercially reasonable manner
during normal AXP business hours.
(iii) Retiree Medical. From and after the Distribution Date,
Ameriprise (acting directly or through its Affiliates) shall fully perform, pay
and discharge all claims of Ameriprise Participants under the Ameriprise
Retiree Medical Program that are incurred on or after the Distribution Date and
all claims of Delayed Transfer Employees under the Ameriprise Retiree Medical
Program that are incurred on or after such Delayed Transfer Employee’s Transfer
Date. From and after the Distribution
Date (or in the case of a Delayed Transfer Employee, such Delayed Transfer
Employee’s Transfer Date), Ameriprise shall reimburse AXP for all claims paid
by the AXP Retiree Medical Plan or AXP which were (A) claims of Ameriprise
Participants incurred but not paid prior to the Distribution Date or (B) claims
of any Delayed Transfer Employee incurred but not paid prior to such Delayed
Transfer Employee’s Transfer Date. AXP
shall submit a monthly written invoice to Ameriprise detailing Ameriprise’s
Liability for such claims. Ameriprise shall
have the right, at its own expense, to audit, or to cause an inspection body
selected by Ameriprise and composed of members with appropriate professional
qualifications to audit, such invoices in a commercially reasonable manner
during normal AXP business hours.
(iv) Incurred Claim Definition. For purposes of this Section 5.2(g), a claim
or Liability is deemed to be incurred (A) with respect to medical, dental,
vision and/or prescription drug benefits, upon the rendering of health services
giving rise to such claim or Liability; (B) with respect to life insurance,
accidental death and dismemberment and business travel accident insurance, upon
the occurrence of the event giving rise to such claim or Liability; (C) with
respect to disability benefits, upon the date of an individual’s disability, as
determined by the disability benefit insurance carrier or claim administrator,
giving rise to such claim or Liability; and (D) with respect to a period of
continuous hospitalization, upon the date of admission to the hospital.
(v) Treatment of Other Liabilities,
Recoveries and Adjustments. For purposes
of applying the claim Liability provisions of clauses (ii) and (iii)
above: (A) recoveries made by the AXP
Welfare Plans or AXP prior to the expiration of the Pre-Distribution Claim
Period with respect to claims incurred prior to the Distribution Date or
relevant Transfer Date, as applicable, including, but not limited to,
subrogation/reimbursement recoveries, claim adjustment recoveries and
demutualization proceeds, shall be taken into account as positive claim
adjustments; and (B) other non-routine claim Liabilities paid by the AXP
Welfare Plans or AXP with respect to claims incurred prior to the Distribution
Date or relevant Transfer Date, as applicable, including, but not limited to,
Medicare Secondary Payer Liability, shall be taken into account as claim
Liabilities.
(vi) Claim Experience. Notwithstanding the foregoing, Ameriprise
(acting directly or through its Affiliates) shall take any action necessary to
ensure that any claims experience under the AXP Welfare Plans attributable to
Ameriprise Participants and Delayed Transfer Employees shall be allocated to
the Ameriprise Welfare Plans.
5.3 DISPOSITION
OF VEBA ASSETS. Following the
Distribution Date, AXP and Ameriprise hereby agree to cooperate in good faith
to ensure that AXP and the AXP Affiliates
25
shall retain all
Voluntary Employee Beneficiary Association Assets and any related trusts, and
in no event will any such Assets or such related trusts transfer to Ameriprise
or one of its Affiliates.
5.4 TIME-OFF
BENEFITS. Ameriprise shall credit each
Ameriprise Participant and Delayed Transfer Employee with the amount of accrued
but unused vacation time, sick time and other time-off benefits as such
Ameriprise Participant or Delayed Transfer Employee had with the AXP Group as
of the Distribution Date, or with respect to Delayed Transfer Employees, the
relevant Transfer Date. Notwithstanding
the above, Ameriprise shall not be required to credit any Ameriprise
Participant or Delayed Transfer Employee with any accrual to the extent that a
benefit attributable to such accrual is provided by the AXP Group.
5.5 KEY
EXECUTIVE LIFE INSURANCE.
(a)
AXP
Split Dollar Arrangement
. AXP shall
retain the American Express Company Key Executive Life Insurance Plan As
Amended and Restated Effective January 1, 1992 and as subsequently amended (the
“
AXP KEL
”). Ameriprise shall not
assume any portion of the AXP KEL or the split-dollar insurance policies held
by AXP thereunder. Pursuant to the terms
of the AXP KEL, Ameriprise Participants shall be treated thereunder as having
terminated employment other than by reason of retirement. The Parties shall agree as to the amount, if
any, that AXP shall reimburse Ameriprise out of the proceeds AXP receives as a
result of Ameriprise Participants purchasing the split-dollar insurance
policies held on their lives or as a result of AXP’s disposal of such
split-dollar insurance policies.
(b)
Ameriprise
Arrangement
. Ameriprise shall
establish a key executive life insurance program that provides eligible
Ameriprise Participants with term life insurance coverage in an amount equal to
four times annual base salary, subject to a maximum of $1,500,000. Such term life insurance coverage shall
terminate upon an Ameriprise Participant’s termination from active employment
with the Ameriprise Group, subject to any conversion rights then available
under the group policy. In addition to
such term life insurance coverage, for eligible Ameriprise Participants who
were participants in the AXP KEL prior to April 1, 2003, Ameriprise shall
provide a non-qualified deferred compensation benefit (the “
AMP KEL Cash
Benefit
”), either through the Ameriprise Financial Deferred Compensation
Plan for Key Employees or through another non-qualified arrangement determined
by Ameriprise, in an amount equal to the cash value that would have been
payable to the Ameriprise Participant under the AXP KEL assuming that: (i) in
the case of an Ameriprise Participant who was a participant in the AXP KEL prior
to August 1, 2002, (A) the Ameriprise Participant had continued to participate
in the AXP KEL through the date of his termination of employment with the
Ameriprise Group and (B) premium payments on the split-dollar insurance policy
held on the Ameriprise Participant’s life under the AXP KEL had continued to be
made after August 2002 and through the date of such Ameriprise Participant’s
termination of employment with the Ameriprise Group; or (ii) in the case of an
Ameriprise Participant who became a participant in the AXP KEL after August
2002, (A) a split-dollar insurance policy had been purchased on the life of the
Ameriprise Participant under the AXP KEL, (B) the Ameriprise Participant had
continued to participate in the AXP KEL through the date of his termination of
employment with the Ameriprise Group, and (C) premium payments on such
hypothetical policy had been made through the date of his termination of
employment with the Ameriprise Group.
The amount and terms of payment of the AMP KEL Cash Benefit shall be
determined by Ameriprise in its sole
26
discretion and may be
reduced by Ameriprise to reflect any compensation paid by Ameriprise to
reimburse an Ameriprise Participant who elects to purchase from AXP the
split-dollar insurance policy held on his life under the AXP KEL.
ARTICLE VI
SUPPLEMENTAL
RETIREMENT PLAN
6.1 AMERICAN
EXPRESS SUPPLEMENTAL RETIREMENT PLAN
(a)
Establishment
of Ameriprise SRP
. Effective as of
the Distribution Date, Ameriprise shall, or shall cause one of its Affiliates
to, establish a non-qualified deferred compensation plan to benefit Ameriprise
Participants who have accrued, or were eligible to accrue, benefits under the
AXP SRP (the “
Ameriprise SRP
”) immediately prior to the Distribution
Date. Effective as of the Effective
Time, Ameriprise hereby agrees to cause the Ameriprise SRP to assume
responsibility for all Liabilities and fully perform, pay and discharge all
obligations, when such obligations become due, of the AXP SRP with respect to
all Ameriprise Participants therein.
With respect to each Delayed Transfer Employee who participated in the
AXP SRP, effective as of such Delayed Transfer Employee’s Transfer Date,
Ameriprise shall cause the Ameriprise SRP to assume, and to fully perform, pay
and discharge, all Liabilities and obligations of the AXP SRP with respect to
such Delayed Transfer Employee.
Ameriprise (acting directly or through its Affiliates) shall be
responsible for any and all Liabilities (including Liability for funding) and
other obligations with respect to the Ameriprise SRP.
(b)
Continuation
of Elections
. As of the Distribution
Date, Ameriprise (acting directly or through an Affiliate) shall cause the
Ameriprise SRP to recognize and maintain all elections (including deferral,
distribution and investment elections) and beneficiary designations with
respect to Ameriprise Participants under the AXP SRP. With respect to each Delayed Transfer
Employee who participated in the AXP SRP, effective as of such Delayed Transfer
Employee’s Transfer Date, Ameriprise (acting directly or through an Affiliate)
shall cause the Ameriprise SRP to recognize and maintain all elections
(including deferral, distribution and investment elections) and beneficiary
designations with respect to such Delayed Transfer Employee.
ARTICLE VII
LONG-TERM
INCENTIVE AWARDS
7.1 LONG-TERM
INCENTIVE AWARDS. This Article VII sets
forth obligations and agreements between the Parties with respect to the
treatment of outstanding long-term incentive awards held by Ameriprise
Participants under the AXP Stock Plans.
7.2 TREATMENT
OF OUTSTANDING AXP OPTIONS HELD BY AMERIPRISE EMPLOYEES.
(a)
Participating
Company
. Notwithstanding anything in
this Agreement to the contrary (including, without limitation, Section 2.2
hereof), neither Ameriprise nor any member
27
of the Ameriprise Group that is a “participating company” (as such term
is used in the AXP Stock Plans) in the AXP Stock Plans immediately prior to the
Distribution Date shall cease to be a “participating company” in the AXP Stock
Plans as a result of the Distribution with respect to outstanding awards held
by Ameriprise Participants thereunder.
Furthermore, Ameriprise and any such member of the Ameriprise Group that
is a “participating company” in the AXP Stock Plans immediately prior to the
Distribution Date will continue to be a “participating company” in the AXP
Stock Plans until such time as no AXP Option, share of AXP Restricted Stock or
AXP LOI (including, without limitation, a Remaining AXP Option, Delayed
Transfer AXP Option, share of Remaining AXP Restricted Stock, share of Delayed
Transfer AXP Restricted Stock, Remaining AXP LOI and Delayed Transfer AXP LOI)
held by an Ameriprise Participant remains outstanding or until such earlier
time as may be mutually agreed to by the AXP Committee and the board of
directors or other governing body of Ameriprise or such member of the
Ameriprise Group.
(b)
Vested
AXP Options
. Each option to purchase
shares of AXP Common Stock (each, an “
AXP Option
”) outstanding under the
AXP Stock Plans and held by an Ameriprise Participant as of the Distribution
Date that is or would have become vested or exercisable, in accordance with its
terms, by December 31, 2005 (the “
Measurement Date
”) (i) had such
Ameriprise Participant remained employed by AXP or its Affiliates until the
Measurement Date or (ii) in accordance with the applicable retirement practices
and policies of AXP had the Ameriprise Participant holding such AXP Option
retired immediately prior to the Measurement Date, in each case assuming the
Distribution had not occurred, shall remain an option on AXP Common Stock
issued under the AXP Stock Plans (each such option, a “
Remaining AXP Option
”). Each Remaining AXP Option shall be subject
to the same terms and conditions after the Distribution as the terms and
conditions applicable to the corresponding AXP Option immediately prior to the
Distribution, it being understood that by reason of Ameriprise and members of
the Ameriprise Group each continuing to be a “participating company” in the AXP
Stock Plans, the employment of an Ameriprise Participant who holds Remaining
AXP Options shall not be considered terminated for purposes of the AXP Stock
Plans as a result of the Distribution and such employment shall only be
considered to terminate for purposes of the AXP Stock Plans when the employment
of such Ameriprise Participant with the Ameriprise Group terminates. The exercise price and number of shares
subject to each Remaining AXP Option shall be adjusted in accordance with
Section 424 of the Code. As a result,
(i) the number of shares of AXP Common Stock subject to such Remaining AXP
Option shall be equal to the product of (x) the number of shares of AXP Common
Stock subject to the corresponding AXP Option immediately prior to the
Distribution Date and (y) the AXP Share Ratio, with fractional shares rounded
down to the nearest whole share and (ii) the per-share exercise price of such
Remaining AXP Option shall be equal to the product of (x) the per-share
exercise price of the corresponding AXP Option immediately prior to the
Distribution Date and (y) the AXP Price Ratio, rounded up to the nearest whole
cent.
(c)
Unvested
AXP Options
. Each AXP Option
outstanding under the AXP Stock Plans and held by an Ameriprise Participant as
of the Distribution Date that would not be vested or treated as vested as of
the Measurement Date, as determined in accordance with Section 7.2(b) above
(each such AXP Option, an “
Unvested AXP Option
”), shall be substituted
with an option to purchase shares of Ameriprise Common Stock (each such option,
an “
Ameriprise Option
”) issued under the Ameriprise Stock Plan and
subject to terms and conditions after the Distribution
28
that are substantially
similar to the terms and conditions applicable to the corresponding Unvested
AXP Option immediately prior to the Distribution. The exercise price and number of shares
subject to such Ameriprise Option shall be determined in accordance with
Section 424 of the Code. As a result,
(i) the number of shares of Ameriprise Common Stock subject to each such
Ameriprise Option shall be equal to the product of (x) the number of shares of
AXP Common Stock subject to the corresponding Unvested AXP Option immediately
prior to the Distribution Date and (y) the Ameriprise Share Ratio, with
fractional shares rounded to the nearest whole share and (ii) the per-share
exercise price of each such Ameriprise Option shall be equal to the product of
(x) the per-share exercise price of the corresponding Unvested AXP Option
immediately prior to the Distribution Date and (y) the Ameriprise Price Ratio,
rounded up to the nearest whole cent.
(d)
Serial
Severance Employees
. Notwithstanding
anything in this Section 7.2 to the contrary, all outstanding AXP Options held
by Serial Severance Employees under the AXP Stock Plans as of the Distribution
Date, regardless of whether or not vested as of the Distribution Date, shall be
treated as Remaining AXP Options in accordance with Section 7.2(b) above.
(e)
Delayed
Transfer Employees
.
(i) Each AXP Option outstanding under the
AXP Stock Plans and held by a Delayed Transfer Employee as of such Delayed
Transfer Employee’s Transfer Date that (A) vested on or prior to the
Measurement Date or, in the event such Delayed Transfer Employee’s Transfer
Date occurs prior to the Measurement Date, would have become vested or
exercisable, in accordance with its terms, by the Measurement Date had such Delayed
Transfer Employee remained employed by AXP or its Affiliates until the
Measurement Date or (B) that would have vested in accordance with the
applicable retirement practices and policies of AXP had the Delayed Transfer
Employee retired immediately prior to the Measurement Date, shall remain an
option on AXP Common Stock issued under the AXP Stock Plans (each such option,
a “
Delayed Transfer AXP Option
”).
Each Delayed Transfer AXP Option held by a Delayed Transfer Employee
shall be subject to the same terms and conditions after such Delayed Transfer
Employee’s Transfer Date as the terms and conditions applicable to the
corresponding AXP Option immediately prior to such Delayed Transfer Employee’s
Transfer Date, it being understood that by reason of Ameriprise and members of
the Ameriprise Group each continuing to be a “participating company” in the AXP
Stock Plans, the employment of a Delayed Transfer Employee who holds Delayed
Transfer AXP Options shall not be considered terminated for purposes of the AXP
Stock Plans as a result of such Delayed Transfer Employee’s transfer to the AMP
Group in connection with the Distribution and such employment shall only be
considered to terminate for purposes of the AXP Stock Plans when the employment
of such Delayed Transfer Employee with the Ameriprise Group terminates.
(ii) Each AXP Option outstanding under the
AXP Stock Plans and held by a Delayed Transfer Employee as of such Delayed
Transfer Employee’s Transfer Date that was not vested or treated as vested as
of the Measurement Date, as determined in accordance with Section 7.2(e)(i)
above, shall be substituted with an option to purchase shares of Ameriprise
Common Stock (each such option, a “
Delayed Transfer Ameriprise Option
”)
issued under the Ameriprise Stock Plan and subject to terms and conditions
after such Delayed Transfer Employee’s Transfer Date that are substantially
similar to the terms and conditions applicable to
29
the corresponding AXP
Option immediately prior to such Delayed Transfer Employee’s Transfer
Date. The exercise price and number of
shares subject to such Delayed Transfer Ameriprise Option shall be determined
in accordance with Section 424 of the Code.
As a result, (i) the number of shares of Ameriprise Common Stock subject
to each such Delayed Transfer Ameriprise Option shall be equal to the product
of (x) the number of shares of AXP Common Stock subject to the corresponding
AXP Option immediately prior to such Delayed Transfer Employee’s Transfer Date
and (y) the Delayed Share Ratio, with fractional shares rounded to the nearest
whole share and (ii) the per-share exercise price of each such Delayed Transfer
Ameriprise Option shall be equal to the product of (x) the per-share exercise
price of the corresponding AXP Option immediately prior to such Delayed
Transfer Employee’s Transfer Date and (y) the Delayed Price Ratio, rounded up
to the nearest whole cent.
(f)
Restriction
on Exercisability of Options
. The
Parties acknowledge and agree that blackout periods may be implemented with
respect to the Remaining AXP Options and Ameriprise Options for administrative
reasons in accordance with the terms of the AXP Stock Plans or the Ameriprise
Stock Plan, as applicable.
7.3 TREATMENT
OF OUTSTANDING AXP RESTRICTED STOCK.
(a)
AXP Restricted Stock Vesting by the Measurement Date
. Each restricted share of AXP Common Stock (“
AXP
Restricted Stock
”) outstanding under the AXP Stock Plans and held by an
Ameriprise Participant as of the Distribution Date that would have become
vested, in accordance with its terms, by the Measurement Date (i) had such
Ameriprise Participant remained employed by AXP or its Affiliates until the
Measurement Date or (ii) in accordance with the applicable retirement practices
and policies of AXP had the Ameriprise Participant holding such AXP Restricted
Stock retired immediately prior to the Measurement Date, in each case assuming
the Distribution had not occurred, shall remain a share of AXP Restricted Stock
issued under the AXP Stock Plans (each such share of AXP Restricted Stock, “
Remaining
AXP Restricted Stock
”). Each share
of Remaining AXP Restricted Stock shall be subject to the same terms and
conditions after the Distribution as the terms and conditions applicable to the
corresponding share of AXP Restricted Stock immediately prior to the
Distribution, it being understood that by reason of Ameriprise and members of
the Ameriprise Group each continuing to be a “participating company” in the AXP
Stock Plans, the employment of an Ameriprise Participant who holds such shares
of Remaining AXP Restricted Stock shall not be considered to have terminated
for purposes of the AXP Stock Plans as a result of the Distribution and such
employment shall only be considered to terminate for purposes of the AXP Stock
Plans when the employment of such Ameriprise Participant with the Ameriprise
Group terminates. The number of shares
of Remaining AXP Restricted Stock held by an Ameriprise Participant shall be adjusted
in a manner so that the number of shares of Remaining AXP Restricted Stock held
by an Ameriprise Participant immediately following the Distribution Date will
equal the product of (x) the number of shares of corresponding AXP Restricted
Stock held by such Ameriprise Participant immediately prior to the Distribution
Date and (y) the AXP Share Ratio, with fractional shares rounded to the nearest
whole share.
(b)
Unvested AXP Restricted Stock
. Except as otherwise expressly provided in any
written agreement entered into between AXP and any Ameriprise Participant and
provided to Ameriprise, each share of AXP Restricted Stock outstanding under
the AXP Stock Plans held by
30
an Ameriprise
Employee as of the Distribution Date that would not be vested or treated as
vested as of the Measurement Date, as determined in accordance with Section
7.3(a) above, shall be substituted with restricted shares of Ameriprise Common
Stock (“
Ameriprise Restricted Stock
”) issued under the Ameriprise Stock
Plan and subject to terms and conditions after the Distribution that are
substantially similar to the terms and conditions applicable to the
corresponding shares of AXP Restricted Stock immediately prior to the
Distribution. The number of shares of
Ameriprise Restricted Stock to which an Ameriprise Participant is entitled
pursuant to this Section 7.3(b) will equal the product of (x) the number of
shares of corresponding AXP Restricted Stock held by such Ameriprise
Participant immediately prior to the Distribution Date and (y) the Ameriprise
Share Ratio, with fractional shares rounded to the nearest whole share.
(c)
Serial Severance Employees
. Notwithstanding anything in this Section 7.3
to the contrary, all outstanding shares of AXP Restricted Stock held by Serial
Severance Employees under the AXP Stock Plans as of the Distribution Date,
regardless of when such AXP Restricted Shares would otherwise vest, shall be
treated as Remaining AXP Restricted Stock in accordance with Section 7.3(a)
above.
(d)
Delayed Transfer Employees
.
(i) Each share of AXP Restricted Stock
outstanding under the AXP Stock Plans and held by a Delayed Transfer Employee
as of such Delayed Transfer Employee’s Transfer Date that would have become
vested (A) in accordance with the applicable retirement practices and policies
of AXP had the Delayed Transfer Employee retired immediately prior to the
Measurement Date or (B) in the event such Delayed Transfer Employee’s Transfer
Date occurs prior to the Measurement Date, would have become vested, in accordance
with its terms, by the Measurement Date had such Delayed Transfer Employee
remained employed by AXP or its Affiliates until the Measurement Date, shall
remain a share of AXP Restricted Stock issued under the AXP Stock Plans (each
such share of AXP Restricted Stock, “
Delayed Transfer AXP Restricted Stock
”). Each share of Delayed Transfer AXP Restricted
Stock shall be subject to the same terms and conditions after a Delayed
Transfer Employee’s Transfer Date as the terms and conditions applicable to the
corresponding share of AXP Restricted Stock immediately prior to such Delayed
Transfer Employee’s Transfer Date, it being understood that by reason of
Ameriprise and members of the Ameriprise Group each continuing to be a
“participating company” in the AXP Stock Plans, the employment of a Delayed
Transfer Employee who holds shares of Delayed Transfer AXP Restricted Stock
shall not be considered terminated for purposes of the AXP Stock Plans as a
result of such Delayed Transfer Employee’s transfer to the AMP Group in
connection with the Distribution and such employment shall only be considered
to terminate for purposes of the AXP Stock Plans when the employment of such
Delayed Transfer Employee with the Ameriprise Group terminates.
(ii) Each share of AXP Restricted Stock
outstanding under the AXP Stock Plans held by a Delayed Transfer Employee as of
such Delayed Transfer Employee’s Transfer Date that would not be treated as
vested in accordance with Section 7.3(d)(i) above, shall be substituted with
restricted shares of Ameriprise Common Stock (“
Delayed Transfer Ameriprise
Restricted Stock
”) issued under the Ameriprise Stock Plan and subject to
terms and conditions after such Delayed Transfer Employee’s Transfer Date that
are substantially similar to the terms and conditions applicable to the
corresponding shares of AXP Restricted Stock immediately
31
prior to such
Delayed Transfer Employee’s Transfer Date.
The number of shares of Delayed Transfer Ameriprise Restricted Stock to
which a Delayed Transfer Employee is entitled pursuant to this Section
7.3(d)(ii) will equal the product of (x) the number of shares of corresponding
AXP Restricted Stock held by such Delayed Transfer Employee immediately prior
to such Delayed Transfer Employee’s Transfer Date and (y) the Delayed Share
Ratio, with fractional shares rounded to the nearest whole share.
7.4 TREATMENT OF OUTSTANDING LETTERS OF INTENT.
(a)
AXP LOIs Vesting by the Measurement Date
. Each letter of intent evidencing a promise to
deliver shares of AXP Common Stock in the future (each, an “
AXP LOI
”)
outstanding under the AXP Stock Plans and held by an Ameriprise Participant as
of the Distribution Date that would have become vested, in accordance with its
terms, by the Measurement Date (i) had such Ameriprise Participant remained
employed by AXP or its Affiliates until the Measurement Date or (ii) in
accordance with the applicable retirement practices and policies of AXP had the
Ameriprise Participant holding such AXP LOI retired immediately prior to the
Measurement Date, in each case assuming the Distribution had not occurred,
shall remain an AXP LOI issued under the AXP Stock Plans (each such AXP LOI, a
“
Remaining AXP LOI
”). Each
Remaining AXP LOI shall be subject to the same terms and conditions after the
Distribution as the terms and conditions applicable to the corresponding AXP
LOI immediately prior to the Distribution, it being understood that by reason
of Ameriprise and members of the Ameriprise Group each continuing to be a
“participating company” in the AXP Stock Plans, the employment of an Ameriprise
Participant who holds Remaining AXP LOIs shall not be considered to have
terminated for purposes of the AXP Stock Plans as a result of the Distribution
and such employment shall only be considered to terminate for purposes of the
AXP Stock Plans when the employment of such Ameriprise Participant with the
Ameriprise Group terminates. The number
of shares of AXP Common Stock to which a Remaining AXP LOI held by an
Ameriprise Participant relates shall be adjusted to equal the product of (x)
the number of shares of AXP Common Stock to which the corresponding AXP LOI
relates immediately prior to the Distribution Date and (y) the AXP Share Ratio,
with fractional shares rounded to the nearest whole share.
(b)
Unvested AXP LOIs
.
Except as otherwise expressly provided in any written agreement entered
into between AXP and any Ameriprise Participant and provided to Ameriprise,
each AXP LOI outstanding under the AXP Stock Plans held by an Ameriprise
Employee as of the Distribution Date that would not be vested or treated as
vested as of the Measurement Date, as determined in accordance with Section
7.4(a) above, shall be substituted with a letter of intent evidencing a promise
to deliver shares of Ameriprise Common Stock (each, an “
Ameriprise LOI
”)
issued under the Ameriprise Stock Plan and subject to terms and conditions
after the Distribution that are substantially similar to the terms and
conditions applicable to the corresponding AXP LOI immediately prior to the
Distribution. The number of shares of
Ameriprise Common Stock to which an Ameriprise LOI relates will equal the
product of (x) the number of shares of AXP Common Stock to which the
corresponding AXP LOI relates immediately prior to the Distribution Date and
(y) the Ameriprise Share Ratio, with fractional shares rounded to the nearest
whole share.
32
(c)
Serial Severance Employees
. Notwithstanding anything in this Section 7.4
to the contrary, all outstanding AXP LOIs held by Serial Severance Employees
under the AXP Stock Plans as of the Distribution Date, regardless of when such
AXP LOIs would otherwise vest, shall be treated as Remaining AXP LOIs in
accordance with Section 7.4(a) above.
(d)
Delayed Transfer Employees
.
(i) Each AXP LOI outstanding under the
AXP Stock Plans and held by a Delayed Transfer Employee as of such Delayed
Transfer Employee’s Transfer Date that would have become vested (A) in accordance
with the applicable retirement practices and policies of AXP had the Delayed
Transfer Employee retired immediately prior to the Measurement Date or (B) in
the event such Delayed Transfer Employee’s Transfer Date occurs prior to the
Measurement Date, would have become vested, in accordance with its terms, by
the Measurement Date had such Delayed Transfer Employee remained employed by
AXP or its Affiliates until the Measurement Date, shall remain an AXP LOI
issued under the AXP Stock Plans (each such AXP LOI, a “
Delayed Transfer AXP
LOI
”). Each Delayed Transfer AXP LOI
shall be subject to the same terms and conditions after a Delayed Transfer
Employee’s Transfer Date as the terms and conditions applicable to the
corresponding AXP LOI immediately prior to such Delayed Transfer Employee’s
Transfer Date, it being understood that by reason of Ameriprise and members of
the Ameriprise Group each continuing to be a “participating company” in the AXP
Stock Plans, the employment of a Delayed Transfer Employee who holds any
Delayed Transfer AXP LOIs shall not be considered terminated for purposes of
the AXP Stock Plans as a result of such Delayed Transfer Employee’s transfer to
the AMP Group in connection with the Distribution and such employment shall
only be considered to terminate for purposes of the AXP Stock Plans when the
employment of such Delayed Transfer Employee with the Ameriprise Group
terminates.
(ii) Each AXP LOI outstanding under the
AXP Stock Plans held by a Delayed Transfer Employee as of such Delayed Transfer
Employee’s Transfer Date that would not be treated as vested, as determined in
accordance with Section 7.4(d)(i) above, shall be substituted with a letter of
intent evidencing a promise to deliver shares of Ameriprise Common Stock (each,
a “
Delayed Transfer Ameriprise LOI
”) issued under the Ameriprise Stock
Plan and subject to terms and conditions after such Delayed Transfer Employee’s
Transfer Date that are substantially similar to the terms and conditions
applicable to the corresponding AXP LOI immediately prior to such Delayed
Transfer Employee’s Transfer Date. The
number of shares of Ameriprise Common Stock to which such a Delayed Transfer
Ameriprise LOI relates will equal the product of (x) the number of shares of
AXP Common Stock to which the corresponding AXP LOI relates immediately prior
to such Delayed Transfer Employee’s Transfer Date and (y) the Delayed Share
Ratio, with fractional shares rounded to the nearest whole share.
7.5 TREATMENT
OF OUTSTANDING PORTFOLIO GRANTS.
(a)
Assumption of Liability
. Effective as of the Effective Time,
Ameriprise shall assume responsibility for all Liabilities and fully perform,
pay and discharge all obligations, when such obligations become due, relating
to the Outstanding PG Awards held, as of the Distribution Date, by Ameriprise
Participants (such assumed Outstanding PG Awards, the “
Ameriprise PG Awards
”).
33
(b)
Terms and Conditions
. Ameriprise PG Awards shall be issued pursuant
to the Ameriprise Stock Plan. Except
with respect to performance goals and targets, Ameriprise PG Awards shall be
subject to terms and conditions after the Distribution that are substantially
similar to the terms and conditions applicable to the corresponding Outstanding
PG Awards immediately prior to the Distribution. With respect to the performance goals and
targets relating to each of the Ameriprise PG Awards, such performance goals
and targets shall be adjusted by Ameriprise, in its sole discretion, in
accordance with their terms (including, without limitation, the terms of the
Ameriprise Stock Plan and any related award agreement).
7.6 DETRIMENTAL CONDUCT PROVISIONS. Ameriprise hereby acknowledges that any
Detrimental Conduct Provisions applicable to the Remaining AXP Options,
Remaining AXP Restricted Stock, or Remaining AXP LOIs held by Ameriprise
Participants and any Detrimental Conduct Provisions applicable to Delayed
Transfer AXP Options, Delayed Transfer AXP Restricted Stock or Delayed Transfer
AXP LOIs held by Delayed Transfer Employees shall continue in full force and
effect following the Distribution. In
addition, Ameriprise agrees to use reasonable commercial efforts to provide AXP
with any Information reasonably requested by AXP in connection with the
enforcement of such Detrimental Conduct Provisions.
Furthermore, the Parties
acknowledge that with respect to any Ameriprise Participant who holds Remaining
AXP Options, Remaining AXP Restricted Stock, or Remaining AXP LOIs and any
Delayed Transfer Employee who holds
Delayed Transfer AXP Options, Delayed Transfer AXP
Restricted Stock or Delayed Transfer AXP LOIs,
AXP will waive any
violation of the Detrimental Conduct Provisions applicable to such awards that
would otherwise be caused by the employment, in and of itself, of such holder
with Ameriprise or any member of the Ameriprise Group.
7.7 SEC REGISTRATION. The Parties mutually agree to use
commercially reasonable efforts to maintain effective registration statements
with the SEC with respect to the long-term incentive awards described in this
Article VII, to the extent any such registration statement is required by
applicable Law.
7.8 SAVINGS
CLAUSE. The Parties hereby acknowledge
that the provisions of this Article VII are intended to achieve certain tax,
legal and accounting objectives and, in the event such objectives are not
achieved, the Parties agree to negotiate in good faith regarding such other
actions that may be necessary or appropriate to achieve such objectives.
ARTICLE VIII
ADDITIONAL COMPENSATION MATTERS; SEVERANCE
8.1
ANNUAL INCENTIVE AWARDS.
(a)
Ameriprise
Assumption of Annual Incentive Liability
.
Effective as of the Effective Time, Ameriprise shall assume or retain,
as applicable, responsibility for all Liabilities and fully perform, pay and
discharge all obligations, when such obligations become due, relating to any
annual incentive awards that any Ameriprise Participant is eligible to receive
with respect to calendar year 2005 and, effective as of the Effective Time, AXP
shall have no obligation with respect to any such annual incentive award.
34
(b)
AXP
Assumption of Annual Incentive Liability
.
Effective as of the Effective Time, AXP shall assume or retain, as
applicable, responsibility for all Liabilities and fully perform, pay and
discharge all obligations relating to any annual incentive awards that any AXP
Participant is eligible to receive with respect to calendar year 2005 and,
effective as of the Effective Time, Ameriprise shall have no obligation with
respect thereto.
8.2 DEFERRED COMPENSATION.
(a)
Outstanding
Deferred Compensation Liabilities
.
Effective as of the Effective Time, Ameriprise shall assume or retain,
as applicable, responsibility for all Liabilities and fully perform, pay and
discharge all obligations, when such obligations become due, relating to the
deferred compensation accounts of Ameriprise Participants under the AXP
Deferred Compensation Plans as of the Distribution Date. Such deferred compensation accounts shall be
subject to terms and conditions that are substantially similar to the terms and
conditions of the AXP Deferred Compensation Plans as in effect immediately
prior to the Distribution Date, it being understood that the crediting rates
applicable to each such deferred compensation account shall be determined in
accordance with the terms and conditions of the applicable Ameriprise Deferred
Compensation Plan and the principles set forth on Schedule I attached
hereto. Notwithstanding anything in this
Section 8.2(a) to the contrary, with respect to those Ameriprise Participants
who, as of the Distribution Date, could have elected to retire in accordance
with the applicable retirement practices and policies of AXP and who previously
were employed by CHQ, AEB or TRS (the “
AXP DC Participants
”), AXP shall
retain all Liabilities (including future interest accruals) and fully perform,
pay and discharge all obligations related to that portion of the deferred
compensation accounts of the AXP DC Participants under the AXP Deferred
Compensation Plans that was deferred by each AXP DC Participant while employed
by CHQ, AEB or TRS (the “
AXP DC Participant Accounts
”). Following the Distribution, the AXP DC
Participant Accounts shall continue to be subject to the terms and conditions
of the AXP Deferred Compensation Plans, as in effect from time to time, it
being understood that the employment of an AXP DC Participant shall not be
considered to have terminated as a result of the Distribution, and such
employment shall only be considered to terminate for purposes of the AXP
Deferred Compensation Plans when the employment of such AXP DC Participant with
the Ameriprise Group terminates in accordance with the terms of the Ameriprise
Deferred Compensation Plan. Ameriprise shall
retain all Liabilities (including future interest accruals) and fully perform,
pay and discharge all obligations related to that portion of the deferred
compensation accounts of the AXP DC Participants under the AXP Deferred
Compensation Plans that was deferred by each AXP DC Participant while employed
by the Ameriprise Group.
(b)
Continuing
Elections
. All elections by
Ameriprise Participants with respect to outstanding deferred compensation
account balances retained or assumed by Ameriprise in accordance with this
Section 8.2 that were controlling under the terms of the applicable AXP
Deferred Compensation Plan prior to the Distribution shall continue in effect
with respect to such account balances until a new election that by its terms
supersedes such original election is made by such Ameriprise Participant in
accordance with applicable Law and the terms and conditions applicable to such
account balances.
(c)
2005
Termination Election
. In accordance
with Q&A 20 of Internal Revenue Service Notice 2005-1, Ameriprise intends
to offer all Ameriprise Participants who have
35
outstanding deferred
compensation account balances under any of the AXP Deferred Compensation Plans
that are to be retained or assumed by Ameriprise in accordance with this
Section 8.2 the right to irrevocably elect to terminate participation in such
plans and to receive all such outstanding deferred compensation account
balances in a lump sum cash payment to be made by Ameriprise as soon as
reasonably practicable after such Ameriprise Participant properly files such
election with Ameriprise, but in no event later than December 31, 2005.
8.3 AMERIPRISE
KEY EMPLOYEE RETENTION AWARDS.
Ameriprise hereby acknowledges and agrees that it shall have full
responsibility with respect to any Liabilities and the payment or performance
of any obligations arising out of or relating to the arrangements listed on
Schedule J attached hereto.
8.4
SEVERANCE PLANS
.
(a)
Establishment
of Ameriprise Severance Plans
.
Effective as of the Distribution Date, Ameriprise shall take all steps
necessary to establish (i) the Ameriprise Financial Senior Executive Severance
Plan for those Ameriprise Employees who, immediately prior to the Distribution
Date, were eligible to participate in the American Express Senior Executive
Severance Plan and (ii) the Ameriprise Financial Severance Pay Plan for all
Ameriprise Employees who, immediately prior to the Distribution Date, were
eligible to participate in the American Express Severance Pay Plan (the
Ameriprise Senior Executive Severance Plan and the Ameriprise Severance Pay
Plan referred to herein collectively as the “
Ameriprise Severance Plans
”).
(b)
Assumption
of Severance Liabilities
. Effective
as of the Effective Time, Ameriprise shall assume or retain, as applicable,
responsibility for all Liabilities and fully perform, pay and discharge all
obligations, when such obligations become due, relating to any severance
benefit to which an Ameriprise Participant is entitled under an AXP Severance
Plan as of the Distribution Date.
(c)
Severance
Benefits
. With respect to any
Ameriprise Participant or Delayed Transfer Employee who becomes eligible to
receive severance benefits pursuant to an Ameriprise Severance Plan during the
period commencing on the Close of the Distribution Date and ending on the first
anniversary of the Distribution Date, the applicable Ameriprise Severance Plan
shall provide to such Ameriprise Participant an amount of severance benefit
that is not less than the number of weeks of pay that such Ameriprise
Participant would have received under the corresponding AXP Severance Plan as
in effect immediately prior to the Distribution Date.
(d)
Effect
of the Separation on Severance
. AXP and Ameriprise acknowledge and agree
that the transactions contemplated by the Separation and Distribution Agreement
will not constitute a termination of employment of any Ameriprise Participant
for purposes of any policy, plan, program or agreement of AXP or Ameriprise or
any member of the AXP Group or Ameriprise Group that provides for the payment
of severance, separation pay, salary continuation or similar benefits in the
event of a termination of employment.
8.5 WORKERS’
COMPENSATION LIABILITIES.
36
(a)
Pre-Distribution
Date Claims
. Except as set forth
below, all workers’ compensation Liabilities relating to, arising out of, or
resulting from any claim by an Ameriprise Employee or Former Ameriprise
Employee that results from an accident, incident or event occurring, or from an
occupational disease which becomes manifest, before the Effective Time shall be
retained by Ameriprise. Notwithstanding
the foregoing, Ameriprise shall not assume or retain any workers’ compensation Liability
relating to, arising out of, or resulting from any claim by an Ameriprise
Employee that results from an accident, incident or event occurring, or from an
occupational disease which becomes manifest, while such Ameriprise Employee was
employed by any member of the AXP Group (such a claim, an “
AXP Retained
Claim
”). All workers’ compensation
Liabilities relating to, arising out of, or resulting from (i) any AXP Retained
Claim or (ii) any claim by an AXP Employee or Former AXP Employee that results
from an accident, incident, or event occurring, or from an occupational disease
which becomes manifest before the Effective Time shall be retained by AXP.
(b)
Post-Distribution
Date Claims
. All workers’
compensation Liabilities relating to, arising out of, or resulting from any
claim by an Ameriprise Employee or Former Ameriprise Employee that results from
an accident, incident or event occurring, or from an occupational disease which
becomes manifest, on or after the Effective Time shall be retained by Ameriprise. All workers’ compensation Liabilities
relating to, arising out of, or resulting from any claim by an AXP Employee or
Former AXP Employee that results from an accident, incident or event occurring,
or from an occupational disease which becomes manifest, on or after the
Effective Time shall be retained by AXP.
(c)
Delayed
Transfer Employees
. All workers’
compensation Liabilities relating to, arising out of, or resulting from any
claim by an Ameriprise Delayed Transfer Employee that results from an accident,
incident or event occurring, or from an occupational disease which becomes
manifest, before such Ameriprise Delayed Transfer Employee’s Transfer Date
shall be assumed or retained, as applicable, by Ameriprise. All workers’ compensation Liabilities
relating to, arising out of, or resulting from any claim by an AXP Delayed
Transfer Employee that results from an accident, incident or event occurring,
or from an occupational disease which becomes manifest, before such AXP Delayed
Transfer Employee’s Transfer Date shall be assumed or retained, as applicable,
by AXP. All workers’ compensation
Liabilities relating to, arising out of, or resulting from any claim by a
Delayed Transfer Employee that results from an accident, incident or event
occurring, or from an occupational disease which becomes manifest, on or after
such Delayed Transfer Employee’s Transfer Date shall be retained or assumed, as
applicable, by Ameriprise. For purposes
of this Section 8.5(c), (i) “Ameriprise Delayed Transfer Employee” means any
Delayed Transfer Employee who, prior to such Delayed Transfer Employee’s
Transfer Date, devotes a majority of his or her time to performing services for
Ameriprise, and (ii) “AXP Delayed Transfer Employee” means any Delayed Transfer
Employee who, prior to such Delayed Transfer Employee’s Transfer Date, devotes
a majority of his or her time to performing services for AXP, in each case as
determined in good faith by the Parties.
(d)
General
. For purposes of this Section 8.5, a
compensable injury shall be deemed to be sustained upon the occurrence of the
event giving rise to eligibility for workers’ compensation benefits or an
occupation disease becomes manifest, as the case may be. AXP and Ameriprise shall cooperate in good
faith with respect to the notification to appropriate
37
governmental agencies of
the Distribution and the issuance of new, or the transfer of existing, workers’
compensation insurance policies and claims handling contracts.
8.6 SECTION
162(m). Notwithstanding anything in this
Agreement to the contrary (including, without limitation, the treatment of
outstanding long-term incentive awards and annual incentive awards as described
herein), the Parties agree to negotiate in good faith regarding any alternative
treatment of any outstanding long-term incentive award, annual incentive award
or other compensation to which any Ameriprise Participant who is a “covered
employee” of Ameriprise (within the meaning of Section 162(m) of the Code) may
be entitled to ensure that the payment of such long-term incentive award,
annual incentive award or other compensation is deductible by the Party
responsible for the payment thereof or otherwise entitled to the deduction
related thereto.
ARTICLE IX
UK PENSION ISSUES
9.1
UK PENSION ASSET TRANSFER
.
(a)
Establishment
of Ameriprise UK Retirement Plan
.
Effective as of the Distribution Date, Ameriprise shall, or shall cause
one or more members of the Ameriprise Group to, establish an occupational
defined benefit pension plan to provide retirement benefits to Ameriprise
Participants who immediately prior to the Distribution Date were participants
in, or entitled to present or future benefits (whether or not vested) under,
the AXP UK Plan (such defined benefit pension plan, the “
Ameriprise UK
Retirement Plan
” and such Ameriprise Participants, the “
Ameriprise UK
Plan Participants
”). For the
avoidance of doubt, Ameriprise shall procure that each of the Ameriprise
Employees who was a member of the AXP UK Plan immediately prior to the
Distribution Date is invited to become a member of the Ameriprise UK Retirement
Plan with effect from the Distribution Date.
Ameriprise undertakes to ensure that the Ameriprise UK Retirement Plan
(i) is an exempt approved scheme under UK Income and Corporation Taxes Act
1988, (ii) is a scheme which is contracted out on a reference scheme basis,
(iii) is capable of receiving the Transfer Amount without prejudicing the
status of the AXP UK Plan as an exempt approved scheme and without requiring
the consent of the Ameriprise UK Plan Participants to the transfer, and (iv)
for a period of not less than twelve (12) months from the Distribution Date,
provides benefits in respect of the future service of each Ameriprise Employee
who is an Ameriprise UK Plan Participant which are, in the opinion of the AXP
UK Actuary, substantially comparable in the aggregate to the benefits provided
by the AXP UK Scheme as in effect immediately prior to the Distribution Date.
(b)
Assumption
of AXP UK Plan Liabilities
.
Effective as of the Payment Date, Ameriprise (acting directly or through
its Affiliates) hereby agrees to cause the Ameriprise UK Retirement Plan to
accept the Transfer Amount in full and final settlement of all claims against
the AXP UK Plan in respect of the Ameriprise UK Plan Participants (whose
consent shall not be required). Subject
to the payment of the Transfer Amount in accordance with Section 9.1(c) below,
Ameriprise shall procure that the Ameriprise UK Retirement Plan shall provide
benefits in respect of each Ameriprise UK Plan Participant which are, in the
case of any pensioner, deferred pensioner or pension credit member, identical
to those provided under the AXP UK
38
Plan to such Ameriprise
UK Plan Participant immediately prior to the Distribution Date and otherwise in
respect of pensionable service (including transfer credits) of each Ameriprise
UK Plan Participant at least equal to those required to allow the rights and
entitlements of the Ameriprise UK Plan Participants in the AXP UK Plan to be
transferred to the Ameriprise UK Retirement Plan without consent in accordance
with the provisions of Regulation 12 of The Occupational Pension Schemes
(Preservation of Benefit) Regulations 1991 and actuarial guidance note GN16 (as
either may be in force at the Payment Date).
(c)
Transfer
of AXP UK Plan Assets
.
(i) As soon as reasonably practicable
following the Distribution Date, AXP shall cause the AXP UK Actuary to
determine the UK Transfer Amount. Within
thirty (30) days of the calculation of the UK Transfer Amount by the AXP UK
Actuary, the Ameriprise UK Actuary shall verify and agree to such UK Transfer
Amount. AXP and Ameriprise undertake to
procure that all such Information as shall be reasonably required by the AXP UK
Actuary and the Ameriprise UK Actuary for the purpose of calculating and
verifying the UK Transfer Amount shall be promptly provided to them and that
all such Information shall (to the best of their knowledge and belief) be true,
complete and accurate in all material respects as of the date the Information
is required for the purposes of this Section 9.1. If the AXP UK Actuary and the Ameriprise UK
Actuary are unable to agree to the UK Transfer Amount within thirty (30) days
of its calculation by the AXP UK Actuary, the matter shall be referred to an
independent actuary in accordance with Section 9.1(e) hereof.
(ii) The Transfer Amount is only payable
if the following conditions have been and remain satisfied: (A) the Ameriprise
UK Retirement Plan has been established as an exempt approved and contracted
out scheme and Ameriprise has delivered to AXP a copy of (1) the initial letter
from HM Customs and Revenue confirming such approval and (2) the contracting
out certificate issued by the National Insurance Services to Pensions Industry
with respect to the Ameriprise UK Retirement Plan; (B) HM Customs and Revenue
have consented to the transfer of the Transfer Amount; (C) the AXP UK Actuary
has issued a GN16 certificate in respect of the transfer of the Transfer
Amount; (D) the requirements of Regulation 12 of the Occupational Pension
Schemes (Preservation of Benefit) Regulations 1991 are satisfied (including any
notice requirements); and (E) the UK Transfer Amount has been agreed or
determined in accordance with this Section 9.1.
(iii) Subject to satisfaction of the
conditions set forth in Section 9.1(c)(ii) above, AXP shall use all reasonable
endeavours to procure that the AXP UK Plan shall, on the Payment Date, transfer
the Transfer Amount to the Ameriprise UK Retirement Plan such assets as the
respective plans may agree, the mid-market value of which is equal to the
Transfer Amount. To the extent the AXP
UK Plan and the Ameriprise UK Retirement Plan are unable to agree to the
appropriate asset transfer, cash equal to the Transfer Amount (reduced by 5% to
cover encashment costs) shall be transferred in full settlement and
satisfaction of the obligations of AXP and the AXP UK Plan pursuant to this
Section 9.1.
(d)
Funding
. Without regard to whether such funding is
required by applicable Law, Ameriprise shall ensure that the Ameriprise UK
Retirement Plan will be maintained at (or
39
returned to) a fully
funded (100%) position as determined on a “PBO” basis within five (5) years of
the Distribution Date.
(e)
Independent
Actuary
. Any disagreement or dispute
between the AXP UK Actuary and the Ameriprise UK Actuary concerning any matter
to be agreed to by them under this Section 9.1 shall be referred to an
independent actuary for determination.
The Parties shall jointly appoint the independent actuary. If the Parties fail to reach agreement on the
appointment of an independent actuary, either AXP or Ameriprise may request the
President for the time being of the Institute of Actuaries to nominate an
independent actuary, the Parties shall then appoint such nominee. The determination and certificate of the
independent actuary shall (in the absence of clear or manifest error) be final and
binding on the Parties. In addition, the
Parties shall comply with and shall respectively procure that the AXP UK Plan
and the Ameriprise UK Retirement Plan and their respective agents comply with
any directions of the independent actuary made to facilitate his investigation
or determination. The costs and fees of
the independent actuary shall be paid one half by AXP and one half by
Ameriprise unless the independent actuary determines some other division
between the Parties (such determination to be final and binding).
(f)
AVCs
. Nothing in this Section 9.1 shall apply to
AVCs or to the benefits secured by them.
However, AXP will use all reasonable endeavours to procure that the AXP
UK Plan will transfer the assets representing the Ameriprise UK Plan Participants’
AVCs to the Ameriprise UK Retirement Plan.
Ameriprise will ensure that the Ameriprise UK Retirement Plan provides
benefits for the Ameriprise UK Plan Participants which are equivalent to those
assets.
(g)
No
Assistance
. Ameriprise shall not
(and shall procure that its Affiliates shall not) encourage or assist or
initiate or facilitate any action for the purpose of requiring the AXP UK Plan
to pay an amount larger than the Transfer Amount to the Ameriprise UK
Retirement Plan.
ARTICLE X
INDEMNIFICATION
10.1 GENERAL
INDEMNIFICATION. Article IV of the
Separation and Distribution Agreement applies to this Agreement as if such
Article were set forth herein and all references to “Agreement” in such Article
IV shall be deemed to be references to this Agreement.
ARTICLE XI
GENERAL AND
ADMINISTRATIVE
11.1 SHARING
OF INFORMATION
.
AXP and Ameriprise (acting directly or through their respective
Affiliates) shall provide to the other and their respective agents and vendors
all Information as the other may reasonably request to enable the requesting
Party to administer efficiently and accurately each of its Benefit Plans and to
determine the scope of, as well as fulfill, its obligations under this
Agreement. Such Information shall, to
the extent reasonably practicable, be provided in the format and at the times and
places requested, but in no
40
event shall the Party providing such Information be obligated to incur
any out-of-pocket expenses not reimbursed by the Party making such request or
make such Information available outside of its normal business hours and
premises. Any Information shared or
exchanged pursuant to this Agreement shall be subject to the same
confidentiality requirements set forth in the Separation and Distribution
Agreement. The Parties also hereby agree
to enter into any business associate agreements that may be required for the
sharing of any Information pursuant to this Agreement to comply with the
requirements of HIPAA.
11.2 REASONABLE
EFFORTS/COOPERATION
.
Each of the Parties hereto will use its commercially reasonable efforts
to promptly take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable Laws and
regulations to consummate the transactions contemplated by this Agreement,
including, without limitation, adopting plans or plan amendments. Each of the Parties hereto shall cooperate
fully on any issue relating to the transactions contemplated by this Agreement
for which the other Party seeks a determination letter or private letter ruling
from the IRS, an advisory opinion from the DOL or any other filing, consent or
approval with respect to or by a Governmental Authority.
11.3 EMPLOYER
RIGHTS. Subject to Ameriprise’s
obligations pursuant to Section 2.3 of this Agreement, nothing in this
Agreement shall prohibit Ameriprise or any Ameriprise Affiliate from amending,
modifying or terminating any Ameriprise Benefit Plan at any time within its
sole discretion. In addition, nothing in
this Agreement shall prohibit AXP or any AXP Affiliate from amending, modifying
or terminating any AXP Benefit Plan at any time within its sole discretion.
11.4 NON-TERMINATION
OF EMPLOYMENT; NO THIRD-PARTY BENEFICIARIES
.
Except as expressly provided for in this Agreement or the Separation and
Distribution Agreement, no provision of this Agreement or the Separation and
Distribution Agreement shall be construed to create any right, or accelerate
entitlement, to any compensation or benefit whatsoever on the part of any AXP
Employee or Ameriprise Employee or other future, present, or former employee of
any member of the AXP Group or Ameriprise Group under any AXP Benefit Plan or
Ameriprise Benefit Plan or otherwise.
Without limiting the generality of the foregoing, except as expressly
provided in this Agreement, the occurrence of the Distribution alone shall not
cause any employee to be deemed to have incurred a termination of employment
which entitles such individual to the commencement of benefits under any of the
AXP Benefit Plans. Furthermore, this
Agreement is solely for the benefit of the Parties hereto and their respective
successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person or persons any rights, benefits or remedies of any
nature whatsoever under or by reason of this Agreement. Furthermore, nothing in this Agreement is
intended to confer upon any employee or former employee of AXP, Ameriprise or
either of their respective Affiliates any right to continued employment, or any
recall or similar rights to an individual on layoff or any type of approved
leave.
11.5 CONSENT
OF THIRD PARTIES
.
If any provision of this Agreement is dependent on the Consent of any
third party and such consent is withheld, the Parties hereto shall use their
reasonable best efforts to implement the applicable provisions of this
Agreement to the fullest extent practicable.
If any provision of this Agreement cannot be implemented due to the
41
failure of such third party to consent, the Parties hereto shall
negotiate in good faith to implement the provision in a mutually satisfactory
manner.
11.6 ACCESS
TO EMPLOYEES. Following the Distribution
Date, AXP and Ameriprise shall, or shall cause each of their respective
Affiliates to, make available to each other those of their employees who may
reasonably be needed in order to defend or prosecute any legal or administrative
action (other than a legal action between AXP and AMP) to which any employee,
director or Benefit Plan of the AXP Group or Ameriprise Group is a party and
which relates to their respective Benefit Plans prior to the Distribution Date. The Party to whom an employee is made
available in accordance with this Section 11.6 shall pay or reimburse the other
Party for all reasonable expenses which may be incurred by such employee in
connection therewith, including, without limitation, all reasonable travel,
lodging, and meal expenses, but excluding any amount for such employee’s time
spent in connection herewith.
11.7 BENEFICIARY
DESIGNATION/RELEASE OF INFORMATION/RIGHT TO REIMBURSEMENT. To the extent permitted by applicable Law and
except as otherwise provided for in this Agreement, all beneficiary
designations, authorizations for the release of Information and rights to
reimbursement made by or relating to Ameriprise Participants under AXP Benefit
Plans shall be transferred to and be in full force and effect under the
corresponding Ameriprise Benefit Plans until such beneficiary designations,
authorizations or rights are replaced or revoked by, or no longer apply, to the
relevant Ameriprise Participant.
11.8 NOT
A CHANGE IN CONTROL. The Parties hereto
acknowledge and agree that the transactions contemplated by the Separation and
Distribution Agreement and this Agreement do not constitute a “change in
control” for purposes of any AXP Benefit Plan or Ameriprise Benefit Plan.
ARTICLE XII
MISCELLANEOUS
12.1 EFFECT
IF DISTRIBUTION DOES NOT OCCUR
.
Notwithstanding anything in this Agreement to the contrary, if the
Separation and Distribution Agreement is terminated prior to the Effective
Time, then all actions and events that are, under this Agreement, to be taken
or occur effective immediately prior to, as of or following the Distribution
Date, or otherwise in connection with the Separation, shall not be taken or
occur except to the extent specifically agreed to in writing by AXP and
Ameriprise and neither Party shall have any Liability or further obligation to
the other Party under this Agreement.
12.2 RELATIONSHIP
OF PARTIES
.
Nothing in this Agreement shall be deemed or construed by the Parties or
any third party as creating the relationship of principal and agent,
partnership or joint venture between the Parties, it being understood and
agreed that no provision contained herein, and no act of the Parties, shall be
deemed to create any relationship between the Parties other than the relationship
set forth herein.
12.3 AFFILIATES
.
Each of AXP and Ameriprise shall cause to be performed, and hereby
guarantees the performance of, all actions, agreements and obligations set
forth in this Agreement to be performed by each of their Affiliates,
respectively.
42
12.4 NOTICES
.
All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be deemed given to a Party when (a)
delivered to the appropriate address by hand or by nationally recognized
overnight courier service (costs prepaid); (b) sent by facsimile with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses and facsimile numbers and marked to the
attention of the person (by name or title) designated below (or to such other
address, facsimile number or person as a Party may designate by notice to the
other Parties):
(a) if to AXP, to:
American Express Company
200 Vesey Street
New York, New York 10285-4905
Attention: Gilbert E. Ahye
Fax: (212) 640-3784
with copies to:
American Express Company
200 Vesey Street
New York, New York 10285-4905
Attn: General Counsel
Fax: (212) 640-0388
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, New York 10006
Attention: A. Richard Susko, Esq.
Fax: (212) 225-3999
and
Harter, Secrest & Emery LLP
1600 Bausch and Lomb Place
Rochester, New York 14604
Attention: Paul W. Holloway, Esq.
Fax: (585) 232-2152
(b) if to Ameriprise, to:
Ameriprise Financial, Inc.
1546 Ameriprise Financial Center
Minneapolis, Minnesota 55474
Attention: Walter Berman
Fax: (612) 678-4945
with
a copy to:
43
Ameriprise Financial,
Inc.
1546 Ameriprise Financial Center
Minneapolis, Minnesota 55474
Attention: General Counsel
Fax: (612) 678-1491
12.5 ENTIRE
AGREEMENT
.
This Agreement, the Separation and Distribution Agreement, and each
other Ancillary Agreement, including any annexes, schedules and exhibits hereto
and thereto, as well as any other agreements and documents referred to herein
and therein, shall together constitute the entire agreement between the Parties
with respect to the subject matter hereof and shall supersede all prior
negotiations, agreements and understandings of the Parties of any nature,
whether oral or written, with respect to such subject matter.
12.6 AMENDMENTS
AND WAIVERS. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
an authorized officer of each Party.
Except as otherwise provided in this Agreement, any failure of any of
the Parties to comply with any obligation, covenant, agreement or condition
herein may be waived by the Party entitled to the benefits thereof only by a
written instrument signed by an authorized officer of the Party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
12.7 GOVERNING
LAW. This Agreement and any dispute
arising out of, in connection with or relating to this Agreement shall be
governed by and construed in accordance with the Laws of the State of New York,
without giving effect to the conflicts of laws principles thereof.
12.8 HEADINGS. The article, section, paragraph and other
headings contained in this Agreement are inserted for convenience of reference
only and shall not affect in any way the meaning or interpretation of this
Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same Agreement.
12.10 ASSIGNMENT. This Agreement may not be assigned by either
Party without the written consent of the other Party. No such assignment shall relieve either Party
of any of its rights and obligations hereunder.
12.11 SEVERABILITY. The invalidity or unenforceability of any
term or provision of this Agreement shall not affect the validity or
enforceability of this Agreement or of any other term or provision of this
Agreement, which shall remain in full force and effect. If it is ever held that any restriction
hereunder is too broad to permit enforcement of such restriction to its fullest
extent, each Party hereby agrees that such restriction may be enforced to the maximum
extent permitted by Law, and each Party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
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blank.
45
IN WITNESS WHEREOF, the
Parties have caused this Agreement to be duly executed as of the day and year
first above written.
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AMERICAN
EXPRESS COMPANY
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By:
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/s/ Gilbert
E. Ahye
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Name: Gilbert E. Ahye
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Title: Senior Vice President
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AMERIPRISE
FINANCIAL, INC.
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By:
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/s/
Kelli A. Hunter
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Name: Kelli A. Hunter
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Title: Executive Vice President, Human Resources
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46
Exhibit 10.8
Ameriprise Financial
Long-Term Incentive Award Program
Guide
Introduction
LTIA
Program
Ameriprise
Financial 2005 Incentive Compensation Plan
Stock-Based
Award Types
Restricted
Stock Award (“RSA”)
Non-Qualified
Stock Option (“NQSO”)
Restricted
Stock Unit (“RSU”)
Portfolio
Grant (“PG”) Program
Tax
Implications for Stock-Based and Other LTIAs (U.S. Only)
Treatment
of LTIAs upon Certain Events
Resources
THIS DOCUMENT IS PART OF A PROSPECTUS COVERING SECURITIES
THAT HAVE
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933.
September 30, 2005
This Guide
is available on AMP Central.
Contents
Long-Term Incentive Award Program
Guide
Information regarding awards granted
beginning October 3, 2005.
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Introduction
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1
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LTIA
Philosophy
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1
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About
the Illustrations
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2
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Annual
Award Materials
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2
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Governing
Award Documents
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2
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LTIA Program
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3
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Overview
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3
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Substitution
Awards
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3
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Ameriprise Financial 2005
Incentive Compensation Plan
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4
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Eligible
Participants and Types of Awards
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4
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AMP
Shares Available for Grant under the Plan
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4
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Administration
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5
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Performance-Based
Compensation
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6
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General
Plan Provisions
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6
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Stock-Based Award Types
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8
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Overview
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8
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Restricted Stock Award (“RSA”)
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9
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Overview
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9
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Valuing
RSA Grants
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9
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Vesting
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9
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Quarterly
Dividends
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9
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Non-Qualified Stock Option
(“NQSO”)
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10
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Overview
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10
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Valuing
NQSO Grants
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10
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Vesting
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10
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Steps
for Exercising NQSOs
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10
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NQSO
Exercise Illustration
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10
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Restricted Stock Unit (“RSU”)
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14
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Overview
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14
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Portfolio Grant (“PG”) Program
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15
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Overview
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Tax Implications for
Stock-Based and other LTIAs (U.S. Only)
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16
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RSA/RSU
Tax Implications
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16
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NQSO
Tax Implications
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17
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Other
Tax Implications for LTIAs
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18
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Treatment of LTIAs upon Certain
Events
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20
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Overview
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20
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Part-Time
Employment Status
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20
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Employment
Termination
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20
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Leave
of Absence
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21
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Death
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21
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Disability
Termination
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22
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Retirement
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22
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Transfer
Between Business Segments
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23
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Situations
of Detrimental Conduct
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23
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Change
in Control (“CIC”) of the Company
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24
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Payments
to U.S. Taxpayers upon a Change in Control of the Company
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24
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Resale
of AMP Shares Received under the Plan
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25
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Resources
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26
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Overview
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26
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Availability
of Certain Information and Incorporation of Documents by Reference
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27
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Appendix A — Detrimental
Conduct Provisions to
Long-Term Incentive Awards
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A-1
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Introduction
Overview
This
Long-Term Incentive Award
Program Guide
(the “Guide”) provides information about the long-term incentive award program and
related policies for long-term incentive awards (“LTIAs”) granted pursuant to
the Ameriprise Financial 2005 Incentive Compensation Plan (the “Plan”).
The LTIA program is designed for eligible
employees of Ameriprise Financial, Inc., and any of its affiliates
participating in the Plan (collectively referred to herein as the “Company” or
“AMP”), as determined by the Compensation
and Benefits Committee of the Board of Directors of the Company (the “CBC”).
In some countries, certain award features may be
different than those shown in this Guide in order to meet local regulatory or
other requirements. Awards are granted
at the discretion of the Company and the CBC or, to the extent permitted by the
Plan, its designee, and are subject to local market regulations and
legislation, which could change at any time.
Also note that while the tax laws that apply to
participants of the LTIA program are based on each employee’s tax jurisdiction,
most tax information provided in this Guide is generally for U.S. purposes
only. Any tax information provided in
this Guide is not intended to constitute tax advice.
The Company urges all employees to consult their
personal tax advisor with any questions or issues regarding their participation
in the LTIA program.
The information in this Guide does not create an
employment contract and does not imply there will be an LTIA program in the
future, nor what the participation, selection and award guidelines would be.
The Company
reserves the right to amend, change or terminate all
or part of the LTIA program in accordance with applicable plans, agreements and
regulations.
LTIA Philosophy
The LTIA program aligns participants’
interests with those of the Company’s shareholders. By providing a stake in the
Company’s future success, LTIAs are essential to our efforts to attract and
retain talented employees.
Management recommends LTIAs in accordance
with program guidelines and award pools that are established at the beginning
of the annual year-end performance and compensation process. (LTIA award pools are subject to CBC
discretion, cost, dilution and shareholder plan limits.)
Guidelines are reviewed and set annually to
provide competitive compensation opportunities, while giving management the
flexibility to select and reward individuals.
Management may reward some individuals in consecutive years, while
others are rewarded on a less frequent basis.
Management considers a variety of factors
when determining awards under the LTIA program, including performance ratings,
leadership behaviors and skills, importance to the future performance and
growth of the organization and the ability to model behaviors for others. These
factors are particularly important when selecting award recipients in those
bands where
1
participation is limited to less than 100% of
these employees. This selectivity is
consistent with market practices and ensures that recipients receive meaningful
awards.
About the Illustrations
All LTIA illustrations and corresponding values shown in this Guide are
based on financial, stock price and other assumptions about future events or
circumstances, which may or may not actually occur, as well as continuous
employment and award requirements.
The illustrations are hypothetical and not meant to imply that the
Company will achieve certain stock prices or growth rates, or has achieved any
stated growth rate consistently in the past.
The value and return on AMP common stock will fluctuate over time and
may be worth more or less than the values shown in these illustrations. Past performance is no guarantee of future
results. Please consult your personal
financial advisor on the value, tax and other implications of your LTIAs, as
applicable to your circumstances. This
Guide is not intended to provide any financial or tax advice.
Award Confirmation Materials
Generally, all employee recipients of LTIAs
will have on-line access to their individual LTIA information through the
Company’s HR self-service. In addition,
Restricted Stock Award (“RSA”), Restricted Stock Unit (“RSU”) and/or
Non-Qualified Stock Option (“NQSO”) Award Certificates will be distributed to
employees via electronic means (either inter-Company electronic mail or to the
employees’ desktop computers). Those
LTIA recipients who do not have access to on-line HR tools will have
confirmation materials mailed to their home address as soon as practicable
following approval of the award.
You should print out and
retain these LTIA documents with any award materials you have received in the
past.
Governing Award Documents
The Plan, the Award Certificates and this Guide contain the controlling
provisions of each LTIA. To view these
documents please go to AMP Central.
While it is intended to have all LTIA documents available on the HR
Homepage, this page is currently under construction. Therefore, please search within AMP Central
to access these LTIA documents. These
documents, along with CBC decisions, will govern in cases of conflict,
ambiguity or miscommunication. No
employee has the authority to change or supersede LTIA provisions or CBC
decisions. Any representation to the
contrary shall be void and non-binding on the Company.
2
LTIA Program
Overview
The chart below summarizes key features of
the LTIA program. The Plan permits a
variety of awards to be granted to Plan participants. This Guide describes those types of awards
that we currently expect to grant under the Plan. If the type of awards granted under the Plan
changes, we will provide you with detailed information pertaining to any such
awards. Detailed information about
various award types, tax implications and other award information follows in
separate sections.
|
Type of Award
|
|
Key Features
|
|
Restricted
Stock Award (“RSA”)
|
|
·
RSAs will vest in equal
installments over a four-year period.
·
Quarterly dividends will
be paid during the vesting period.
|
|
Non-Qualified
Stock Option (“NQSO”)
|
|
·
NQSOs will vest and become
exercisable in equal installments over a four-year period.
·
NQSOs may be exercised up
to 10 years after the grant date, subject to continuous employment and award
requirements.
|
|
Restricted
Stock Unit Award (“RSU”)*
|
|
·
RSUs will vest at the end
of a specified period, usually four years long.
·
Quarterly dividend equivalents
will be paid during the vesting period.
|
|
Portfolio
Grant (“PG”)
|
|
·
The performance periods
for PG awards are generally three-years and generally vest and become payable
in the first February following the end of the third year.
|
*
To avoid adverse tax
consequences, Restricted Stock Units (“RSUs”) may be granted in lieu of RSAs
and NQSOs in certain countries, as well as to employees in the U.S. who meet
the retirement definition during the course of the award’s term.
Substitution Awards
In
addition to those LTIAs newly granted to eligible Participants under the Plan,
this Guide and the applicable Award Certificates, certain incentive awards that
were granted under the American Express Company 1998 Incentive Compensation
Plan will be substituted with AMP LTIAS in connection with the spin-off of the
Company from American Express Company (such LTIAs, the “Substitution
Awards”). Substitution Awards will be
governed by the Plan and the Form of Ameriprise Financial 2005 Incentive
Compensation Plan Master Agreement for Substitution Awards.
3
Ameriprise Financial 2005 Incentive Compensation
Plan
The general nature of the Plan and it terms
and conditions are described herein, but the information contained in this
Guide is for general guidance only and is not intended to be a complete
description of the Plan. In the event of
a conflict or inconsistency between this Guide and the Plan, the Plan
provisions will govern.
Purpose
The purpose of the Plan is to promote the
interests of the Company and our shareholders by providing eligible
participants, who are responsible for the management, growth and protection of
the business of the Company, with incentives and rewards to encourage them to
continue in the service of the Company.
The Plan is designed to meet this purpose by providing such participants
with a proprietary interest in pursuing the long-term growth, profitability and
financial success of our Company.
Eligible Participants and Types of
Awards
The Plan provides for the grant of cash awards (“Cash Incentive
Awards”), non-qualified and incentive stock options (“Options”) and other
stock-based awards (Options and other stock-based awards, together with Cash
Incentive Awards, are referred to in this Guide as the “LTIAs”) to our
employees. The Plan also provides that
the CBC may grant LTIAs to other persons such as independent contractors and
non-employee directors who provide services to the Company. LTIAs may be settled in cash or in shares of
Company common stock (“AMP Shares”) or other property pursuant to the terms of
such LTIA. Our named executive officers
will receive annual cash bonuses as Cash Incentive Awards under the Plan. In addition, to provide suitable incentives
to employees outside the United States, we may issue awards similar to the types
of awards listed above that also meet the requirements of foreign
jurisdictions.
AMP Shares Available For Grant under
the Plan
The number of
AMP Shares
authorized for issuance
with respect to LTIAs granted under the Plan is 37,900,000. Of those AMP Shares, the maximum number of
AMP Shares that may be covered by “incentive stock options” within the meaning
of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”)
shall not exceed 5,000,000. AMP Shares
issued under the Plan may be either newly issued shares or treasury shares.
Excluding AMP Shares that may be issued with
respect to Substitution Awards, the maximum number of AMP Shares that may be
covered by LTIAs granted under the Plan to any single participant in the Plan
(a “Participant”) in any calendar year will not exceed 3,000,000 AMP
Shares. The amount payable to any
Participant with respect to any calendar year for all Cash Incentive Awards for
which the performance period is not longer than one year shall not exceed
$15,000,000, and for which the performance period is longer than one year shall
not exceed $10,000,000.
AMP Shares covered by LTIAs shall only be
counted as used to the extent they are actually issued and delivered to a
Participant (or a Participant’s permitted transferees). AMP Shares covered by
Substitution Awards that are not counted as used shall be available for use in
connection with any other LTIAs.
Accordingly, if an LTIA is settled for cash or if AMP Shares
4
are withheld to pay the exercise price of an
Option or to satisfy any tax withholding requirement in connection with an
LTIA, only the AMP Shares issued (if any), net of the AMP Shares withheld, will
be deemed delivered for purposes of determining the number of AMP Shares that
remain available for delivery under the Plan.
If AMP Shares are issued subject to conditions which may result in the
forfeiture, cancellation or return of such AMP Shares to the Company, any
portion of the AMP Shares forfeited, cancelled or returned shall be treated as
not issued pursuant to the Plan. If AMP
Shares owned by a Participant are tendered (either actually or through
attestation) to the Company in payment of any obligation in connection with an
LTIA, the number of AMP Shares tendered shall be added to the number of AMP
Shares that are available for delivery under the Plan.
If the Company uses cash it receives in
payment of the exercise price or purchase price in connection with any LTIA to
repurchase AMP Shares, the AMP Shares so repurchased will be added to the
aggregate number of AMP Shares available for issuance under the Plan. The AMP Shares covered by LTIAs granted
pursuant to the Plan in connection with the assumption, replacement, conversion
or adjustment of outstanding equity-based awards in the context of a corporate
acquisition or merger will not count as used under the Plan for these purposes.
Administration
The CBC shall from time to time designate
those persons who shall be granted LTIAs and the amount, type and other terms
and conditions of such LTIAs. The CBC
will have full authority to administer the Plan, including authority to
interpret and construe any provision of the Plan and the terms of any LTIA
issued under it and to adopt such rules and regulations for administering the
Plan, as it may deem necessary. Pursuant
to this authority, on or after the date of grant of an LTIA under the Plan, the
CBC may (i) accelerate the date on which any such LTIA becomes vested,
exercisable or transferable, as the case may be, (ii) extend the term of any
such LTIA, including, without limitation, extending the period following a
termination of a Participant’s employment during which any such LTIA may remain
outstanding, (iii) waive any conditions to the vesting, exercisability or
transferability, as the case may be, of any such LTIA or (iv) provide for the
payment of dividends or dividend equivalents with respect to any such LTIA;
provided that, the CBC shall not have any such authority to the extent that the
exercise of such authority would cause any tax to become due under Section 409A
of the Code.
The Company shall pay any amount payable with
respect to an LTIA in accordance with the terms of such LTIA, provided that the
CBC may, in its discretion, defer the payment of amounts payable with respect
to an LTIA subject to and in accordance with the terms of a deferred
compensation plan as adopted by the Company.
The Plan is not subject to the requirements
of the Employee Retirement Income Security Act of 1974, as amended. The Plan is not qualified under the Internal
Revenue Code.
The Company’s Board of Directors appoints CBC
members for an annual term. The Board
may remove any CBC member for cause and a majority of the shareholders may
remove a CBC member for any reason. No
CBC member is an employee of the Company or has any business undertakings with
the Company.
5
Performance-Based
Compensation
The CBC may grant LTIAs that are intended to
qualify under the requirements of Section 162(m) of the Code as
performance-based compensation. The performance goals upon which the payment or
vesting of any LTIA (other than Options) that is intended to so qualify depends
may relate to one or more of the following performance measures: (i) net income
or operating net income (before or after taxes, interest, depreciation,
amortization, and/or nonrecurring/unusual items), (ii) return on assets, return
on capital, return on equity, return on economic capital, return on other
measures of capital, return on sales or other financial criteria, (iv) revenue
or net sales, (v) gross profit or operating gross profit, (vi) cash flow, (vii)
productivity or efficiency ratios, (viii) share price or total shareholder
return, (ix) earnings per share, (x) budget and expense management, (xi)
customer and product measures, including market share, high value client
growth, and customer growth, (xii) working capital turnover and targets, (xiii)
margins, and (xiv) economic value added or other value added measurements, in
any such case (x) considered absolutely or relative to historic performance or
relative to one or more other businesses and (y) determined for the Company or
a business unit or division thereof.
Within 90 days after the beginning of a
performance period, and in any case before 25% of the performance period has
elapsed, it is expected that the CBC shall establish (a) performance goals and
objectives for such performance period, (b) target awards for each Participant,
and (c) performance schedules or other objective methods for determining the
applicable performance percentage to be applied to each such target award.
The measurement of any performance measure(s) may exclude the impact of
charges for restructurings, discontinued operations, extraordinary items, and
other unusual or non-recurring items, and the cumulative effects of accounting
changes, each as defined by generally accepted accounting principles and as
identified in the Company’s audited financial statements, including the notes
thereto. Any performance measure(s) may be used to measure the performance of
the Company as a whole or any business unit of the Company or any combination
thereof, as the CBC may deem appropriate, or any of the above performance
measures as compared to the performance of a group of competitor companies, or
a published or special index that the CBC, in its sole discretion, deems
appropriate.
General
Plan Provisions
Adjustments
upon Changes in Capitalization
The Plan provides for an adjustment in the
number of AMP Shares available to be issued under the Plan, the number of AMP
Shares subject to LTIAs and the exercise prices of certain LTIAs upon a change
in the capitalization of the Company, a stock dividend or split, a merger or
combination of AMP Shares and certain other similar events.
Tax
Withholding
The Plan provides that Participants may elect
to satisfy certain federal, state and local withholding tax requirements, if
any, by remitting to the Company cash or, subject to certain conditions, AMP
Shares or by instructing the Company to withhold AMP Shares payable to the
Participant. In the event the
Participant remits AMP Shares or instructs the Company to withhold AMP Shares
payable to such Participant, only a number of AMP Shares sufficient to satisfy
the minimum withholding tax requirements, if any, attributable to such
exercise, grant or
6
vesting but not greater than the minimum
withholding obligations may be remitted or withheld, as the case may be.
Assignment
and Transfer
Under the Plan, LTIAs may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution, except as
permitted by the CBC on a general or specific basis.
Amendment
Our Board of Directors may at any time
suspend or discontinue the Plan or revise or amend it in any respect whatsoever,
except that, in general, no revision or amendment may, without the approval of
shareholders of the Company, (i) increase the number of AMP Shares that may be
issued under the Plan or (ii) materially modify the requirements as to
eligibility for participation in the Plan.
Term of
the Plan
No grants of LTIAs may be made under the Plan
after September 30, 2015.
7
Stock-Based
Award Types
Overview
This section summarizes
general features of RSAs, NQSOs and RSUs.
Detailed information about the various award types is contained in
sections that follow.
|
Award Feature
|
|
RSA
|
|
NQSO
|
|
RSU
|
|
Intent
and form of award
|
|
A grant of AMP Shares in which the recipient’s
rights in the stock are restricted until the AMP Shares vest, subject to
continuous employment.
|
|
The opportunity to purchase (or exercise) a
specific number of AMP Shares when the award vests, subject to continuous
employment.
|
|
A promise to deliver AMP Shares when the award
vests, subject to continuous employment.
|
|
Size of grant
|
|
Generally, dollar value that is converted to a
specific number of AMP Shares on the grant date.
|
|
Same as RSA.
|
|
Same as RSA.
|
|
Vesting schedule
|
|
Generally vest in four equal annual installments.
Individual awards may vary as specified in your award package.
|
|
Same as RSA.
|
|
Same as RSA.
|
|
Dividends/ dividend equivalents
|
|
Dividends payable as declared by AMP Board of
Directors (usually quarterly) on unvested AMP Shares.
|
|
No.
|
|
Same as RSA, but dividend equivalents.
|
|
Tax on dividends/ dividend equivalents for
unvested AMP Shares (U.S. only)
|
|
Taxed as ordinary income and reflected on your W-2
Form.
|
|
No.
|
|
Same as RSA.
|
|
Voting rights for unvested AMP Shares
|
|
Yes.
|
|
No.
|
|
No.
|
|
Current value
|
|
Current share price multiplied by number of AMP
Shares.
|
|
Difference between the grant price (also known as
the exercise or strike price) and the current share price, multiplied by the
number of AMP Shares.
|
|
Same as RSA.
|
|
Taxation (U.S. only)
|
|
Generally upon vesting. Subject to statutory
federal minimum, state and local income tax withholding, Social Security and Medicare
taxes (actual tax obligation may be higher).
|
|
Upon exercise. Subject to statutory federal
minimum, state and local income tax withholding, Social Security and Medicare
taxes (actual tax obligation may be higher).
|
|
Upon vesting of AMP Shares. Subject to statutory
federal minimum, state and local income tax withholding, Social Security and
Medicare taxes (actual tax obligation may be higher.
|
8
Restricted Stock Award (“RSA”)
Overview
An RSA grant is a grant of AMP Shares in
which your rights in such shares are restricted until the shares vest, subject
to continuous employment. Once vested,
you receive the AMP Shares free from restrictions. Quarterly dividends are paid during the
restricted period, as may be declared by the AMP Board of Directors, and you
may vote your restricted AMP Shares.
Valuing RSA Grants
The value of an RSA share at
vesting is equal to AMP’s average share price on that day.
We use the average of the high and low of AMP’s
trading prices on the vesting date.
For example, if
150 restricted AMP Shares vest in 1/07 and the AMP Share price at vesting is
$55, the pre-tax value of these AMP Shares would be $8,250 ($55 x 150 =
$8,250). (See “About the Illustrations” for an important disclosure.)
Vesting
RSAs generally vest in equal installments
over a four-year period, starting with the first anniversary of the grant date
and ending on the fourth anniversary.
The Award Certificate you receive in connection with an RSA grant will
include a personalized schedule. Prior
to the vesting date, the Corporate Secretary’s Office will remind you that you
may open a brokerage account with Ameriprise Financial Brokerage Services
(“AFBS”) and have the net AMP Shares transferred to this account, or hold the
net AMP Shares in an account in your name
with our transfer agent, The Bank of New York.
The net AMP Shares deposited into your account
will be the number of AMP Shares specified in your RSA award less the necessary
number of AMP Shares needed to satisfy any tax withholding requirements. Once deposited into your account, you may
sell your AMP Shares at any time, subject to securities laws governing insider
trading and Company black-out periods applicable to Bands 50 and above.
Quarterly
Dividends
AMP
Share dividends are paid quarterly during the restricted period, as may be
declared by the AMP Board of Directors. The dividend payment amount is
determined each quarter and stated as a per share amount that is multiplied by
the number of restricted AMP Shares in your award. For example, if a quarterly dividend is $0.12
per share and you have 500 restricted AMP Shares, your quarterly dividend
payment would equal $60 ($0.12 x 500 = $60).
To
change the address where your dividend check is mailed or to request a dividend
check replacement, visit The Bank of New York’s website at
www.stockbny.com. You can also reach The
Bank of New York at (800) 463-5911 or (
212) 815-3700.
For the hearing impaired, the TDD Number is (888)
269-5221.
Treatment
of RSAs upon Certain Events
For information on the treatment
of RSAs upon retirement, employment termination, leave of absence, etc., please
see “Treatment of LTIAs upon Certain Events.”
9
Non-Qualified Stock Option
(“NQSO”)
Overview
An NQSO gives you the right
to purchase a specified number of AMP Shares for a 10-year period at the
exercise price (which is the price at grant) on the day the option is granted,
subject to continuous employment and vesting requirements. The exercise price
is the average of the high and low of AMP’s trading prices on the day the
option is granted. Once an option
becomes vested, you determine when to exercise the option and how to pay for
the option exercise.
“Non-qualified”
refers to the tax treatment of the option under the Code. A non-qualified stock option does not receive
special individual tax treatment under the Code, but preserves the Company’s
tax deduction for the gain at exercise. This means the gain is treated as
ordinary income and you must pay tax on the gain when you exercise the NQSO. (See “Tax Implications for Stock-Based Awards
(U.S. Only)” for more detailed information).
Valuing NQSO Grants
NQSOs earn value when AMP’s
stock price increases above the exercise price.
Once an NQSO becomes vested, you have the right to exercise the
NQSO. For example, assume that 500
vested NQSOs were granted at the exercise price of $35 per share and the AMP
Share price is now $55. If you decide to
exercise the NQSO, the pre-tax value of these shares would be $10,000 ($55 -
$35 = $20 x 500 = $10,000). (See “About the Illustrations” for an important
disclosure.)
Vesting
Outstanding NQSOs generally become vested and
available for exercise in equal installments over a four-year period, starting
with the first anniversary of the grant date and ending on the fourth
anniversary. The Award Certificate you
receive in connection with an NQSO grant will include a personalized schedule.
Steps for Exercising NQSOs
(For U.S. employees; exercise steps outside the
U.S. may differ due to local requirements)
You may exercise an NQSO as soon as it vests or at
any subsequent time during the 10-year option term, subject to continuous
employment. Please keep track of your
NQSO expiration date(s) to ensure you realize any value through a timely
exercise. As with any investment decision, please consult with your personal
financial advisor before exercising an NQSO.
Follow these steps to exercise an NQSO:
1.
Complete
the Notice of Exercise of Employee Stock Option Form.
To access this form, please go to AMP Central
and search on “Exercise Form”. Also, you
may e-mail Brokerage Services for the Notice of Exercise Form. Their address is “ESO Group”. On the form indicate how you plan to pay for
the AMP Shares you are purchasing through exercising the option and any
required minimum tax withholding. You
may pay the exercise cost (exercise price times the number of shares) using one
of these payment options (in U.S. dollars):
·
Cashless:
Instruct
Ameriprise Financial Brokerage Services (“AFBS”), our exclusive broker, to sell
the number of AMP Shares required to pay the exercise cost and tax
10
payment due. There is no fee
to open a brokerage account with AFBS and you will pay a reduced commission
when AFBS sells shares on your behalf.
·
Check:
Made payable
to
Ameriprise Financial, Inc.
·
Stock-for-Stock
(“Swap”):
Swap AMP Shares you have owned for at least six
months that are held in either your name or a joint account with your name.
(AMP Shares within a U.S. Individual Retirement Account, the Ameriprise
Financial 401(k) Plan, or other similar program cannot be used for this transaction.) You may pay the exercise
cost by completing an Attestation Form and attaching documentation that affirms
you own the required AMP Shares. To
access this form, please go to AMP Central and search on “Attestation Form”.
If you choose to pay the
exercise cost using the cashless method, required tax withholding will be
deducted from the proceeds of the sale.
If you choose to pay the exercise cost by check or with AMP Shares (
i.e
., Swap), you may pay any required minimum
tax withholding using one of these payment options (in U.S. dollars):
·
Check
made payable to
Ameriprise
Financial, Inc
.
·
Request the
Corporate Secretary’s Office to
retain shares
otherwise available from the exercise.
·
Instruct AFBS
to
sell the appropriate number of shares
to pay the required minimum tax withholding.
2.
(For Bands
50 and above only)
Verify special provisions and restrictions.
·
Obtain
required approval.
All Band 50 and above Participants must pre-clear
their intent to exercise through the Company’s Corporate Secretary’s
Office. Additional approvals may be
required if the exercise request exceeds certain hurdles, e.g., the request
that would result in the exercise of more than 40% of your available AMP Shares
(25% for Executive Team members) within any 90-day period. The Corporate Secretary’s Office will provide
instruction on necessary approvals required.
·
Black-out period.
There is a quarterly black-out period when
the trading window closes and remains closed for approximately six weeks until
the Company’s earnings for the preceding quarter are made public. Other black-out periods may apply as
determined by the Corporate Secretary’s Office.
·
(For
Bands 70 and above only)
Affirm stock ownership
requirements are met or requirements understood if not yet met.
The
Company will be implementing stock ownership guidelines for executives. These guidelines are currently being
developed and will be communicated to affected executives after CBC approval.
11
3.
Submit
your Notice of Exercise of Employee Stock Option Form.
If you plan to sell all or a portion of your
AMP Shares, fax the form directly to Ameriprise Financial Brokerage Services at
(612) 671-6023. If you are paying for
the exercise by check or with AMP Shares you already own, mail the form to
Ameriprise Financial Stock Administration, 361 AMP Financial Center,
Minneapolis, MN 55474 or fax it to (612)
671-3948. Stock Administration will send
you a note confirming the amount needed to cover the exercise cost and the
required minimum tax withholding. (Forms submitted via e-mail are not accepted
at this time.)
4.
To
place a stop order on your account, contact Ameriprise Financial Brokerage
Services directly at (612) 671-5355 or (800) 555-9826.
The above described
provisions and procedures are subject to change as the Company implements more
integrated and automated processes.
NQSO Exercise Illustration
(For U.S. purposes only) The illustration shows
three ways to exercise an NQSO. In this example, assume a U.S. employee chooses
to exercise 1,000 NQSO shares with a grant price of $30 per share. Assume that
the market price on the exercise date is $50 per share.
NQSO Exercise Alternatives
|
|
|
Exercise
Step
|
|
Cashless
Via Broker
|
|
Cash
(using check
or money order)
|
|
Stock-for-Stock
|
|
A
|
|
Market value of exercised AMP Shares at $50
($50/share x 1,000 shares)
|
|
$50,000
|
|
$50,000
|
|
$50,000
|
|
B
|
|
Exercise price paid ($30/share x 1,000 shares)
|
|
$30,000
(use sale proceeds)
|
|
$30,000
|
|
$30,000 (swap 600
AMP Shares)
|
|
C
|
|
Pre-Tax Gain (Step A–Step B)
|
|
$20,000
|
|
$20,000
|
|
$20,000
|
|
D
|
|
Minimum U.S. tax withholding paid (Step C x
40% assumed tax)
|
|
$8,000
|
|
$8,000
(withhold 160 AMP shares from
exercise)
|
|
$8,000
|
|
E
|
|
Incremental value after exercise and tax
withholding (Step A–Step B–Step D)
|
|
$12,000 (broker commission applies)
|
|
$12,000
|
|
$12,000
|
|
F
|
|
Incremental share ownership (or
net proceeds) from exercise
|
|
$12,000
|
|
840 AMP Shares
(1,000–160 AMP Shares withheld for taxes)
|
|
240 AMP Shares
(1,000–160 AMP Shares withheld for taxes;
600 AMP Shares swapped)
|
(See “About the Illustrations” for an
important disclosure.)
12
Treatment
of NQSOs upon Certain Events
To find out how
your NQSOs will be treated upon retirement, employment termination, leave of
absence, etc., please see “Treatment of LTIAs upon Certain Events.”
13
Restricted Stock Unit
(“RSU”)
Overview
The Company has the right to
grant an RSU in place of an RSA or NQSO when it is advantageous to the employee
and/or the Company from a tax perspective.
In the U.S., RSUs are
granted in lieu of RSAs to employees who meet the retirement definition during
the course of the award’s term, in order to avoid adverse tax consequences. In
certain countries outside the U.S., RSAs or NQSOs are taxable at the time of
grant even though they have not vested. For this reason, RSUs may be granted
and they may have country-specific provisions.
Generally, an RSU represents
the Company’s intent to provide a specified number of AMP Shares at the end of
a four-year period of continuous employment.
During this period, you receive quarterly payments that are the
equivalent of AMP Share dividends. You
do not have voting rights for shares promised under the RSU.
After vesting, you will
receive the number of vested AMP Shares specified in your RSU award. Tax withholding on the market value of these
shares will depend on the tax regulations in your country. Any required minimum tax withholding will be
paid by surrendering AMP Shares.
Treatment
of RSUs upon Certain Events
For information
about how your RSUs will be treated upon certain events, such as retirement,
employment termination, leave of absence, etc., please see “Treatment of LTIAs
upon Certain Events.”
14
Portfolio Grant (“PG”) Program
Overview
(For Bands 50 and above)
Portfolio Grants (“PGs”) are
long-term cash incentives d
esigned to earn
value based on three-year business segment and overall Company financial and
performance metrics. Generally, PGs
vest and become payable in
February following the three-year performance period, as specified in your
individual award agreement and are based
on values generated from the Financial Incentive Component (“FIC”) and Stock
Incentive Component (“SIC”) grids, after CBC adjustments are made. We project that PG payments will be made in
cash, but they may also be made in AMP Shares or other forms of payment, or a
combination of cash, AMP Shares and other forms of payment. Certain terms and conditions, including
applicable performance and payout grids, with respect to PG awards are being
developed by the Company and will be communicated to PG recipients after CBC
approval.
15
Tax
Implications for Stock-Based and Other LTIAs (U.S. Only)
The following is a summary description of the
United States federal income tax consequences generally arising with respect to
grants of RSAs, NQSOs, RSUs and other LTIAs issued pursuant to the Plan. There may also be state and local taxes
applicable to these awards. This summary
is not intended to be a complete description of all possible tax consequences
of LTIAs issued under the Plan and you should be aware that different tax
treatments may apply outside of the United States depending upon your country
of residence and/or citizenship.
NO REPRESENTATION RESPECTING TAX
TREATMENT OF ANY LTIA, INCLUDING THE EXERCISE OF ANY NQSOS, HAS BEEN MADE TO
YOU. YOU ARE URGED TO CONSULT YOUR
COUNSEL, ACCOUNTANTS, OR OTHER TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF
LTIAS GRANTED TO YOU IN RELATION TO YOUR OWN PARTICULAR TAX SITUATION.
RSA/RSU Tax Implications
(
U.S. Only
) The tax
rules that apply to your RSA or RSU award vary based on your tax jurisdiction.
Below is a brief summary of the general tax implications for U.S. taxpayers. You are urged to consult with your personal
tax advisor on applicable tax implications of RSA or RSU awards and selling
acquired AMP Shares in light of your individual circumstances.
For employees subject to U.S. taxes, there
are no specific income tax consequences when an RSA/RSU award is granted. As the restricted period expires and RSA/RSU
shares vest
(i.e.
, the RSA/RSU
shares become transferable or no longer subject to a substantial risk of
forfeiture, whichever occurs earlier), ordinary compensation income taxes are
triggered based on the market value of an AMP Share on the day of vesting. Your
W-2 wage and earnings statement will indicate that you had ordinary
compensation income equal to the market value of your vested AMP Shares.
Income resulting from an RSA/RSU vesting is
subject to U.S. statutory federal minimum income tax withholding, plus any
applicable statutory state and local withholding. (
NOTE:
The actual income tax you owe will be based on your individual circumstances
and may be more or less than the income tax withheld.) This income is also subject to Social
Security and Medicare taxes. The net AMP
Shares deposited into your account will be the number of AMP Shares specified
in your RSA/RSU award less the necessary number of AMP Shares needed to satisfy
any tax withholding requirements.
If you later sell AMP Shares acquired from an
RSA/RSU vesting, you will realize a short-term or long-term capital gain (or
loss) on the spread between the market value on the date of vesting (your cost
basis) and the net proceeds you receive when you sell the AMP Shares. If you realize a gain after satisfying a
minimum holding period (currently greater than one year) and are in a net
capital gain position under applicable U.S. tax rules, you may be able to pay
tax on the gain based on long-term capital gains tax rates. These rates are generally lower than ordinary
income and short-term capital gains tax rates.
If you realize a loss, you may be able to use that loss to offset any
capital gains you may otherwise have and any loss in excess of capital gains
may, to a
16
limited extent, be used to offset ordinary
income, to the extent permitted under applicable U.S. tax rules.
During the restricted period, any dividends
or dividend-equivalents paid on unvested RSA/RSU shares will be paid through
The Bank of New York and reflected in the earnings column under “Taxable Other”
on your payroll check. Dividends or
dividend-equivalents paid on these shares are also considered ordinary
compensation income and are subject to taxes, as described above. Ordinary income incurred will appear on your
W-2 statement.
In advance of an
RSA vesting event, you will receive a notification of this pending RSA vesting
from LTIA Stock Administration. This
notification will provide you with important information and instructions in
advance of the vesting date. Following
actual vesting, you will receive a Share Release Receipt that reflects the
grant date, vesting date, market value of your vested AMP Shares, average AMP
stock price used to calculate the fair market value, number of shares withheld
to satisfy your tax obligation, breakdown of the taxes withheld and net shares
delivered to you. It is extremely
important that you retain this document for income tax purposes.
NQSO Tax Implications
(
U.S. Only
) The
tax implications that apply when you exercise your NQSOs vary based on your tax
jurisdiction. Below is a summary of the
general tax implications for holders of NQSOs who are U.S. taxpayers. You are urged to consult with your personal
tax advisor on the applicable U.S. and non-U.S. tax implications of receiving
and exercising NQSOs and selling acquired AMP Shares in light of your
individual circumstances.
For employees subject to U.S. taxes, in the
year that you exercise an NQSO, your W-2 wage and earnings statement will
indicate that you had ordinary compensation income equal to the difference
between the exercise price and the market value of AMP Shares on the day of the
exercise.
Income resulting from an NQSO exercise is
subject to U.S. statutory minimum federal income tax withholding, plus any
applicable statutory state and local withholding. (
NOTE:
The actual income tax you owe will be based on your individual circumstances
and may be more or less than the income tax withheld.) This income is also subject to Social
Security and Medicare taxes. You may pay
any required minimum tax withholding using one of three payments options: check, selling of AMP Shares or retention of
AMP Shares by the Corporate Secretary’s Office.
Please refer to the section in this Guide titled “NQSO Exercise
Illustration” for withholding tax payment details.
If you later sell AMP Shares acquired from an
NQSO exercise, you will realize a short-term of long-term capital gain (or
loss) on the spread between the market value on the date of exercise (your cost
basis) and the net proceeds you receive when you sell the AMP Shares. If you
realize a gain after satisfying a minimum holding period (currently greater
than one year) and are in a net capital gain position under applicable U.S. tax
rules, you may be able to pay tax on the gain based on long-term capital gains
tax rates. These rates are generally lower than ordinary income and short-term
capital gains tax rates. If you realize
a loss, you may be able to use that loss to offset any capital gains you may
otherwise have and any loss in excess of capital gains may, to a
17
limited extent, be used to offset ordinary
income, to the extent permitted under applicable U.S. tax rules.
If you pay for an NQSO exercise with AMP
Shares you have owned for at least six months, generally under current U.S. tax
laws, this does not result in the taxable sale or other disposition of these
old AMP Shares. In fact, if you use the
“attestation” procedure to do this (described in this Guide as a
“stock-for-stock exercise”), the old AMP Shares will retain their cost or other
tax basis and their holding period.
Other Tax Implications for LTIAs
Performance-based LTIAs
Section 162(m) of the Code limits the ability
of the Company to deduct compensation paid during a fiscal year to a Covered
Employee (see definition of Covered Employee under “Payments to U.S. Taxpayers
upon a Change in Control of the Company”) in excess of one million dollars,
unless such compensation qualifies as “performance-based compensation” (as
defined in Code Section 162(m)) or meets another exception specified in Code
Section 162(m). Generally, LTIAs granted
under the Plan may be deductible by the Company, without regard to the limit set
by Code Section 162(m); however, the Plan does permit awards to be granted that
would be subject to such limit and that would not qualify as “performance-based
compensation” or meet another exception in Code Section 162(m). In such case, the Company’s deductions with
respect to such awards would be subject to the limitations imposed by Code
Section 162(m).
Generally, you will not have income at the
time the CBC grants a performance-based award to you. Under current tax laws, you generally will
have income at the time that the Company pays cash, AMP Shares, other Company
securities or property to you under such award, which will equal the amount of
cash and the fair market value of the AMP Shares, securities, or property you
receive.
Code
Section 83(b) Election
Under the Plan, you may be permitted or
required to elect to be taxed at the time of receipt of AMP Shares or other
property rather than upon lapse of restrictions on transferability or
substantial risk of forfeiture, but if you subsequently forfeit such AMP Shares
or property, you would not be entitled to any tax deduction, including as a
capital loss, for the value of the AMP Shares or property on which you
previously paid tax. In such case, you
must file any such election with the IRS within thirty (30) days of the receipt
of the AMP Shares or other property. The
Company generally will be entitled to a deduction in an amount equal to the
ordinary income recognized by the Participant.
Parachute Payments
In certain
circumstances, a Participant
in the Plan might be deemed to have received
“parachute payments” under Code Section 280G to the extent that a Change of
Control of the Company results in the grant of, or increase in the amount of,
any LTIA or accelerates a such Participant’s rights under any LTIA (such as the
right to exercise, retain, or earn such LTIA).
In general, if the present value of all payments to a Participant
constituting parachute payments equals or
18
exceeds three times the Participant’s “base
amount” (the Participant’s average annual compensation, determined over the
five-year period preceding the year the payment is made), the Participant will
be subject to a 20% excise tax (in addition to regular tax) on the excess of
the parachute payments over the Participant’s base amount, and the Company will
be denied any tax deduction for the amount of the excess parachute
payments. See “Payments to U.S.
Taxpayers upon a Change in Control of the Company” for more information.).
Code Section 409A
Congress recently passed tax legislation
geared toward certain deferred compensation programs. This statute, Code Section 409A, was
generally effective January 1, 2005.
LTIAs that are earned and vested prior to the end of 2004 are generally
exempt from the new law, provided that they are not materially modified after
October 3, 2004. All LTIAs that are
subject to the new law will be administered in compliance with the new law,
even if it conflicts with the information in this Guide, the Plan or the
governing award documents described above.
The information in this Guide, as well as the Plan and the governing
award documents, will be amended in accordance with IRS deadlines to comply
with Section 409A. Further information
on Section 409A and the nature of the required amendments to comply with
recently released IRS guidance will be provided when it becomes available.
19
Treatment of LTIAs upon Certain Events
Overview
Existing policies regarding the treatment of
outstanding RSAs, NQSOs and RSUs under certain circumstances are described
below. The CBC may amend the following
policies for any or all outstanding and future LTIAs. For specific information about the treatment
of your LTIAs, please see the applicable section that describes the following
specific events:
·
part-time
employment status,
·
employment
termination,
·
leave of
absence,
·
death,
·
disability
termination,
·
retirement,
·
transfer from
one business segment to another,
·
situations of
Detrimental Conduct (Bands 50 and above), and
·
Change in
Control of the Company.
Part-Time Employment Status
Outstanding LTIAs continue to vest while you
are on part-time status, subject to the Company’s right to adjust or terminate
any outstanding LTIAs, based on its discretionary determination of a significant
change in your duties and responsibilities.
Employment Termination
This section pertains to employment
terminations other than
retirement, death, or disability (as described separately).
·
Voluntary Termination
:
If you terminate your
employment with the Company, your outstanding LTIAs, including any exercisable
NQSO shares that have not been exercised, will be cancelled on your last day of
employment.
·
Termination Not Eligible for Severance under Company Plan:
If your employment is terminated for any
reason other than death, disability or retirement or pursuant to a Change in
Control and you are not entitled to receive benefits under a Company severance
plan (as defined by the Company), your outstanding LTIAs, including any
exercisable NQSO shares that have not been exercised, will be cancelled on your
last day of employment.
20
·
Termination Eligible for Severance under Company Plan
:
If your
employment is terminated and you receive benefits under a Company severance
plan (as defined by the Company) in the form of payments over a specified
severance period, your outstanding LTIAs, including any exercisable NQSO shares
that have not been exercised, will be cancelled on the earlier of the award
expiration date or the end of your severance payments. However, if you begin a
new full-time position outside the Company (other than self-employment) during
the severance period, your outstanding LTIAs will be cancelled upon such
employment, regardless of the continuation of severance payments. If your
employment is terminated and you receive benefits under a Company severance
plan (as defined by the Company) in the form of a lump sum payment, your
outstanding LTIAs, including any exercisable shares that have not been
exercised, will be cancelled as of your last day of employment.
Leave of Absence
Outstanding LTIAs continue to vest when you
are on a leave of absence (as determined in accordance with the applicable
Company policies) subject to the Company’s right to adjust or terminate any
outstanding LTIAs, based on its discretionary determination of a significant
change in your duties and responsibilities and/or related employment, as
defined by the Company.
Death
The following chart shows how RSAs/RSUs and NQSOs are treated if your
employment with the Company terminates due to your death, subject to the
Company receiving required documentation from the legal representatives of your
estate.
|
Award
Type
|
|
Age: Any Age
Service:
Any Service
|
|
60–61
At Least 10 Years
|
|
62 or Over
At Least 10 Years
|
|
RSA/RSU
|
|
Outstanding
RSAs/RSUs become 100% vested.
|
|
No
difference for age or service.
|
|
No
difference for age or service.
|
|
NQSO
|
|
Outstanding
NQSOs at death become 100% exercisable. NQSOs are exercisable by the estate
for up to five years after death, subject to the original 10-year option
expiration date.
|
|
No
difference for age or service.
|
|
No
difference for age or service.
|
In the event of your death, shares for all
RSAs/RSUs that vest will automatically be issued to your estate. Since NQSO
shares cannot be transferred, the Executor/Executrix of your estate must open
an estate brokerage account in order to exercise any NQSOs. The estate is then
responsible for distributing any funds according to your Last Will and
Testament.
Subject to the provisions of
the Plan, you may name a beneficiary or beneficiaries to receive any payments
of LTIAs in the event of your death by completing a form that is acceptable to
the Company and returning it in a timely manner to the Corporate Secretary’s
Office, at Ameriprise Financial, Inc., 55 Ameriprise Financial Center,
Minneapolis, MN 55474,. You may change
your
21
beneficiary or beneficiaries
from time to time by submitting a new form to the Corporate Secretary’s Office
at the same address. If you do not
designate a beneficiary, or if no designated beneficiary is living on the date
any LTIA amount becomes payable, such payment will be made to the legal
representatives of your estate, which will be deemed to be your designated
beneficiary.
Disability Termination
The following chart shows how your RSAs/RSUs and NQSOs are treated if
your employment with the Company terminates due to a qualifying disability, as
defined by the Company.
|
Award
Type
|
|
Age: Any Age
Service:
Any Service
|
|
60–61
At Least 10 Years
|
|
62 or Over
At Least 10 Years
|
|
RSA/RSU
|
|
Outstanding
RSAs/RSUs become 100% vested.
|
|
No
difference for age or service.
|
|
No
difference for age or service.
|
|
NQSO
|
|
Outstanding
NQSOs at employment termination become 100% exercisable. NQSOs are
exercisable for five years after employment termination, subject to the
original option expiration date.
|
|
No
difference for age or service.
|
|
No
difference for age or service.
|
Retirement
The following chart shows how RSAs/RSUs and
NQSOs are treated upon retirement. The worldwide definition of retirement for
all outstanding LTIAs, is a minimum of 55 years of age with at least 10 years
of applicable service at the point of termination,
regardless of any pension plan or other definitions of retirement
.
IMPORTANT:
If you do not meet the definition of retirement, your LTIAs are
forfeited immediately upon termination, as described above.
|
Award
Type
|
|
Age: 55–59
Service:
At Least 10 Years
|
|
60–61
At Least 10 Years
|
|
62 or Over
At Least 10 Years
|
|
RSA/RSU
|
|
For
RSA/RSU awards or installments that vest in four years or less, if your
retirement date is more than two years after your grant date, outstanding
RSA/RSU shares vest in full. If your retirement date is two years or less
after your grant date, outstanding RSA/RSU shares are forfeited. (For RSA/RSU
awards or installments that vest after more than four years, other provisions
apply.)
|
|
In
addition to the benefit in the “Age 55–59” column, 50% of the otherwise
forfeited amount vests. The remaining 50% of the amount is forfeited.
|
|
In
addition to the benefit in the “Age 55–59” column, 100% of the otherwise
forfeited amount vests.
|
22
|
Award
Type
|
|
Age: 55–59
Service:
At Least 10 Years
|
|
60–61
At Least 10 Years
|
|
62 or Over
At Least 10 Years
|
|
NQSOs
|
|
Same as above plus: 50% of unvested NQSOs that are
outstanding more than one year at retirement continue to vest according to
the original award schedule. The remaining unvested NQSOs are forfeited.
|
|
In
addition to the benefit in the “Age 55–59” column, 100% of the unvested NQSOs
that are outstanding more than one year at retirement continue to vest
according to the original award schedule. The remaining unvested NQSOs are
forfeited.
|
|
In addition to the benefit in the “Age 55–59”
column, 100% of the otherwise forfeited amount vests for all NQSOs,
regardless of grant date.
|
Transfer Between Business
Segments
Outstanding LTIAs continue to vest when you
transfer from one business segment to another, subject to the Company’s right
to adjust or terminate any outstanding LTIAs, based on its discretionary
determination of a significant change in your duties and responsibilities
and/or related employment, as defined by the Company.
Situations of Detrimental Conduct
(Bands 50 and above)
To protect the interests of
the Company and all employees, the Company has implemented Detrimental Conduct
Provisions, affecting Plan Participants in Bands 50 and above. These provisions support the multi-year
performance objectives of LTIAs.
Detrimental Conduct Provisions specify how
LTIAs and LTIA payments will be handled in the event a Band 50 or above
employee joins a defined competitor, leaves and solicits business customers,
solicits or hires AMP employees or otherwise engages in conduct that is against
the Company’s interests during certain time periods, as defined by the Company.
·
For Bands
50 and 60 Participants
,
Detrimental Conduct during
employment and up to one year after employment termination would result in the
repayment of NQSO exercise gains realized in the six months prior to employment
termination.
·
For Bands
70 and above Participants
,
Detrimental Conduct during
employment and up to one year after employment termination would result in the
repayment of all LTIA value realized in the two years prior to termination of
employment.
For the
full Detrimental Conduct Provisions, see Appendix A attached to this Guide.
23
Change in Control (“CIC”) of the Company
We designed the CIC (as defined in the Plan)
provisions to preserve earned or anticipated compensation and benefits if a CIC
were to occur, thereby helping you focus on your job during the uncertainty
that accompanies a potential CIC.
Generally, as the term is used in this Guide,
a CIC includes the following:
1.
A third party acquires 25%
or more of the Company’s common shares or voting securities.
2. A
majority of the AMP Board of Directors is replaced.
3. The
consummation of certain mergers, reorganizations, consolidations and sales of
assets.
4. The
consummation of a complete liquidation or dissolution of AMP.
If a merger or other business combination
transaction between AMP and another party occurs, a CIC and the applicable LTIA
treatment would be triggered if any of the following conditions were present:
·
Parties who were AMP
shareholders before the transaction own 50% or less of the voting securities of
the new company resulting from the business combination, or their ownership is
not substantially in the same proportions as before the transaction.
·
An unaffiliated party ends
up owning 25% or more of the voting securities of the new company (other than a
party who owns 25% or more before the transaction).
·
A majority of the board of
the new company is made up of individuals who were not AMP Board members at the
time the deal was signed or approved.
In the event of a CIC, outstanding RSAs/RSUs
and NQSOs would be treated as follows:
·
RSAs/RSUs
and
NQSOs
would vest immediately
. In addition, if your employment terminates
within two years after a CIC for reasons other than misconduct, you will have
an additional 90 days after your employment termination date to exercise your
vested NQSOs.
Change in Control situations are complex and
involve a variety of possible circumstances.
In the event of a CIC, the Company will provide detailed information to
you about any compensation and benefits programs that may have special CIC
provisions.
Payments to U.S. Taxpayers upon a Change in Control
of the Company
(This section applies to U.S.
Taxpayers only. This material is highly complex. In the event of a CIC, the
Company will provide detailed information to you.)
In the event of a CIC, you may be liable for
an excise tax on a portion of your LTIA and other compensation/benefits
payments if you are considered a covered employee (as defined in the box below)
and your payments exceed a certain total value under U.S. tax definitions.
24
Most employees are not covered employees, so there is no limit on the
total value of their vesting/payment actions upon a CIC. If you are considered a covered employee in
the event of a CIC, we will do the calculation to determine whether you will be
better off exceeding the limit and paying the excise tax or having your vesting/payment
actions limited to avoid the excise tax.
The Company will determine, in its sole discretion, which approach is
more favorable to you and will apply it.
You will not be eligible for additional payments to offset the impact of
any excise tax. LTIAs and value not
accelerated for covered employees if the limit is applied will continue to be
governed by applicable award documents and paid out as applicable. Generally, for employees in Bands 70 or above
at the time of the CIC, there is no limit on the total value of your LTIA
payments, any severance payments and any other vesting/payment actions upon a
CIC. In addition, you may be eligible to
receive payments to offset the impact of U.S. excise taxes that may apply to
you.
|
Definition of Covered Employee
Generally, covered employees of the Company and its subsidiaries are the
employees subject to U.S. taxes who are the most highly compensated 250
employees or the top 1% (who earn at least $75,000 annually), whichever is
less, as well as the most highly compensated 50 officers and employees who
hold AMP Shares with a market value exceeding $1 million. The actual list of
covered employees can only be determined based on information available at
the time of a CIC, based on applicable IRS guidance.
|
Resale of
Shares Received under the Plan
The U.S. securities laws impose restrictions
on the resale of AMP Shares by individuals who are “affiliates” of the
Company. Affiliates may resell their AMP
Shares by complying with Rule 144 under the Securities Act of 1933, as amended
(the “Securities Act”) or by registering their AMP Shares for sale under the
Securities Act. These restrictions do
not apply to individuals who are not affiliates of the Company.
25
Resources
1
Overview
|
Type of Question or
Information Needed
|
|
Contact/E-mail/Web
Address
|
|
Phone
Number
|
|
Fax
Number
|
|
Cashless stock option exercise (simultaneous
exercise and sell)
|
|
|
|
|
|
|
|
Stock option exercises, RSA vesting or to request
a current LTIA history report
|
|
|
|
|
|
|
|
Notice of Exercise of Employee Stock Option and
Attestation Forms, Frequently-Asked Questions, Detrimental Conduct provisions
for Bands 50 and above
|
|
|
|
|
|
|
|
Other information requests (
e.g.
, LTIA policy questions for HR,
general LTIA questions)
|
|
|
|
|
|
|
|
Senior Management Stock Ownership Program (Bands
70 and above)
|
|
|
|
|
|
|
|
Stock Transfer Agent:
Shareholder inquiries
|
|
|
|
|
|
|
|
Stock Transfer Agent:
Send certificates for transfer and address changes to:
|
|
|
|
|
|
|
1
To be completed.
26
Availability of Certain
Information and Incorporation of Documents by Reference
Pursuant to the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company
will provide, without charge, upon the written or oral request of any person to
whom this Guide is delivered by the Company or one of its affiliated entities
to the Corporate Secretary’s Office, Ameriprise Financial, Inc., 55 Amerprise
Financial Center, Minneapolis, MN 55474, (612) 671-3131, a copy of any of the
following documents, all of which are incorporated by reference in this Guide:
(a) The Company’s Registration Statement on Form
10, as amended, as filed with the Securities and Exchange Commission (the
“Commission”) August 19, 2005 (the “Form 10 Registration Statement”);
(b) All other reports filed by the Company
pursuant to Section 13(a) or 15(d) of the Exchange Act since the end of the
fiscal year covered by the Form 10 Registration Statement; and
(c) The description of the Company’s Common Stock
contained in the Company’s Form 10 Registration Statement, including any
amendment or report filed for the purpose of updating such description.
All documents filed by
the Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act subsequent to the date of the Registration Statement on
Form S-8 to which this Guide relates and prior to the filing of a
post-effective amendment that indicates that all securities offered hereby have
been sold or that deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in, and to be a part of, this Guide from
the date of filing of such documents.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Guide to the extent that a statement contained
in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Guide.
Nothing in this Guide
shall be deemed to incorporate information furnished but not filed with the
Commission pursuant to Item 2.02 or Item 7.01 of Form 8-K.
In addition, the Company
will provide, without charge, upon the written or oral request of any person to
whom this Guide is delivered by the Company or one of its affiliated entities
to the Corporate Secretary’s Office (contact information noted above), copies
of all reports, proxy statements and other communications distributed by the
Company to the holders of AMP Shares.
27
Appendix
A
DETRIMENTAL
CONDUCT PROVISIONS TO LONG-TERM INCENTIVE AWARDS
1.
Introduction
.
Stock Options, Restricted Stock Awards,
Restricted Stock Unit Awards, and other stock-based awards (collectively
referred to herein as “Awards”) are issued to employees pursuant to the
Ameriprise Financial 2005 Incentive Compensation Plan, as amended from time to
time (the “Ameriprise 2005 ICP”), at the discretion and subject to the
administration of the Compensation and Benefits Committee of the Board of
Directors of Ameriprise Financial, Inc. (the “Ameriprise CBC”). These Detrimental Conduct Provisions (the
“Provisions”) supplement the terms of the Ameriprise 2005 ICP and the
applicable Award Certificates and Award Agreements issued thereunder, and any
other agreement or certificate for the grant of any Awards under the Ameriprise
2005 ICP, and apply to all Awards that have been issued to you under the
Ameriprise 2005 ICP, unless the Ameriprise CBC determines otherwise.
2.
Detrimental Conduct
. If you engage in Detrimental Conduct (as
defined below), Awards previously issued to you may be canceled, rescinded or
otherwise restricted and the Company (as defined in Paragraph 2(a) below) can
recover any payments you received and stock delivered to you in accordance with
the terms of Paragraph 3 of these Provisions.
For purposes of these Provisions, “Detrimental Conduct” shall mean the
conduct described in Paragraphs 2(a) through 2(g) of these Provisions.
(a) Noncompete.
For a one year period after your last day of active employment if you
are a Band 70 or above employee, or for a six-month period after your last day
of active employment if you are a Band 50 or 60 employee, and during your
employment with Ameriprise Financial, Inc. and its subsidiaries and affiliates
(collectively, the “Company”),
you shall not be employed by, provide advice to or act
as a consultant for any Competitor. The
Company has defined Competitor for certain lines of business, departments or
job functions by establishing a specific standard and/or by name as set forth
in the attached Competitor List. Your
personal list of competitors will be the sum of
either
:
(i) all
competitors derived from the Standard Competitors column on the Competitor List
for the lines of business and departments (under the Line of Business,
Department or Job Function column) that you provided services to or managed
during the two-year period preceding the date your employment with the Company
terminates, or
(ii) if the job
function you are employed in at the time your employment with the Company
terminates is listed on the Competitor List under the Line of Business,
Department or Job Function column, the competitors under the Standard
Competitors column of the Competitor List,
plus
the Entities (as that term is defined in Paragraph 8
of these Provisions) listed on the Competitor List under the column titled
Business Unit Wide Competitors for the business units that you provided
services to or managed during the two-year period preceding the date your
employment with the Company terminates.
If any line(s) of business you provided services to or managed during
the two-year period preceding the date your employment with the Company
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terminates is not listed on the Competitor List then, with respect to
such line(s) of business, you shall not be employed by, provide advice or act
as a consultant for (i) an Entity’s line of business that competes with those
line(s) of business and (ii) the Entities listed on the Competitor List under
the column titled Business Unit Wide Competitors for the business units you
provided services to or managed during the two-year period preceding the date
your employment with the Company terminates.
Except for Business Unit Wide Competitors, the prohibition against being
employed by, providing advice to or acting as a consultant for a Competitor is
limited to the line(s) of business of the Competitor that compete with the
line(s) of business of the Company that you provided services to or
managed. With respect to Business Unit
Wide Competitors, you agree not to be employed by, provide advice or act as a
consultant for such Entities in any line of business because these Entities
compete with several of the Company’s lines of business. The Company can revise the Competitor List at
its discretion at any time and from time to time and as revised will become
part of these Provisions. A copy of the
current Competitor List will be available through the Corporate Secretary’s
Office. Notwithstanding anything in
these Provisions to the contrary, the Company shall not make any additions to
the Competitor List for a period of two years following the date of Change in
Control (as such term is defined in the Ameriprise 2005 ICP, as amended from
time to time, or any successor thereto).
(b) Nondenigration. For a
one-year period after your last day of active employment (“the Restricted
Period”) and during your employment with the Company, you or anyone acting at
your direction will not denigrate the Company or the Company’s employees to the
media or financial analysts. You agree
during the Restricted Period not to (i) provide information considered
proprietary by the Company to the media or financial analysts or (ii) discuss
the Company with the media or financial analysts, without the explicit written
permission of the Senior Vice President of Public Affairs, Communications and
Government Relations. This Paragraph
shall not be applicable to any truthful statement required to be made by you in
any legal proceeding.
(c) Nonsolicitation of Employees.
During the Restricted Period, you shall not employ or solicit for
employment any employee of the Company.
In addition, during the Restricted Period you shall not advise or
recommend to any other person that he or she employ or solicit for employment,
any person employed by the Company for the purpose of employing that person at
an Entity at which you are or are intending to be (i) employed, (ii) a member
of the board of directors, or (iii) providing consulting services.
(d) Nonsolicitation of Customers.
During the Restricted Period you shall not directly or indirectly
solicit or enter into any arrangement with any Entity, which is, at the time of
such solicitation, a significant customer of the Company for the purpose of
engaging in any business transactions of the nature performed or contemplated
by the Company. This Paragraph shall
apply only to customers whom you personally serviced while employed by the
Company or customers you acquired material information about while employed by
the Company.
(e) Misconduct. During your
employment with the Company, you will not engage in any conduct that results in
termination of your employment for Misconduct.
For purposes of this Paragraph 2(e), Misconduct is (i) material
violation of the Ameriprise Financial Code of Conduct, (ii) criminal activity,
(iii) gross insubordination, and (iv) gross negligence in the
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performance of your duties.
(f) Confidential Information.
During the Restricted Period and during your employment with the
Company, you shall not misappropriate or improperly disclose confidential
information or trade secrets of the Company and its businesses, including but
not limited to information about marketing or business plans, possible
acquisitions or divestitures, potential new products or markets and other data
not available to the public.
(g) Other Detrimental Conduct.
During the Restricted Period, you shall not take any actions that the
Company reasonably deems detrimental to its interests. To the extent practicable, the Company will
request you to cease and desist or rectify the conduct prior to seeking any
legal remedies under this Paragraph and will only seek legal remedies if you do
not comply with such request. This
Paragraph shall not be applied to conduct that is otherwise permitted by
Paragraphs 2(a) through 2(f). For
example, if you leave the Company’s employment to work for an Entity that is
not a Competitor under Paragraph 2(a), the Company will not claim that
employment with that Entity violates Paragraph 2(g). Notwithstanding anything in these Provisions
to the contrary, this Paragraph 2(g) shall not be applicable to you form and
after your last day of active employment, if your employment terminates for any
reason (other than for Misconduct, as defined in Paragraph 2(e) above) within
two years following a Change in Control (as such term is defined in the
Ameriprise 2005 ICP, as amended from time to time, or any successor thereto).
3.
Detrimental Conduct
Remedies
.
(a)
Repayment of Financial Gain
. If you fail to comply with the requirements
of Paragraphs 2(a) through 2(g) and you are a Band 70 employee or above at the
time your employment with the Company terminates, the Company may cancel any
outstanding Awards and recover (i) the amount of any gain realized on stock
options and stock appreciation rights issued under the Ameriprise 2005 ICP or
issued under the American Express Company
1998 Incentive Compensation
Plan or the American Express Company 1989 Long-Term Incentive Plan
(together, the “AXP Incentive Plans”),
that you have exercised, as of the date you exercised them, (ii) any payments
you received for Portfolio Grant Awards or other Awards issued under the
Ameriprise 2005 ICP or the AXP Incentive Plans and (iii) stock whose restrictions
lapsed (or the value of the stock at the time the restrictions lapsed) pursuant
to a Restricted Stock Award, Restricted Stock Unit Award or other Award, or any
other stock-based award issued under the Ameriprise 2005 ICP or the AXP
Incentive Plans, during the last two years you were employed by the Company
(including employment with American Express Company). If you fail to comply with the requirements
of Paragraphs 2(a) through 2(g) and you are a Band 50 or 60 employee at the
time your employment with the Company terminates, the Company may cancel any
outstanding Awards and recover the amount of any gain realized on stock options
and stock appreciation rights issued under the Ameriprise 2005 ICP or the AXP
Incentive Plans that you have exercised, as of the date you exercised them,
which were exercised during the last six months you were employed by the
Company, including employment with American Express Company. If you fail to comply with the requirements
of Paragraphs 2(a) through 2(g), you agree to repay the Company in accordance
with the terms of this Paragraph 3(a) and the Company shall be entitled to
set-off against the amount of any such repayment obligation any
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amount owed to you by the Company.
(b)
Other Remedies
. The
remedy provided pursuant to Paragraph 3(a) shall be without prejudice to the
Company’s right to recover any losses resulting from a violation of these
Provisions and shall be in addition to whatever other remedies the Company may
have, at law or equity, for violating the terms of these Provisions.
4.
Approval to Exercise
Options
. If you are a Band 50
employee or above, you may be required to obtain written approval to exercise a
specified percent all your outstanding vested stock options issued under the
Ameriprise 2005 ICP in any 90-day period.
The standard for determining whether to approve your request to exercise
options will be whether you are complying and will comply with the requirements
of paragraphs 2(a) through 2(g) of these Provisions. You may contact the Corporate Secretary’s
Office for additional information on any applicable policies.
5.
Compensation Band
Changes
. If the Company changes its
current system of classifying employees in compensation bands and management
tiers, the references to Bands 50, 60 and 70, Executive Officers in these
Provisions will be construed to mean the compensation level(s) and management
tiers in the new or revised system that, in the Company’s discretion, most
closely approximates these bands and management tiers under the current system.
6.
Involuntary Terminations
. These Provisions will not apply to employees
of the Company who enter into a severance agreement with the Company or other
involuntary terminations as determined by the Company (excluding termination
covered by Paragraph 2(e) hereof). In
the event of a spin-off or a sale of a business, the terms of Paragraph 2(b),
2(c) and 2(f) of these Provisions shall continue to apply during the Restricted
Period but the other terms of Paragraph 2 will not continue to apply.
7.
Modification
. If any term of these Provisions is determined
by a court or arbitrator of competent jurisdiction not to be enforceable in the
manner set forth in these Provisions, that such term should be enforceable to
the maximum extent permissible under applicable law and that such court or
arbitrator shall reform such term to make it enforceable.
8.
Definition of Entity
.
As used in these Provisions, the word Entity or Entities shall mean any
corporation, partnership, association, joint venture, trust, government,
governmental agency or authority, person or other organization or entity.
9.
Waivers
. The failure
of the Company to enforce at any time any term of these Provisions shall not be
construed to be a waiver of such term or of any other term. Any waiver or modification of the terms of
these Provisions will only be effective if reduced to writing and signed by both
you and the President or Chief Executive Officer of Ameriprise Financial, Inc.
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