Document:

exv10w7

 

Exhibit 10.7

MONEYGRAM INTERNATIONAL, INC.

DEFERRED COMPENSATION PLAN

AS STATED July 1, 2004

1. PURPOSE OF THE PLAN.

     The purpose of the Deferred Compensation Plan (the “Plan”) is to provide a
select group of management or highly compensated employees of MoneyGram
International, Inc. (the “Corporation”), and its subsidiaries with an
opportunity to defer the receipt of incentive compensation awarded to them
under the Management Incentive Plan and certain other incentive plans of
MoneyGram International, Inc. and its subsidiaries (the “Incentive Plans”) or
such other substitute plans as may be adopted by the Corporation (“successor
plans”) and thereby enhance the long-range benefits and purposes of the
incentive awards. Each plan year shall extend from January 1 through December
31 of each calendar year, except that the first plan year shall begin on July
1, 2004 and shall end on December 31, 2004.

2. ADMINISTRATION OF THE PLAN.

     The Plan shall be administered by a committee appointed by the Chief
Executive Officer of the Corporation (hereinafter the “Compensation Advisory
Committee” or the “Committee”). Subject to the express provisions of the Plan,
and the Incentive Plans or successor plans, the Committee shall have the
authority to adopt, amend and rescind such rules and regulations, and to make
such determinations and interpretations relating to the Plan, which it deems
necessary or advisable for the administration of the Plan, but it shall not
have the power to amend, suspend or terminate the Plan. All such rules,
regulations, determinations and interpretations shall be conclusive and binding
on all parties.

3. PARTICIPATION IN THE PLAN.

     (a) Participation in the Plan shall be restricted to a select group of
management or highly compensated employees of the Corporation or one of its
subsidiaries who are participants in certain Incentive Plans, including the
Management Incentive Plan, and any other bonus or bonuses or similar or
successor plans, who have been selected in writing by the Chief Executive
Officer of the Corporation to participate in the Plan, and whose timely written
requests to defer the receipt of all or a portion of any incentive compensation
which may be awarded to them, are honored in whole or in part by the Committee.
Any individual whose request for deferral is not accepted or honored by the
Committee, whether for failure of timely submission or for any other reason,
shall not become a participant in the Plan, and the Committee’s determination
in this regard shall be conclusive and binding.

     (b) Participants may defer incentive compensation into a cash account and,
if designated by the Committee, into a stock unit account.

 

 

     (c) If a participant in the Plan shall 1) sever, voluntarily or
involuntarily, his or her employment with the Corporation or one of its
subsidiaries other than as a result of disability or retirement, 2) engage in
any activity in competition with the Corporation or any of its subsidiaries
during or following such employment, or 3) remain in the employ of a
corporation which for any reason ceases to be a subsidiary of the Corporation,
the Committee may at any time thereafter direct, in its sole and exclusive
discretion, that his participation in the Plan shall terminate, and that he or
she be paid in a lump sum the aggregate amount credited to his or her deferred
incentive cash account as of the date such participation is terminated and that
he or she be paid shares of MoneyGram International, Inc. Common Stock
(“Common Stock”) equal to the aggregate number of stock units credited to his
or her deferred stock unit account as of the date such participation is
terminated (with any fractional unit being settled by cash payment). The
Committee is authorized to establish and implement a policy and procedures for
administration of this paragraph, including, but not limited to, a policy
regarding small account balance cash-outs.

     (d) The Corporation and each participating subsidiary shall be solely
liable for payment of any benefits and, except as may be otherwise determined
by the Committee, for maintenance of deferred incentive accounts pursuant to
paragraph 7, with respect to its own employees who participate in the Plan. In
the event a participant leaves the employ of the Corporation or a participating
subsidiary (“former employer”) and is subsequently employed by another
employer, the Corporation or another subsidiary of the Corporation (“new
employer”), the former employer may agree to transfer and the new employer may
agree to assume the benefit liability reflected in such participant’s deferred
incentive account, without the consent of such participant and subject to the
approval of the Committee, in its sole discretion. In the event of such a
transfer and assumption of liability, the former employer shall have no further
liability for any benefit under the Plan to its former employee or otherwise
with respect to such transferred account.

4. REQUESTS FOR DEFERRAL.

     All requests for deferral of incentive awards must be made in writing
prior to November 15 of the year in which the bonus is being earned and shall
be in such form and shall contain such terms and conditions as the Committee
may determine. Each such request shall specify the dollar amount or the
percentage to be deferred of incentive award which would otherwise be received
in the following calendar year, but the deferral amount must be in an amount
equal to or greater than the lesser of $10,000 or 25% of the incentive award.
Each such request shall also specify 1) the date (no later than the employee’s
actual retirement date) when payment of the aggregate amount credited to the
deferred incentive account is to commence, 2) whether such payment is then to
be made in a lump sum or in quarterly or annual installments, 3) if payment is
to be made in installments, the period of time (not in excess of ten years)
over which the installments are to be paid, and 4) if the participant is
permitted to defer incentive compensation into a stock unit account, the
portion of the deferred incentive compensation which shall be treated as a cash
account under

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paragraph 7(b) and the portion which shall be treated as a stock unit
account under paragraph 7(c). If the participant has requested that a portion
of the deferred incentive compensation be placed in a stock unit account, such
request shall also include acknowledgment that such stock unit account will be
settled in Common Stock of the Corporation, and that such stock unit account
cannot be converted to a cash account in the future. The Committee shall,
under no circumstances, accept any request for deferral of less than $1,000 of
an incentive award or any request which is not in writing or which is not
timely submitted.

5. DEFERRAL AND PAYMENT OF INCENTIVE AWARDS.

     The Committee shall, prior to December 15 of the year in which the bonus
is being earned, notify each individual who has submitted a request for
deferral of an incentive award whether or not such request has been accepted
and honored. If the request has been honored in whole or in part, the
Committee shall advise the participant of the dollar amount or percentage of
his or her incentive compensation which the Committee has determined to be
deferred. The Committee shall further advise the participant of its
determination as to the date when payment of the aggregate amount credited to
the participant’s deferred incentive account is to commence, whether payment of
the amount so credited as of that date will then be made in a lump sum or in
quarterly or annual installments, if payment is to be made in installments, the
period of time over which the installments will be paid, and if the participant
is permitted to defer incentive compensation into a stock unit account, whether
the deferred incentive account shall be treated as a cash account or a stock
unit account or split between cash and stock units. Upon subsequently being
advised of the existence of special circumstances which are beyond the
participant’s control and which impose an unforeseen severe financial hardship
on the participant or his or her beneficiary, the Committee may, in its sole
and exclusive discretion, modify the deferral arrangement established for that
participant to the extent necessary to remedy such financial hardship.

     If the participant has elected to defer incentive compensation in the form
of cash, the Corporation shall distribute a sum in cash to such participant,
pursuant to his or her election provided for in paragraph 4. If the
participant has elected to defer incentive compensation in the form of stock
units, the Corporation shall distribute to such participant, pursuant to his or
her election provided for in paragraph 4, shares of Common Stock of the
Corporation equal to the number of stock units being settled in such
installment (with any fractional unit being settled by cash payment).

6. CONVERSION OF CASH ACCOUNT BALANCE.

     Each participant who is permitted to defer incentive compensation into a
stock unit account may, not more than once a year or such other period as is
determined by the Committee, by written notice delivered to the Committee,
convert the aggregate balance or any portion thereof in his or her deferred
compensation cash account (either before or after installment payments from the
account may have commenced) from an account in the form of cash to an account
in the form of stock units in an amount equal

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to the cash balance or specified portion thereof divided by the closing
price of the Common Stock of the Corporation (as reported for the New York
Stock Exchange-Composite Transactions) on the last trading day of the quarter
in which such notice is given, said account to then accrue dividend equivalents
as set forth in paragraph 7(c) below; provided however, that no such notice of
conversion (“Conversion Notice”) (a) may be given within six months following
the date of an election by such participant, if an Executive Officer of the
Corporation, with respect to any plan of the Corporation, that effected a
Discretionary Transaction (as defined in Rule 16b-3(f) under the Securities
Exchange Act of 1934) that was a disposition or (b) may be given after an
individual ceases to be an employee of the Corporation . The stock unit
account will be settled in Common Stock of the Corporation and such stock unit
account cannot be converted to a cash account in the future.

7. DEFERRED INCENTIVE ACCOUNT.

     (a) A deferred incentive account shall be maintained by his or her
employer for each participant in the Plan, and there shall be credited to each
participant’s account, on the date incentive compensation is paid, the
incentive award, or portion thereof, which would have been paid to such
participant on said date if the receipt thereof had not been deferred. If the
account is to be a stock unit account, the incentive compensation award shall
be converted into stock units by dividing the closing price of the
Corporation’s Common Stock (as reported for the New York Stock Exchange
Composite Transactions) on the day such incentive award is payable into such
incentive award.

     (b) If the participant has elected to defer incentive compensation in the
form of cash, there shall be credited on the last day of the quarter to each
participant’s account, an interest credit on his or her deferred incentive
award at the interest rates determined by the Committee to be payable during
each calendar year, or portion thereof, prior to the termination of such
participant’s deferral period or, if the amount then credited to his or her
deferred incentive account is to be paid in installments, prior to the
termination of such installment period. Interest will be paid on a prorated
basis for amounts withdrawn from the account during the quarter, with the
remaining balance accruing interest for the duration of the quarter. The
interest credit for the following quarter shall be a rate equal to the yield as
of March 31, June 30, September 30, and December 31 on Merrill Lynch Taxable
Bond Index — Long Term Medium Quality (A3) Industrial Bonds, unless and until
otherwise determined.

     (c) If a participant has elected to defer incentive compensation in the
form of stock units, then, in the event of a dividend paid in cash, stock of
the Corporation (other than Common Stock) or property, additional credits
(dividend equivalents) shall be made to the participant’s stock unit account
consisting of a number of stock units equal to the amount of such dividend per
share (or the fair market value, on the date of payment, of dividends paid in
stock or property), multiplied by the aggregate number of stock units credited
to such participant’s deferred compensation account on the record date for the
payment of such dividend, divided by the last closing price of the

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Corporation’s Common Stock (as reported for the New York State
Exchange-Composite transactions) prior to the date such dividend is payable to
stockholders. After payment of deferred compensation commences, dividend
equivalents shall accrue on the unpaid balance thereof in the same manner until
all such deferred compensation has been paid.

     (d) In the event of a dividend of Common Stock declared and paid by the
Corporation, an additional credit shall be made to the participant’s stock unit
account of a number of stock units equal to the number of shares of the
Corporation’s Common Stock which the participant would have received as a stock
dividend had he or she been the owner on the record date for the payment of
such stock dividend of the number of shares of Common Stock equal to the number
of units in such stock unit account on such date. After payment of deferred
compensation commences, additional credits for stock dividends shall accrue on
the unpaid balance thereof in the same manner until all such deferred
compensation has been paid.

     (e) The Plan shall at all times be unfunded. The Corporation shall not be
required to segregate physically any amounts of money or otherwise provide
funding or security for any amounts credited to the deferred incentive accounts
of participants in the Plan.

8. CHANGE OF CONTROL OR CHANGE IN CAPITALIZATION.

     (a) If a tender offer or exchange offer for shares of Common Stock of the
Corporation (other than such an offer by the Corporation) is commenced, or if
the stockholders of the Corporation shall approve an agreement providing either
for a transaction in which the Corporation will cease to be an independent
publicly owned corporation or for a sale or other disposition of all or
substantially all the assets of the Corporation (“Change of Control”), a lump
sum cash payment shall be made to each participant participating in the Plan of
the aggregate current balance of his or her deferred compensation cash account
accrued on the date of the Change of Control, notwithstanding any other
provision herein. If the participant has elected to defer compensation in the
form of stock units, the Corporation shall distribute to such participant
shares of Common Stock of the Corporation equal to the number of stock units in
such participant’s stock unit account on the day preceding the date of the
Change of Control (with any fractional unit being settled by cash payment).
Any notice by a participant to change or terminate his or her election to defer
Compensation on or before the date of the Change of Control shall be effective
as of the date of the Change of Control, notwithstanding any other provision
herein.

     (b) Any recapitalization, reclassification, split-up, spin-off, sale of
assets, combination or merger not otherwise provided for herein which affects
the outstanding shares of Common Stock of the Corporation or any other relevant
change in the capitalization of the Corporation shall be appropriately adjusted
for by the Board of Directors of this Corporation, and any such adjustments
shall be final, conclusive and binding.

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9. DESIGNATION OF BENEFICIARY.

     Each participant in the Plan shall deliver to the Committee a written
instrument, in the form provided by the Committee, designating one or more
beneficiaries to whom payment of the amount credited to his or her deferred
incentive account shall be made in the event of his or her death. Unless the
Committee shall otherwise determine, such payments shall be made in such
amounts and at such times as they would otherwise have been paid to the
participant if he had survived.

10. NONASSIGNABILITY OF PARTICIPATION RIGHTS.

     No right, interest or benefit under the Plan shall be assignable or
transferable under any circumstances other than to a participant’s designated
beneficiary in the event of his or her death, nor shall any such right,
interest or benefit be subject to or liable for any debt, obligation, liability
or default of any participant. The payments, benefits or rights arising by
reason of this Plan shall not in any way be subject to a participant’s debts,
contracts or engagements, and shall not be subject to attachment, garnishment,
levy, execution or other legal or equitable process.

11. RIGHTS OF PARTICIPANTS.

     A participant in the Plan shall have only those rights, interests or
benefits as are expressly provided in the Plan and in the Incentive Plans or
successor plans. The Plan shall be deemed to be ancillary to the Incentive
Plans or successor plans and the rights of participants in the Plan shall be
limited as provided in the Incentive Plans or successor plans. The right of a
participant or designated beneficiary to receive a distribution hereunder shall
be an unsecured claim against the general assets of the Corporation. All
amounts credited to an account shall constitute general assets of the
Corporation and may be disposed of by the Corporation at such time and for such
purposes as it may deem appropriate.

12. CLAIMS FOR BENEFITS.

     Claims for benefits under the Plan shall be filed with the Committee.
Written notice of the disposition of a claim shall be furnished the claimant
within 60 days after the application therefor is filed. In the event the claim
is denied, the reasons for the denial shall be specifically set forth.
Pertinent provisions of this Plan shall be cited. In addition, the written
notice shall describe any additional material or information necessary for the
claimant to perfect the claim (along with an explanation of why such material
or information is needed), and the written notice will fully describe the claim
review procedures of paragraph 13 below.

13. CLAIM REVIEW.

     Any claimant who has been denied a benefit shall be entitled, upon request
to the Committee, to receive a written notice of such action, together with a
full and clear statement of the reasons for the action. The claimant may also
review this Plan if he or she chooses. If the claimant wishes further
consideration of his or her position, he or she may request a hearing. The
request, together with a written statement of the

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claimant’s position, shall be filed with a Committee member no later than
60 days after receipt of the written notification provided for above. The
Committee shall schedule an opportunity for a full and fair hearing of the
issue within the next 60 days. The decision following the hearing shall be
made within 60 days and shall be communicated in writing to the claimant. If
the claimant requests, the hearing may be waived, in which case the Committee’s
decision shall be made within 60 days from the date on which the hearing is
waived and shall be communicated in writing to the claimant.

14. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.

     The Board of Directors of the Corporation (the “Board”) may from time to
time amend, suspend or terminate the Plan, in whole or in part, and if the Plan
is suspended or terminated, the Board may reinstate any or all provisions of
the Plan, except that no amendment, suspension or termination of the Plan
shall, without the consent of a participant, adversely affect such
participant’s right to receive payment of the entire amount credited to his or
her deferred incentive account on the date of such Board action. In the event
the Plan is suspended or terminated, the Board may, in its discretion, direct
the Committee to pay to each participant the amount credited to his or her
account either in a lump sum or in accordance with the Committee’s prior
determination regarding the method of payment.

15. EFFECTIVE DATE.

     The Plan shall become effective on July 1, 2004.

IN WITNESS WHEREOF, the undersigned authorized officer has signed
this document on July 1, 2004, effective as of July 1, 2004 .

	 	 	 
	

	 	MONEYGRAM INTERNATIONAL, INC.
	 
	 	 
	

	 	By: /s/ Teresa H. Johnson
	

	 	

	

	 	Its: Vice President and General Counsel

7exv10w8

 

Exhibit 10.8

MONEYGRAM INTERNATIONAL, INC.

EXECUTIVE SEVERANCE PLAN (TIER I)

     1. PURPOSE: To provide management continuity by inducing selected
Executives to remain in the employ of MoneyGram International, Inc. (the
“Corporation”) or one of its subsidiaries pending a possible Change of Control
of the Corporation, effective as of June 30, 2004.

     2. OBJECTIVES: To ensure in the event of a possible Change of Control of
the Corporation, in addition to the Executive’s regular duties, that he may be
available to be called upon to assist in the objective assessment of such
situations, to advise management and the Board of Directors (the “Board”) of
the Corporation as to whether such proposals would be in the best interests of
the Corporation, its, subsidiaries and its shareholders and to take such other
actions as management or the Board might determine reasonably appropriate and
in the best interests of the Corporation and its shareholders.

     3. PARTICIPATION: Participation in this Executive Severance Plan (Tier I)
(this “Plan”) will be limited to selected Executives (each referred to herein
as “Executive”) whose importance to the Corporation during such periods is
deemed to warrant good and valuable special consideration by the Chief
Executive Officer of the Corporation. Each such Executive’s participation
shall be evidenced by a certificate (“Certificate”) issued by the Corporation,
each of which is incorporated herein by reference as if set forth in its
entirety. In the event an Executive shall become ineligible hereunder, his
Certificate shall be surrendered promptly to the Corporation.

     4. DEFINITION OF CHANGE OF CONTROL: For purposes of this Plan, a “Change
of Control” shall mean any of the following events:

     (a) An acquisition by an individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 20% or more of either: (1) the then

 

 

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outstanding shares of Common Stock of the Corporation (the “Outstanding
Corporation Common Stock”) or (2) the combined voting power of the then
Outstanding Voting Securities of the Corporation entitled to vote generally in
the election of Directors (the “Outstanding Corporation Voting Securities”);
excluding, however the following: (A) any acquisition directly from the
Corporation or any entity controlled by the Corporation other than an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the Corporation
or any entity controlled by the Corporation, (B) any acquisition by the
Corporation, or any entity controlled by the Corporation, (C) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any entity controlled by the Corporation or (D) any acquisition
pursuant to a transaction which complies with clauses (1), (2) and (3) of
Section 4(c); or

     (b) A change in the composition of the Board such that the individuals
who, as of the effective date of the Plan, constitute the Board (such Board
shall be hereinafter referred to as the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however, for purposes
of this Section 4(b) that any individual, who becomes a member of the Board
subsequent to the effective date of the Plan, whose election, or nomination for
election by the Corporation’s shareholders, was approved by a vote of at least
a majority of those individuals who are members of the Board and who were also
members of the Incumbent Board, (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the Incumbent
Board; but provided further, that any such individual whose initial assumption
of office occurs as a result of either an actual or threatened election contest
(as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act) or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board shall not be so considered as
a member of the Incumbent Board, or

 

 

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     (c) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of the Corporation
(a “Corporate Transaction”) excluding, however, such a Corporate Transaction
pursuant to which (1) all or substantially all of the individuals and entities
who are the beneficial owners, respectively, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities immediately prior to
such Corporate Transaction (the “Prior Shareholders”) beneficially own,
directly or indirectly, more than 60% of, respectively, the outstanding shares
of Common Stock and the combined voting power of the then Outstanding Voting
Securities entitled to vote generally in the election of Directors, as the case
may be, of the Corporation or other entity resulting from such Corporate
Transaction (including, without limitation, a corporation or other entity which
as a result of such transaction owns the Corporation or all or substantially
all of the Corporation’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Corporation
Common Stock and Outstanding Corporation Voting Securities, as the case may be,
(2) no Person (other than the Corporation or any entity controlled by the
Corporation, any employee benefit plan (or related trust) of the Corporation or
any entity controlled by the Corporation or such corporation or other entity
resulting from such Corporate Transaction) will beneficially own, directly or
indirectly, 20% or more of, respectively, the outstanding shares of Common
Stock of the Corporation or other entity resulting from such Corporate
Transaction or the combined voting power of the Outstanding Voting Securities
of such Corporation or other entity entitled to vote generally in the election
of Directors except to the extent that such ownership existed prior to the
Corporate Transaction and (3) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the Board of
Directors of the Corporation resulting from such Corporate Transaction; and
further excluding any disposition of all or substantially all of the assets of
the Corporation

 

 

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pursuant to a spin-off, split-up or similar transaction (a “Spin-off”) if,
immediately following the Spin-off, the Prior Shareholders beneficially own,
directly or indirectly, more than 80% of the outstanding shares of Common Stock
and the combined voting power of the then Outstanding Voting Securities
entitled to vote generally in the election of directors of both entities
resulting from such transaction, in substantially the same proportions as their
ownership, immediately prior to such transaction, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities;
provided, that if another Corporate Transaction involving the Corporation
occurs in connection with or following a Spin-off, such Corporate Transaction
shall be analyzed separately for purposes of determining whether a Change of
Control has occurred;
(d) The approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation.

     5. DEFINITIONS:

            (a) For purposes of this Plan, “Cause” with respect to an Executive shall
mean:

            (i) The willful and continued failure of the Executive to perform
substantially the Executive’s duties with the Corporation or one of its
affiliates (other than any such failure resulting from incapacity due to
physical or mental illness), after a written demand for substantial performance
improvement is delivered to the Executive by the Board or the Chief Executive
Officer of the Corporation which specifically identifies the manner in which
the Board or Chief Executive Officer believes that the Executive has not
substantially performed the Executive’s duties, or

            (ii) The willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Corporation.
For purposes of this Section 5(a), no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief

 

 

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that the Executive’s action or omission was in the best interests of the
Corporation. Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Corporation or based upon the
advice of counsel for the Corporation shall be conclusively presumed to be
done, or omitted to be done, by the Executive in good faith and in the best
interests of the Corporation. The cessation of employment of the Executive
shall not be deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board (excluding the Executive, if he is a member of the Board) at a
meeting of the Board called and held for such purpose (after reasonable notice
is provided to the Executive and the Executive is given an opportunity,
together with counsel, to be heard before the Board), finding that, in the
good-faith opinion of the Board, the Executive is guilty of the conduct
described in subparagraph (i) or (ii) above, and specifying the particulars
thereof in detail.

         (b) For purposes of this Plan, “Good Reason” with respect to an
Executive shall mean:

                  (i) The assignment to the Executive of any duties inconsistent in any
respect with the Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities immediately
prior to the Change of Control, or any other action by the Corporation or any
of its subsidiaries which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is
remedied by the Corporation or the applicable subsidiary promptly after receipt
of notice thereof given by the Executive;

 

 

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         (ii) Any reduction of the Executive’s base salary, annual bonus, incentive
opportunities, retirement benefits, welfare or fringe benefits below the
highest level enjoyed by the Executive during the 120-day period prior to the
Change of Control;

         (iii) The Corporation’s or one of its subsidiaries requiring the Executive
to be based at any office or location other than that at which he was based
immediately prior to the Change of Control or the Corporation’s or one of its
subsidiaries requiring the Executive to travel to a substantially greater
extent than required immediately prior to the Change of Control;

         (iv) Any purported termination by the Corporation or one of its
subsidiaries of the Executive’s employment otherwise than as expressly
permitted by this Plan; or

         (v) Any failure by the Corporation to comply with and satisfy Section
11(c) of this Plan.
For purposes of this Plan, any good-faith determination of “Good Reason” made
by an Executive shall be conclusive with respect to that Executive.

       (c) For purposes of this Plan, “Window Period” means the 30-day period
following the first anniversary of the Change of Control.

     6. ELIGIBILITY FOR BENEFITS: Benefits as described in Section 7 shall be
provided in the event the Executive’s employment with the Corporation or any of
its subsidiaries is terminated:

     (a) Involuntarily by the Corporation or the applicable subsidiaries
without Cause (a “Without Cause Termination”); or

     (b) By the Executive for Good Reason (a “Good Reason Termination”) or

     (c) By the Executive’s own election for any reason during the Window
Period; provided, in the case of a Without Cause Termination or a Good Reason
Termination, that such termination occurs within thirty-six months after a
Change of Control; and provided, further, that in

 

 

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no event shall a termination as a consequence of an Executive’s death,
disability, or Retirement (as defined in the next sentence) entitle the
Executive to benefits under this Plan. “Retirement” shall mean the Executive’s
voluntary retirement at or after his normal retirement date under the
Corporation’s or a subsidiary’s retirement plan or, if the Executive does not
participate in any such plan that provides for a normal retirement date, at or
after age 65.

     7. BENEFIT ENTITLEMENTS:

     (a) Lump Sum Payment: On or before the Executive’s last day of employment
with the Corporation or any of its subsidiaries, the Corporation or the
applicable subsidiary will pay to the Executive as compensation for services
rendered a lump sum cash amount (subject to any applicable payroll or other
taxes required to be withheld) equal to the sum of (i) Executive’s highest
annual salary fixed during the period Executive was an employee of the
Corporation or any of its subsidiaries, plus (ii) the greater of (x) the
largest amount awarded to him in a year as cash bonus (whether or not deferred
and regardless of deferral election) under the Corporation’s Management
Incentive Plan during the preceding four years or if the Executive has not been
employed for at least four full fiscal years, all of the completed full fiscal
years during which the Executive has been employed, or (y) the target bonus
under the Corporation’s Management Incentive Plan for the fiscal year in which
the Change of Control occurs, plus (iii) the greater of (x) the largest amount
awarded to Executive in a year as cash bonus (whether or not deferred and
regardless of deferral election) under the Corporation’s Performance Unit
Incentive Plan during the preceding four years or if the Executive has not been
employed for at least four full fiscal years, all of the completed full fiscal
years during which the Executive has been employed, or (y) the aggregate value
of shares when earned during a performance period under any performance-related
Restricted Stock award during the preceding four years or if the Executive has
not been employed for at least four full fiscal years, all of the completed
full fiscal years during which the Executive has been employed, or (z) the

 

 

8

aggregate value at the time of grant of the target shares awarded under the
Corporation’s performance-related Restricted Stock programs for the fiscal year
in which the Change of Control occurs, multiplied by:

                       (i) Three times a fraction, the numerator of which is 36
minus the number of full months from the date of the Change of
Control through the last day of the Executive’s employment, and
the denominator of which is 36, in the case of a Without Cause
Termination or a Good Reason Termination, or

                       (ii) Two if the termination is voluntary during the Window Period.

                   (b) Employee Plans: The Executive’s participation in life, accident,
health, compensation deferral, automobile, club membership, and financial
counseling plans of the Corporation, or the applicable subsidiary, if any,
provided to the Executive immediately prior to the Change of Control or his
termination, shall be continued, or equivalent benefits provided, by the
Corporation or the applicable subsidiary at no direct cost or tax cost to the
Executive in excess of the costs that would be imposed on the Executive, if he
remained an employee, for a period (the “Severance Period”) of:

                       (i) Three years times a fraction, the numerator of which is 36 minus the
number of full months from the date of the Change of Control through the last
day of the Executive’s employment, and the denominator of which is 36, in the
case of a Without Cause Termination or a Good Reason Termination, or

                       (ii) Two years if the termination is voluntary during the Window Period,
in each case from the date of termination (or until his death or normal
retirement date, whichever is sooner). The Executive’s participation in any
applicable qualified or nonqualified retirement and/or pension plans and any
deferred compensation or bonus plan of the Corporation or any of its
subsidiaries, if any, shall continue only through the last day of employment.
Any terminating

 

 

9

distributions and/or vested rights under such plans shall be governed by the
terms of the respective plans. For purposes of determining the eligibility of
the Executive for any post-retirement life and health benefits, the Executive
shall be treated as having attained an additional three years of age and
service credit (in the case of a Without Cause Termination or a Good Reason
Termination) or two years of age and service credit (if the termination is
voluntary during the Window Period), in each case as of the last day of the
Executive’s employment.

     (c) Special Retirement Benefits: If the Executive is, immediately prior
to his termination of employment, an active participant accruing benefits under
any qualified and/or nonqualified defined benefit retirement plans
(collectively, the “Retirement Plans”), then the Executive or his beneficiaries
shall be paid Special Retirement Benefits as and when the Executive or such
beneficiaries become entitled to receive benefits under the Retirement Plans
(as defined below), equal to the excess of (i) the retirement benefits that
would be payable to the Executive or his beneficiaries under the Retirement
Plans if the Executive’s employment had continued during the Severance Period,
all of his accrued benefits under the Retirement Plans (including those
attributable to the Severance Period) were fully vested, and his final average
compensation is equal to the Deemed Final Average Compensation, as defined
below, over (ii) the total qualified and unqualified benefits actually payable
to the Executive or his beneficiaries under the Retirement Plan. The “Deemed
Final Average Compensation” means the Executive’s final average compensation
computed in accordance with the Retirement Plans, except that the amount
specified in Section 7(a) shall be considered as having been paid to the
Executive as “compensation” in equal monthly installments during the Severance
Period. All Special Retirement Benefits shall be unfunded and payable solely
from the general assets of the Corporation or its appropriate subsidiary, and
are not intended to meet the qualification requirements of Section 401 of the
Internal Revenue Code. The amount of the Special Retirement Benefits shall be
determined using

 

 

 10

actuarial assumptions no less favorable to the Executive than those used in the
qualified Retirement Plan immediately prior to the Change of Control.

     (d) Outplacement: The Executive shall be provided with outplacement
benefits in accordance with those offered to Executives immediately prior to
the Change of Control.

     (e) Minimum Benefit Entitlement: Notwithstanding anything to the contrary
in this Section 7, and except as provided in Section 8(a), in no event shall an
Executive’s severance benefits under this Plan be less than the benefits (if
any) such Executive would have received in accordance with the severance policy
of the Corporation or applicable subsidiary in effect immediately prior to the
Change of Control.

     8. TAXES: (a) Anything in this Plan to the contrary notwithstanding,
and except as set forth below, in the event it shall be determined that any of
an Executive’s Payment(s) would be subject to the Excise Tax, then the
Executive shall be entitled to receive an additional payment (the “Gross-Up
Payment”) in an amount such that, after payment by the Executive of all taxes
(and any interest and penalties imposed with respect thereto) and Excise Tax
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon such Executive’s
Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it
shall be determined that the Executive is entitled to the Gross-Up Payment, but
that the Parachute Value of all Payments does not exceed 110% of the
Executive’s Safe Harbor Amount, then no Gross-Up Payment shall be made to the
Executive and the amounts payable under this Plan shall be reduced so that the
Parachute Value of all of such Executive’s Payments, in the aggregate, equals
the Executive’s Safe Harbor Amount. The reduction of the amounts payable
hereunder, if applicable, shall be made by first reducing the Executive’s
Payments under Section 7(a), unless an alternative method of reduction is
elected by the Executive, and in any event shall be made in such a manner as to
maximize the Value of all Payments actually made to the Executive.

 

 

 11

For purposes of reducing the Payments to the Safe Harbor Amount, only amounts
payable under this Plan (and no other Payments) shall be reduced. If the
reduction of the amounts payable under this Plan would not result in a
reduction of the Parachute Value of all Payments to the Executive’s Safe Harbor
Amount, no amounts payable to such Executive under this Plan shall be reduced
pursuant to this Section 8(a) and the Gross-Up Payment shall be made to the
Executive. The Corporation’s obligation to make Gross-Up Payments under this
Section 8 shall not be conditioned upon the Executive’s termination of
employment.

     (b) Determination By Accountant. Subject to the provisions of Section
8(c)ii, all determinations required to be made under this Section 8, including
whether and when a Gross-Up Payment to any Executive is required, the amount of
such Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by the Corporation’s auditor or another nationally
recognized accounting firm appointed by the Corporation (the “Accounting
Firm”). In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of Control,
the Executive may appoint another nationally recognized accounting firm to make
the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). The Accounting Firm shall
provide detailed supporting calculations both to the Corporation and the
Executive within 15 business days of the receipt of notice from the Executive
that there has been a Payment or such earlier time as is requested by the
Corporation. All fees and expenses of the Accounting Firm shall be borne
solely by the Corporation. Any Gross-Up Payment, as determined pursuant to
this Section 8, shall be paid by the Corporation to the applicable Executive
within five days of the receipt of the Accounting Firm’s determination. Any
determination by the Accounting Firm shall be binding upon the Corporation and
the applicable Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the initial determination by the
Accounting

 

 

 12

Firm hereunder it is possible that Gross-Up Payments that will not have been
made by the Corporation should have been made (the “Underpayment”), consistent
with the calculations required to be made hereunder. In the event the
Corporation exhausts its remedies pursuant to Section 8(c) and the Executive
thereafter is required to make a payment of any Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Corporation to or for the benefit of
the Executive.

              (c) Notification Required. The Executive shall notify the Corporation in
writing of any claim by the Internal Revenue Service that, if successful, would
require the payment by the Corporation of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than 10
business days after the Executive is informed in writing of such claim. The
Executive shall apprise the Corporation of the nature of such claim and the
date on which such claim is requested to be paid. The Executive shall not pay
such claim prior to the expiration of the 30-day period following the date on
which the Executive gives such notice to the Corporation (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Corporation notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:

              (i) Give the Corporation any information reasonably requested by
the Corporation relating to such claim,

              (ii) Take such action in connection with contesting such claim as
the Corporation shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Corporation,

              (iii) Cooperate with the Corporation in good faith in order to
effectively contest such claim, and

 

 

13

         (iv) Permit the Corporation to participate in any proceedings
relating to such claim; provided, however, that the Corporation shall
bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an after-tax basis,
for any Excise Tax or income tax, (including interest and penalties)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 8(c)ii, the Corporation shall control all proceedings taken in
connection with such contest and, at its sole discretion, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the applicable taxing authority in respect of such
claim and may, at its sole discretion, either direct the Executive to
pay the tax claimed and sue for a refund, or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Corporation shall determine; provided, however, that if the Corporation
directs the Executive to pay such claim and sue for a refund, the
Corporation shall pay the amount of such payment to the Executive, and
shall indemnify and hold the Executive harmless, on an after-tax basis,
from any Excise Tax or income tax, (including interest or penalties)
imposed with respect to such payment or with respect to any imputed
income in connection with such payment; and provided, further that any
extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Corporation’s control of the contest shall be limited
to issues with respect to which a the Gross-Up Payment would be payable
hereunder and the

 

 

14

Executive shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other
taxing authority.

         (d) Repayment. If, after the receipt by the Executive of a Gross-Up
Payment or an amount paid by the Corporation pursuant to Section 8(c), the
Executive becomes entitled to receive any refund with respect to the Excise Tax
to which such Gross-Up Payment relates or with respect to such claim, the
Executive shall (subject to the Corporation’s complying with the requirements
of Section 8(c), if applicable,) promptly pay to the Corporation the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount paid
by the Corporation pursuant to Section 8(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such claim and
the Corporation does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then the Executive shall not be required to repay such amount to
the Corporation, but the amount of such payment shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.

         (e) Withholding. Notwithstanding any other provision of this Section 8,
the Corporation may, in its sole discretion, withhold and pay over to the
Internal Revenue Service or any other applicable taxing authority, for the
benefit of each Executive, all or any portion of any Gross-Up Payment.

         (f) Definitions: The following terms shall have the following meanings
for purposes of this Section 8.

         “Excise Tax” shall mean the excise tax imposed by Section 4999 of the
Code, together with any interest or penalties imposed with respect to such
excise tax.

     “Parachute Value” of a Payment shall mean the present value as of the date
of the change of control for purposes of Section 280G of the Code of the
portion of such Payment that constitutes a “parachute payment” under Section
280G(b)(2), as determined by the Accounting Firm for purposes of determining
whether and to what extent the Excise Tax will apply to such Payment.

 

 

15

     A “Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or for
the benefit of an Executive, whether paid or payable pursuant to this Plan or
otherwise.

     The “Safe Harbor Amount” of an Executive means 2.99 times the Executive’s
“base amount,” within the meaning of Section 280G(b)(3) of the Code.

     “Value” of a Payment shall mean the economic present value of a Payment as
of the date of the change of control for purposes of Section 280G of the Code,
as determined by the Accounting Firm using the discount rate required by
Section 280G(d)(4) of the Code.

     9. INDEMNIFICATION: If litigation is brought to enforce or interpret any
provision contained herein, the Corporation or applicable subsidiary, to the
extent permitted by applicable law and the Corporation’s or subsidiary’s
Articles of Incorporation, as the case may be, shall indemnify each Executive
who is a party thereto for his reasonable attorneys’ fees and disbursements
incurred in such litigation, regardless of the outcome thereof, and shall pay
interest on any money judgment obtained by the Executive calculated at the
Citibank, N.A. prime interest rate in effect from time to time from the date
that payment(s) to him should have been made under this Plan until the date the
payment(s) is made. Such attorneys’ fees and disbursements shall be paid
promptly as incurred by the Executive.

     10. PAYMENT OBLIGATIONS ABSOLUTE: Except as expressly provided in Section
13 and 14, the Corporation’s or subsidiary’s obligation to pay the Executive
the benefits hereunder and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counter-claim, recoupment, defense
or other right which the Corporation or any of its subsidiaries may have
against him or anyone else. All amounts paid or payable by the Corporation or
one of its subsidiaries hereunder shall be paid without notice or demand. Each
and every payment made hereunder by the Corporation or subsidiary shall be
final and the Corporation or subsidiary will not seek to recover all or any
part of such payment(s) from the Executive or from whosoever may be

 

 

16

entitled thereto, for any reason whatsoever. No Executive shall be obligated
to seek other employment in mitigation of the amounts payable or arrangements
made under any provision of this Plan, and the obtaining of any such other
employment shall in no event effect any reduction of the Corporation’s or
subsidiary’s obligations to make the payments and arrangements required to be
made under this Plan. The Corporation or applicable subsidiary may at the
discretion of the Chief Executive Officer of the Corporation enter into an
irrevocable, third-party guarantee or similar agreement with a bank or other
institution with respect to the benefits payable to an Executive hereunder,
which would provide for the unconditional payment of such benefits by such
third party upon presentment by an Executive of his Certificate (and on such
other conditions deemed necessary or desirable by the Corporation or such
subsidiary) at some specified time after termination of employment. Such
third-party guarantor shall have no liability for improper payment if it
follows the instructions of the Corporation or such subsidiary as provided in
such Certificate and other documents required to be presented under the
agreement, unless the Corporation or such subsidiary, in a written notice, has
previously advised such third-party guarantor of the determination by its Board
of Directors of ineligibility of the Executive in accordance with Section 15.

      11. CONTINUING OBLIGATIONS: It shall be a condition to the entitlement of
an Executive to any benefits under this Plan that he agree to retain in
confidence any confidential information known to him concerning the Corporation
and its subsidiaries and their respective businesses as long as such
information is not publicly disclosed, except as required by law.

      12. SUCCESSORS:

      (a) The benefits provided under this Plan are personal to the Executives
and without the prior written consent of the Corporation shall not be
assignable by any Executive

 

 

17

otherwise than by will or the laws of descent and distribution. This Plan
shall inure to the benefit of and be enforceable by the Executive’s legal
representatives.

     (b) This Plan shall inure to the benefit of and be binding upon the
Corporation and its successors and assigns.

     (c) The Corporation will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to assume
expressly and agree to perform this Plan in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. As used in this Plan, Corporation shall mean the
Corporation as hereinbefore defined and any other person or entity which
assumes or agrees to perform this Plan by operation of law, or otherwise.

     13. SEVERABILITY: Any provision in this Plan which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     14. OTHER PLANS AND AGREEMENTS: Notwithstanding any provision herein to
the contrary, in the event the Executive’s employment with the Corporation or
applicable subsidiary terminates and the Executive is entitled to receive
termination, separation or other like amounts from the Corporation or any of
its subsidiaries pursuant to any contract of employment, generally prevailing
separation pay policy, or other program of the Corporation or applicable
subsidiary, all such amounts shall be applied to and set off against the
Corporation’s or applicable subsidiary’s obligation set forth in Sections 7 and
8 of this Plan. Nothing in this Section 14 is intended to result in set-off of
pension benefits, supplemental executive retirement benefits,

 

 

18

disability benefits, retiree benefits or any other plan benefits not directly
provided as termination or separation benefits.

     15. AMENDMENT AND TERMINATION: This Plan may be amended or terminated by
action of the Board. This Plan shall terminate with respect to an Executive if
the Chief Executive Officer of the Corporation determines that the Executive is
no longer a key executive to be provided a severance agreement and so notifies
the Executive by certified mail at least thirty (30) days before participation
in this Plan shall cease. Notwithstanding the foregoing, no such amendment,
termination or determination may be made, (and if made, shall have no effect
during the period of thirty-six months following any Change of Control or (ii)
during any period of time when the Corporation has knowledge that any third
person has taken steps reasonably calculated to effect a Change of Control,
until such third person has abandoned or terminated his efforts to effect a
Change of Control as determined by the Board in good faith, but in its sole
discretion.

     16. GOVERNING LAW: This Plan shall be governed by and construed in
accordance with the laws of the State of Delaware, without reference to
principles of conflict of laws. The captions of this Plan are not part of the
provisions hereof and shall have no force or effect.

     17. ACCEPTANCE: By acceptance of participation in this Plan, an Executive
agrees to give a minimum of four (4) weeks’ notice to the Corporation in the
event of his voluntary resignation.

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