Document:

exv10w1

 

Exhibit 10.1

SEPARATION AGREEMENT

     This Agreement is entered into by and between Erich G. Smith (“Executive”), a resident of the
state of Texas, and Vought Aircraft Industries, Inc., a Delaware corporation with its principal
place of business in Dallas, Texas (“Vought” or the “Company”).

     Executive and Vought (“the parties”) have agreed that Executive’s employment with the Company
will conclude as provided in this Agreement. In connection with this separation from employment and
subject to this Agreement, Vought has agreed to provide Executive with certain payments and other
benefits to which Executive would not be entitled absent his execution of this Agreement. Further,
Executive and Vought desire to settle any and all disputes between the parties arising out of the
employment relationship or separation from employment.

     Therefore, in consideration of the covenants and agreements set forth in this Agreement,
Executive and Vought agree as follows:

     1. Executive agrees that he will separate from employment with Vought effective May 31, 2006
(“Separation Date”).

     2. Compensation: In connection with the Executive’s separation from Vought, and in lieu
of other benefits that might be provided under any other layoff or severance policy, plan or
agreement, Vought will provide Executive the following payments and benefits in exchange for his
fulfillment of the terms and obligations in this Agreement:

a. Separation Pay: Within thirty (30) days after the Effective Date of this Agreement
(as defined in Paragraph 11), Vought will pay to Executive a one-time lump sum equal to
fifty-two (52) times Executive’s current weekly, regular base salary. This payment will be
made only on the conditions that Executive has signed this Agreement, has not exercised his
right to revoke this Agreement (as described more fully in Paragraph 10), and has fulfilled
the other obligations set forth in this Agreement. This payment will not be considered
eligible compensation for purposes of the Vought Retirement Plan or the Savings and
Investment Plan.

b. Accrued Vacation. Within ten (10) days after the Separation Date, Executive will
receive payment for all accrued but unused vacation, if any.

c. Employee Benefits: Except as otherwise specified in this Agreement or under terms of
the applicable employee benefit plans, all of Executive’s privileges, perquisites and
benefits as a Vought employee will end as of the close of business on the Separation Date.
Neither Executive nor his dependents will be eligible for coverage under the Company’s
employee health and welfare benefit plan or any supplemental health care benefits plan
after midnight Central Time on the Separation Date.

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     Executive may elect to continue existing group medical and dental benefits coverage
for himself and his eligible dependents under COBRA at regular COBRA rates. The Company
will pay Executive a one-time lump sum equal to the amount of his regular COBRA
continuation coverage costs for twelve months, less the amount of his applicable weekly
contributions for such coverage, as calculated on the Separation Date. If Executive is not
covered by medical and dental benefits as of the Separation Date, Executive is not eligible
to receive this payment.

     Executive is responsible for paying the applicable cost of any COBRA coverage, along
with any administrative fees (with after-tax dollars). If rates for active employees
increase during the COBRA continuation period, Executive’s costs will also increase.
Likewise, the coverage offered is the same as is offered to similarly-situated active
employees, including any amendments to or terminations of the group medical and dental
plans occurring after the Separation Date.

d. Outplacement Assistance: Outplacement services will be provided to Executive by the
Company’s designated outplacement service provider through March 15, 2007. All services
will be subject to then-applicable contract terms between the Company and the provider.

e. Withholdings: Vought will withhold all required payroll deductions, including any
applicable taxes, from the above payments.

     3. Inclusive of Income and All Other Benefits: Except as provided in Paragraph 2 above,
Executive acknowledges and agrees that that this Agreement provides for compensation over and above
anything to which he would have otherwise been entitled and that he has no further claim to any
compensation, severance pay or other benefits from Vought under any plan, policy, practice or
agreement.

     4. Equity Plans: The terms of Executive’s Stock Option Agreements, if any, shall govern the
exercisability and timing of exercising of his stock options. In accordance with those agreements,
all non-vested stock options shall be forfeited, and no further vesting shall occur, following the
Separation Date. Executive may continue to hold shares of stock purchased before the Separation
Date, under the terms and conditions set forth in the applicable Shareholders’ Agreement.

     5. Confidential Information: Executive acknowledges and agrees that in the course of his
employment with Vought, he has had access to Confidential Information relating to the business
affairs of Vought and its suppliers and customers. “Confidential Information” means the Company’s
confidential and/or proprietary information and/or trade secrets that cannot be obtained readily by
third parties from outside sources. Confidential Information includes, by way of example only, the
following information regarding customers, employees, suppliers, and the industry not generally
known to the

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public: technical information concerning products, equipment, services, and processes;
procurement procedures and pricing techniques; the names of and other information concerning
customers, investors, and business affiliates and the Company’s relationship with them; pricing
strategies; positions, plans, and strategies for expansion or acquisitions; budgets; research;
financial and sales data; evaluations, opinions, and interpretations of information and data;
prospective customers’ names and marks; electronic databases; models; specifications; computer
programs; internal business records; contracts benefiting or obligating the Company; bids or
proposals submitted to any third party; technologies and methods; and other such information.
Executive agrees that he will continue to maintain the complete confidentiality of this
Confidential Information and will otherwise comply with all applicable fiduciary duties owed to the
Company in connection with Executive’s position as an officer of the Company. Executive agrees that
at no time after he signs this Agreement will he disclose, use, or otherwise make available to any
person, company and/or other entity, Vought’s Confidential Information.

     a. Unfair Competition Restrictions. Ancillary to the rights provided to Executive following
employment termination as set forth in this Agreement and any addenda or amendments to this
Agreement, the Company’s provision of Confidential Information, specialized training, and goodwill
support to Executive, and Executive’s agreements regarding the use of same, and in order to protect
the value of any equity-based compensation, training, goodwill support and/or the Confidential
Information described above, the Company and Executive agree to the following provisions against
unfair competition:

     i. Executive agrees that for a period of twelve (12) months following the Separation
Date (“Restricted Term”), Executive will not, directly or indirectly, for Executive or for
others, anywhere in the United States (the “Restricted Area”) do the following, unless
expressly authorized to do so in writing by the Chief Executive Officer of the Company:
Engage in, or assist any person, entity, or business engaged in, the selling or providing
of products or services that would displace the products or services that (i) the Company
is currently in the business of providing, or was planning to be in the business of
providing, as of the time Executive separated from the Company, and (ii) that Executive had
involvement in or received Confidential Information about in the course of employment.
Executive further understands that the foregoing restrictions may limit his ability to
engage in certain businesses during the Restricted Term, but acknowledges that these
restrictions are necessary to protect the Confidential Information the Company has provided
to Executive.

     ii. A failure to comply with the foregoing restrictions will create a presumption that
Executive is engaging in unfair competition. Executive agrees that this covenant does not
prevent Executive from using and offering the skills that Executive possessed prior to
receiving access to Confidential Information, confidential training, and knowledge from the
Company. This Agreement creates an advance approval process, and nothing herein is
intended, or will be construed

3

 

as, a general restriction against the pursuit of lawful employment in violation of any
controlling state or federal laws. Executive shall be permitted to engage in activities
that would otherwise be prohibited by this covenant if such activities are determined in
the sole discretion of the Chief Executive Officer of the Company to be no material threat
to the legitimate business interests of the Company.

     b. Enforcement of Covenants. Executive acknowledges that a breach of the covenants set
forth above will cause irreparable damage to the Company, for which the Company’s remedy at law
for damages will be inadequate. Therefore, in the event of breach or anticipatory breach of the
covenants set forth in this section by Executive, that the Company shall be entitled to seek
the following particular forms of relief, in addition to remedies otherwise available at law or
equity: (A) injunctions enjoining or restraining such breach or anticipatory breach in any
court of competent jurisdiction; and (B) recovery of all reasonable sums expended and costs,
including reasonable attorney’s fees, incurred by the Company to enforce the covenants set
forth in Paragraph 5.

     c. Separability of Covenants. If a court decides that any of the covenants set forth in
Paragraph 5 exceed the time, geographic, or occupational limitations permitted by applicable
laws, the parties agree that such provisions shall be reformed to the maximum time, geographic,
or occupational limitations permitted by applicable laws.

     6. Non-Solicitation: Executive also agrees that, for a period starting on the Separation Date
and ending on the first anniversary of that date, he will not, either on his own behalf or jointly
with or as a manager, agent, officer, employee, consultant, partner, joint venturer, owner or
shareholder, or otherwise on behalf of any other person, firm or corporation, directly or
indirectly solicit or attempt to solicit away from the Company any of its officers or employees;
provided, however, that a general advertisement to which an employee of the Company responds shall
not be deemed, standing alone, to result in a breach of this paragraph.

     7. Return of Vought Property: Executive agrees to immediately return all property owned by
Vought in his possession including, but not limited to, any Company files, documents, drawings,
plans, or photographs; any Vought credit card (or credit card for which Vought is the guarantor);
and any badge, personal digital assistant, computer, telephone, pager, fax machine, or printer.

     8. Waiver and Release: Executive, for and on behalf of himself and his heirs,
administrators, executors, successors and assigns, hereby releases and forever discharges Vought
and its subsidiaries, affiliates and related companies, and the current and former directors,
officers, executives, managers, agents, attorneys, insurers, independent contractors and employees
of Vought and all its related entities (the “Released Parties”), from any and all claims, whether
direct or indirect, fixed or contingent, now known or unknown, which Executive ever had, has now,
or may claim to have against the Released Parties, by reason of any matter, act, action, inaction,
decision, event or subject existing or occurring as of the time Executive signs this Agreement.

4

 

     Executive understands and agrees that by executing this Agreement, he is giving up any and all
actions or causes of action, suits, debts, claims, complaints, or demands of any kind whatsoever
against the Company, in law or in equity, including but not limited to claims under the Age
Discrimination in Employment Act of 1967 and under any other federal, state, or local law or
regulation; as well as claims that this Agreement was procured through fraud or duress.

     This Agreement does not waive or release: (i) any rights or claims that arise or commence
after the date he signs this Agreement; (ii) Executive’s right to file a charge or participate in
an investigation or proceeding conducted by the Equal Employment Opportunity Commission (although
any rights to recovery in such a proceeding are governed by this Agreement and specifically by this
Waiver and Release paragraph); (iii) any rights or claims Employee may have for employee benefits
pursuant to the terms of any Company retirement plans, savings plans, or employee welfare benefit
plan providing medical, surgical or hospital benefits; or (iv) any rights or claims Executive may
have for breach of this Agreement.

     9. Consideration Period: Executive will have up to twenty-one (21) days from the date he
receives this Agreement to consider it. During this time period, Executive is advised to seek legal
counsel regarding the effect of this Agreement. Changes to this Agreement, whether material or
immaterial, will not restart this time period. Executive may sign and return the Agreement in less
than twenty-one days if he wishes.

     10. Right to Rescind: Executive can revoke the Agreement in writing within seven (7)
days after signing it. The revocation must be received by W. Bruce White, Jr., General Counsel,
Vought Aircraft Industries, Inc., P.O. Box 655907, Dallas, Texas 75265, no later than midnight of
the seventh day.

     11. Effective Date: This Agreement will become effective and enforceable eight (8) days
after Executive signs it and returns it to the Company (the “Effective Date”), if not revoked as
provided in Paragraph 10.

     12. Effect of Breach: If Executive breaches any provision of this Agreement, Vought will
have no further obligations under Paragraph 2 of this Agreement. Executive agrees that in the event
he breaches this Agreement, Vought will be entitled to legal remedies, including but not limited to
repayment of all monies paid to Executive under Paragraph 2 (excluding payment for accrued but
unused vacation), together with the attorneys’ fees and costs incurred to collect these monies.

     13. No Admission of Fault or Liability: The parties agree that this Agreement is not
intended to, and does not, constitute an admission of liability or fault on the part of either
Executive or Vought.

     14. Enforceable Contract/Severability: The parties agree that this Agreement is an
enforceable contract under the laws of the State of Texas. The parties further agree

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that to the extent any part of this Agreement is found to be in violation of any law or
unenforceable as written, that part shall be modified to achieve the objective of the parties to
the fullest extent permitted, and the balance of the Agreement shall remain in full force and
effect.

     15. Entire Agreement: The parties agree that this Agreement constitutes the entire
Agreement between Executive and Vought regarding its subject matter, unless otherwise explicitly
stated herein. Any modification or addition to this Agreement, to be effective, must be in writing
and signed by Executive and an officer of Vought.

     16. Governing Law: The parties agree that this Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Texas. The parties further agree that any
suit, action or proceeding arising out of or seeking to enforce any provision of this Agreement may
be brought only in a court of competent jurisdiction in Dallas County, Texas, and the parties
hereby consent to the jurisdiction of such courts.

BY SIGNING THIS AGREEMENT, EXECUTIVE ACKNOWLEDGES (i) HE HAS CAREFULLY READ
THIS AGREEMENT AND VOLUNTARILY AGREES TO ITS TERMS, (ii) HE UNDERSTANDS THIS
AGREEMENT, AND (iii) HE HAS BEEN GIVEN THE OPPORTUNITY TO ASK ANY QUESTIONS ABOUT
THIS AGREEMENT.

IN WITNESS WHEREOF, the parties have executed this Agreement by their signatures below.

	 	 	 	 	 
	Erich G. Smith	 	Vought Aircraft Industries, Inc.
	 
	 	 	 	 
	 

	 	By:
	 	Thomas F. Stubbins
	 
	 	 	 	 
	/s/ Erich G. Smith
	 	 	 	/s/ Thomas F. Stubbins
	 	 	 	 	 
	 
	 	 	 	 
	 

	 	Its:
	 	Vice President, Human Resources
	 
	 	 	 	 
	Dated: April 21, 2006	 	Dated: April 21, 2006

6exv10w1

 

Exhibit 10.1

MONEYGRAM INTERNATIONAL, INC.

DEFERRED COMPENSATION PLAN

Adopted February 16, 2006

 

 

MONEYGRAM INTERNATIONAL, INC.

DEFERRED COMPENSATION PLAN

Adopted February 16, 2006

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 1.	 	INTRODUCTION AND DEFINITIONS	 	 	1	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	1.1.	 	Statement of Plan	 	 	 	 
	 
	 	 	 	1.1.1.	 	History	 	 	 	 
	 
	 	 	 	1.1.2.	 	Purpose	 	 	 	 
	 	 	1.2.	 	Definitions	 	 	 	 
	 
	 	 	 	1.2.1.	 	Account	 	 	 	 
	 
	 	 	 	1.2.2.	 	Affiliate	 	 	 	 
	 
	 	 	 	1.2.3.	 	Annual Deferral Amount	 	 	 	 
	 
	 	 	 	1.2.4.	 	Beneficiary	 	 	 	 
	 
	 	 	 	1.2.5.	 	Chief Executive Officer	 	 	 	 
	 
	 	 	 	1.2.6.	 	Code	 	 	 	 
	 
	 	 	 	1.2.7.	 	Common Stock	 	 	 	 
	 
	 	 	 	1.2.8.	 	Compensation	 	 	 	 
	 
	 	 	 	1.2.9.	 	Disability	 	 	 	 
	 
	 	 	 	1.2.10.	 	Effective Date	 	 	 	 
	 
	 	 	 	1.2.11.	 	Employers	 	 	 	 
	 
	 	 	 	1.2.12.	 	ERISA	 	 	 	 
	 
	 	 	 	1.2.13.	 	Event of Maturity	 	 	 	 
	 
	 	 	 	1.2.14.	 	Human Resources Committee	 	 	 	 
	 
	 	 	 	1.2.15.	 	Incentive Pay	 	 	 	 
	 
	 	 	 	1.2.16.	 	MGI	 	 	 	 
	 
	 	 	 	1.2.17.	 	Participant	 	 	 	 
	 
	 	 	 	1.2.18.	 	Plan	 	 	 	 
	 
	 	 	 	1.2.19.	 	Plan Statement	 	 	 	 
	 
	 	 	 	1.2.20.	 	Plan Year	 	 	 	 
	 
	 	 	 	1.2.21.	 	Scheduled Distribution	 	 	 	 
	 
	 	 	 	1.2.22.	 	Termination of Employment	 	 	 	 
	 
	 	 	 	1.2.23.	 	Unforeseeable Emergency	 	 	 	 
	 
	 	 	 	1.2.24.	 	Valuation Date	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 2.	 	PARTICIPATION	 	 	5	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	2.1.	 	Eligibility to Participate	 	 	 	 
	 
	 	 	 	2.1.1.	 	Compensation Deferrals	 	 	 	 
	 
	 	 	 	2.1.2.	 	Supplemental Profit Sharing	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	2.1.3.	 	Incentive Pay Deferrals	 	 	 	 
	 	 	2.2.	 	Enrollment for Elective Deferrals	 	 	 	 
	 
	 	 	 	2.2.1.	 	Compensation Deferrals	 	 	 	 
	 
	 	 	 	2.2.2.	 	Incentive Pay Deferrals	 	 	 	 
	 
	 	 	 	2.2.3.	 	Election As to Time and Form of Payment	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 3.	 	CREDITS TO ACCOUNTS	 	 	7	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	3.1.	 	Elective Deferral Credits	 	 	 	 
	 	 	3.2.	 	Matching Credits	 	 	 	 
	 
	 	 	 	3.2.1.	 	Matching Credits on Compensation Deferrals	 	 	 	 
	 
	 	 	 	3.2.2.	 	Matching Credits on Incentive Pay Deferrals	 	 	 	 
	 	 	3.3.	 	Supplemental Profit Sharing Credits	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 4.	 	ADJUSTMENT OF ACCOUNTS	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	4.1.	 	Establishment of Accounts	 	 	 	 
	 	 	4.2.	 	Adjustments of Accounts	 	 	 	 
	 	 	4.3.	 	Investment Adjustments	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 5.	 	VESTING OF ACCOUNTS	 	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 6.	 	MATURITY	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 7.	 	DISTRIBUTIONS	 	 	10	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	7.1.	 	Scheduled Distributions	 	 	 	 
	 
	 	 	 	7.1.1.	 	Scheduled Distributions of Compensation Deferrals and	 	 	 	 
	 
	 	 	 	 	 	Matching Credits	 	 	 	 
	 
	 	 	 	7.1.2.	 	Scheduled Distributions of Incentive Pay Deferrals and	 	 	 	 
	 
	 	 	 	 	 	Matching Credits	 	 	 	 
	 
	 	 	 	7.1.3.	 	Event of Maturity Takes Precedence Over Scheduled	 	 	 	 
	 
	 	 	 	 	 	Distributions	 	 	 	 
	 	 	7.2.	 	Hardship Withdrawals	 	 	 	 
	 	 	7.3.	 	Payment Upon Event of Maturity	 	 	 	 
	 
	 	 	 	7.3.1.	 	Time of Payment	 	 	 	 
	 
	 	 	 	7.3.2.	 	Form of Payment	 	 	 	 
	 	 	7.4.	 	Designation of Beneficiaries	 	 	 	 
	 	 	7.5.	 	No Spousal Rights	 	 	 	 
	 	 	7.6.	 	Death Prior to Full Distribution	 	 	 	 
	 	 	7.7.	 	Distributions in Cash	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 8.	 	FUNDING OF PLAN	 	 	12	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	8.1.	 	Unfunded Obligation	 	 	 	 
	 	 	8.2.	 	Corporate Obligation	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Page	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 9.	 	AMENDMENT AND TERMINATION	 	 	13	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	9.1.	 	Amendment and Termination	 	 	 	 
	 	 	9.2.	 	No Oral Amendments	 	 	 	 
	 	 	9.3.	 	Plan Binding on Successors	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 10.	 	DETERMINATIONS — RULES AND REGULATIONS	 	 	14	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	10.1.	 	Determinations	 	 	 	 
	 	 	10.2.	 	Method of Executing Instruments	 	 	 	 
	 	 	10.3.	 	Claims Procedure	 	 	 	 
	 
	 	 	 	10.3.1.	 	Initial Claim	 	 	 	 
	 
	 	 	 	10.3.2.	 	Notice of Initial Adverse Determination	 	 	 	 
	 
	 	 	 	10.3.3.	 	Request for Review	 	 	 	 
	 
	 	 	 	10.3.4.	 	Claim on Review	 	 	 	 
	 
	 	 	 	10.3.5.	 	Notice of Adverse Determination for Claim on Review	 	 	 	 
	 	 	10.4.	 	Rules and Regulations	 	 	 	 
	 
	 	 	 	10.4.1.	 	Adoption of Rules	 	 	 	 
	 
	 	 	 	10.4.2.	 	Special Rules	 	 	 	 
	 
	 	 	 	10.4.3.	 	Limitations and Exhaustion	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 11.	 	PLAN ADMINISTRATION	 	 	18	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	11.1.	 	Authority	 	 	 	 
	 
	 	 	 	11.1.1.	 	MGI	 	 	 	 
	 
	 	 	 	11.1.2.	 	Chief Executive Officer	 	 	 	 
	 
	 	 	 	11.1.3.	 	Board of Directors	 	 	 	 
	 	 	11.2.	 	Conflict of Interest	 	 	 	 
	 	 	11.3.	 	Service of Process	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	SECTION 12.	 	CONSTRUCTION	 	 	19	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	12.1.	 	ERISA Status	 	 	 	 
	 	 	12.2.	 	IRC Status	 	 	 	 
	 	 	12.3.	 	Effect on Other Plans	 	 	 	 
	 	 	12.4.	 	Disqualification	 	 	 	 
	 	 	12.5.	 	Rules of Document Construction	 	 	 	 
	 	 	12.6.	 	References to Laws	 	 	 	 
	 	 	12.7.	 	Choice of Law	 	 	 	 
	 	 	12.8.	 	ERISA Administrator	 	 	 	 
	 	 	12.9.	 	Delegation	 	 	 	 
	 	 	12.10.	 	Not an Employment Contract	 	 	 	 
	 	 	12.11.	 	Tax Withholding	 	 	 	 
	 	 	12.12.	 	Expenses	 	 	 	 
	 	 	12.13.	 	Spendthrift Provision	 	 	 	 
	 	 	12.14.	 	Amendment History	 	 	 	 

 

 

MONEYGRAM INTERNATIONAL, INC.

DEFERRED COMPENSATION PLAN

Adopted February 16, 2006

SECTION 1

INTRODUCTION
AND DEFINITIONS

1.1. Statement of Plan.

     1.1.1. History. Effective January 1, 2006, MONEYGRAM INTERNATIONAL, INC. (hereinafter
sometimes referred to as “MGI”) and certain affiliated corporations (together with MGI hereinafter
sometimes collectively referred to as the “Employers” and separately as the “Employer”) established
a nonqualified, unfunded deferred compensation plan known as the “MONEYGRAM INTERNATIONAL, INC.
SUPPLEMENTAL 401(k) PLAN,” which permits eligible employees to defer Compensation and receive
matching credits with respect to such deferrals. Effective in 2005, MGI also established a
nonqualified, unfunded deferred compensation plan known as the “MONEYGRAM INTERNATIONAL, INC.
SUPPLEMENTAL PROFIT SHARING PLAN,” which provided eligible employees with supplemental profit
sharing credits and was merged with and continues to be operated under the terms of this Plan.
Now, effective as of the date adopted by MGI’s Board of Directors, this Plan is hereby amended and
restated to permit eligible employees to elect to defer certain incentive pay awards under the
Plan. The Plan, as amended and restated, shall be known as the “MONEYGRAM INTERNATIONAL, INC.
DEFERRED COMPENSATION PLAN”.

     1.1.2. Purpose. MGI has established this nonqualified, unfunded, deferred compensation plan
which contains three components:

	 	(a)	 	the first component allows a select group of management and highly
compensated employees whose elective Pre-Tax Deferrals for a Plan Year under the
MoneyGram International, Inc. 401(k) Plan are expected to be limited under section
402(g) of the Code to defer the receipt of Compensation which would otherwise be paid
to those employees, and to receive matching credits with respect to such deferrals;
	 
	 	(b)	 	the second component allows a select group of management and highly
compensated employees whose Profit Sharing Contribution for a Plan Year under the
MoneyGram International, Inc. 401(k) Plan was reduced by sections 401(a)(17) and 415
of the Code or any other legal limitations to receive a supplemental profit sharing
credit under this Plan; and
	 
	 	(c)	 	the third component allows a select group of management and highly
compensated employees to defer receipt of Incentive Pay which would

 

 

otherwise be paid to those employees, and receive matching credits with
respect to such deferrals.

1.2. Definitions. When the following terms are used herein with initial capital letters, they
shall have the following meanings:

     1.2.1. Account — the separate bookkeeping account representing the separate unfunded and
unsecured general obligation of the Employers established with respect to each person who is a
Participant in this Plan in accordance with Section 2 and to which is credited the amounts
specified in Section 3 and Section 4, which will vest in accordance with Section 5 and from which
are subtracted payments made pursuant to Section 6 and Section 7.

     1.2.2. Affiliate — a business entity which is affiliated in ownership with MGI that is
recognized as an Affiliate by MGI for the purposes of this Plan.

     1.2.3. Annual Deferral Amount — an entry on the records of the Employers equal to the
following amounts deferred in any one Plan Year equal to:

	 	(a)	 	with respect to a Participant in the Compensation deferral component of the
Plan, that portion of a Participant’s Compensation that a Participant elects to defer
for the Plan Year, along with any matching credits made thereon; and
	 
	 	(b)	 	with respect to a Participant in the Incentive Pay deferral component of
the Plan, that portion of a Participant’s Incentive Pay that a Participant elects to
defer for a performance period and which is credited to the Plan during a Plan Year,
along with any matching credits made thereon.

     The Annual Deferral Amount shall be a bookkeeping entry only and shall be utilized solely as a
device for the measurement and determination of the amounts credited to a Participant’s Account.

     1.2.4. Beneficiary — a person designated in accordance with Section 7.4 to receive all or a
part of the Participant’s Account in the event of the Participant’s death prior to full
distribution thereof. A person so designated shall not be considered a Beneficiary until the death
of the Participant.

     1.2.5. Chief Executive Officer — the chief executive officer of MGI.

     1.2.6. Code — the Internal Revenue Code of 1986, as amended (including, when the context
requires, all regulations, interpretations and rulings issued thereunder).

     1.2.7. Common Stock — common stock of MGI.

     1.2.8. Compensation — Compensation as defined under the MoneyGram International, Inc. 401(k)
Plan; provided, however, that Compensation for purposes of this Plan shall be determined without
regard to limitations imposed under section 401(a)(17) of the Code.

-2-

 

Performance-based pay (as that term is defined under section 409A of the Code and regulations thereunder) shall be excluded from
Compensation.

     1.2.9. Disability — a medically determinable physical or mental impairment which: (i)
renders the individual incapable of performing any substantial gainful employment, (ii) can be
expected to result in death or can be expected to last for a continuous period of not less than
twelve (12) months, and (iii) is evidenced by a certification to this effect by a doctor of
medicine approved by MGI. In lieu of such a certification, a Participant shall be considered
disabled if the Participant is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous
period of not less than twelve (12) months, receiving income replacement benefits for a period of
not less than three (3) months under an accident and health plan covering employees of the
Participant’s Employer.

     1.2.10. Effective Date — the date this restated Plan document is adopted by the Board of
Directors of MGI.

     1.2.11. Employers — MGI and each business entity affiliated with MGI that employs persons who
are designated for participation in this Plan (collectively the “Employers” and separately the
“Employer”).

     1.2.12. ERISA — the Employee Retirement Income Security Act of 1974, as amended (including,
when the context requires, all regulations, interpretations and rulings issued thereunder).

     1.2.13. Event of Maturity — any of the occurrences described in Section 6 by reason of which
a Participant or Beneficiary may become entitled to a distribution from this Plan.

     1.2.14. Human Resources Committee — the Human Resources Committee of the Board of Directors
of MGI (or any successor committee).

     1.2.15. Incentive Pay — any performance-based cash compensation, other than Compensation,
earned by a Participant under any Employer’s annual or long-term incentive plans for services
rendered during a performance period of at least 12 months, as specified and approved by the Human
Resources Committee in its sole discretion (in accordance with Section 409A of the Code and related
guidance).

     1.2.16. MGI — MoneyGram International, Inc. and any successor thereto.

     1.2.17. Participant — an employee of an Employer who is designated as eligible to participate
in this Plan and becomes a Participant in this Plan in accordance with the provisions of Section 2.
An employee who has become a Participant shall be considered to continue as a Participant in this
Plan until the date of the Participant’s death or, if earlier, the date when the Participant is no
longer employed by an Employer or an Affiliate and upon which the Participant no longer has any
Account under this Plan (that is, the Participant has received a distribution of all of the
Participant’s Account).

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     1.2.18. Plan — the nonqualified, income deferral program maintained by MGI established for
the benefit of Participants eligible to participate therein, as set forth in the Plan Statement.
(As used herein, “Plan” does not refer to the documents pursuant to which this Plan is maintained.
That document is referred to herein as the “Plan Statement”). The Plan shall consist of three
parts: the “Compensation deferral” component consisting of elective deferrals of Compensation and
matching credits with respect to such deferrals, if applicable; (ii) the “supplemental profit
sharing” component consisting of supplemental profit sharing credits made with respect to one or
more Participants; and (iii) the “Incentive Pay deferral” component consisting of deferrals of
Incentive Pay and matching credits with respect to such deferrals, if applicable. All parts
together constitute the Plan and shall be referred to as the “MONEYGRAM INTERNATIONAL, INC.
DEFERRED COMPENSATION PLAN.”

     1.2.19. Plan Statement — this document entitled “MONEYGRAM INTERNATIONAL, INC. DEFERRED
COMPENSATION PLAN” as adopted by the Board of Directors of MGI (based upon recommendation by the
Human Resources Committee), as the same may be amended from time to time thereafter.

     1.2.20. Plan Year — the twelve (12) consecutive month period ending on any December 31.

     1.2.21. Scheduled Distribution — the scheduled, in-service distribution set forth in Section
7.1.

     1.2.22. Termination of Employment — a complete severance of an employee’s employment
relationship with the Employers and all Affiliates, if any, for any reason. A transfer from
employment with an Employer to employment with an Affiliate of an Employer shall not constitute a
Termination of Employment. A transfer from full-time employment to employment on a part-time basis
shall not constitute a Termination of Employment. If an Employer who is an Affiliate ceases to be
an Affiliate because of a sale of substantially all the stock or assets of that Employer, then
Participants who are employed by that Employer shall be deemed to have thereby had a Termination of
Employment for the purpose of commencing distributions from this Plan. Notwithstanding the
foregoing, a Termination of Employment shall not occur unless such termination also qualifies as a
“separation from service”, as defined under section 409A of the Code and related guidance
thereunder.

     1.2.23. Unforeseeable Emergency — a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as
defined in section 152(a) of the Code) of the Participant, loss of the Participant’s property due
to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant.

     1.2.24. Valuation Date — the last day of each calendar quarter of the Plan Year, and such
other dates as may be specified by MGI.

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SECTION 2

PARTICIPATION

2.1. Eligibility to Participate. In all cases, an employee selected for participation under
this Section 2 shall be a member of a select group of management or highly compensated employees
(as that expression is used in ERISA). Such employee shall as a condition of participation in this
Plan complete such forms as MGI may require for the effective administration of this Plan.

     2.1.1. Compensation Deferrals. Any employee of an Employer selected for participation by the
Chief Executive Officer shall become a Participant in the Compensation deferral component of the
Plan as of any date selected by the Chief Executive Officer. The Chief Executive Officer shall not
select any employee for participation unless the Chief Executive Officer determines that such
employee’s Pre-Tax Deferrals for a Plan Year under the MoneyGram International, Inc. 401(k) Plan
are expected to be limited by section 402(g) of the Code.

     2.1.2. Supplemental Profit Sharing. Any employee of an Employer selected for participation by
the Chief Executive Officer shall become a Participant in the supplemental profit sharing component
of the Plan as of any date selected by the Chief Executive Officer. The Chief Executive Officer
shall not select any employee for participation unless the Chief Executive Officer determines that
such employee’s Profit Sharing Contribution for a Plan Year under the MoneyGram International, Inc.
401(k) Plan is reduced by sections 401(a)(17) and 415 of the Code or any other legal limitations.

     2.1.3. Incentive Pay Deferrals. Any employee of an Employer selected for participation by the
Chief Executive Officer shall become a Participant in the Incentive Pay deferral component of the
Plan as of any date selected by the Chief Executive Officer.

2.2. Enrollment for Elective Deferrals.

     2.2.1. Compensation Deferrals.

	 	(a)	 	Election to Defer Compensation.

	 	(i)	 	Initial Election. In the case of an employee
who first becomes eligible to make elective deferrals under the Plan,
no later than thirty (30) days after the employee is notified of
eligibility to make a deferral election, such employee shall complete
such forms as necessary to defer a portion of the employee’s
Compensation for that Plan Year. The agreement to defer a portion of
the employee’s Compensation may only be made with respect to
Compensation earned for services performed for such Plan Year
subsequent to the deferral election, except to the extent permissible
under Section 409A of the Code. (Alternatively, such election may be
made as late as the last day of the Plan Year in which the employee
first becomes eligible

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	 	 	 	if the agreement to defer Compensation is made
solely with respect to Compensation to be earned for services performed
in the succeeding Plan Year.)

	 	(ii)	 	Subsequent Elections. Each active
Participant’s deferral agreement shall expire upon the last day of the
Plan Year to which it relates. Each eligible Participant who wishes to
defer Compensation for a subsequent Plan Year must make an election to
defer Compensation prior to the first day of that subsequent Plan Year.
	 
	 	(iii)	 	Irrevocability. A deferral agreement accepted
by the Employer shall become irrevocable when the Plan Year with
respect to which it is made has commenced; provided, however, that if
the Participant receives a distribution on account of a Disability or
Unforeseeable Emergency during such Plan Year, the Participant’s
agreement shall be cancelled, and further deferrals shall not be made.

	 	(b)	 	Maximum/Minimum Amounts. The terms of any such agreement shall provide
that the employee elects a deferral of Compensation equal to any percentage of
Compensation per payroll period, which shall not exceed fifty percent (50%), or be
less than one percent (1%) of such Compensation.
	 
	 	(c)	 	Withholding. In the event an employee elects to defer an amount of his or
her Compensation that would not allow for the full payment of all FICA, federal,
state and/or local income tax liabilities, the actual amount deferred shall be the
maximum amount allowable after all applicable taxes.

     2.2.2. Incentive Pay Deferrals.

	 	(a)	 	Election to Defer Incentive Pay.

	 	(i)	 	Initial Election. When an employee first
becomes eligible to make elective deferrals of Incentive Pay, such
employee shall complete such forms as necessary to defer a portion of
the employee’s Incentive Pay. The agreement to defer a portion of the
employee’s Incentive Pay shall be made no later than six (6) months
before the end of the performance period applicable to such Incentive
Pay. (Alternatively, if an employee first becomes eligible to
participate in the Plan less than six (6) months before the end of the
performance period, such initial election may be made within thirty
(30) days but only with respect to Incentive Pay earned for services
performed subsequent to the deferral election, except to the extent
permissible under Section 409A of the Code.)
	 
	 	(ii)	 	Subsequent Elections. Each active
Participant’s deferral agreement shall expire upon the last day of the
performance period to which it

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relates. Each eligible Participant who
wishes to defer Incentive Pay for a subsequent performance period must
make an election to defer Incentive Pay no later than six (6) months
prior to the end of that subsequent performance period.

	 	(iii)	 	Irrevocability. A deferral agreement accepted
by the Employer shall become irrevocable as of the date that is six (6)
months before the end of the performance period applicable to such
Incentive Pay; provided, however, that if the Participant receives a
distribution on account of a Disability or Unforeseeable Emergency
occurs during such performance period, the Participant’s agreement
shall be cancelled, and further deferrals shall not be made.

	 	(b)	 	Maximum/Minimum Amounts. The terms of any such agreement shall provide
that the employee elects a deferral of Incentive Pay equal to any percentage of
Incentive Pay for the applicable performance period, not to exceed one hundred
percent (100%), or be less than one percent (1%) of such Incentive Pay.
	 
	 	(c)	 	Withholding. In the event an employee elects to defer an amount of his or
her Incentive Pay that would not allow for the full payment of all FICA, federal,
state and/or local income tax liabilities, the actual amount deferred shall be the
maximum amount allowable after all applicable taxes.

     2.2.3. Election As to Time and Form of Payment. In connection with the Participant’s initial
enrollment in the Plan, the Participant shall elect the form in which his or her Account shall be
paid upon such Participant’s Termination of Employment (to the extent not previously distributed as
a Scheduled Distribution). The Participant may elect to receive his or her Account at Termination
of Employment in the form of a lump sum or pursuant to an annual installment method of up to five
(5) years (in accordance with Section 7). In addition, in connection with each election to defer
an Annual Deferral Amount, the Participant may elect whether to receive all or a portion of his or
her Annual Deferral Amount as a Scheduled Distribution. An election as to the time and form of
payment, once accepted by the Employer and made effective, may not be changed.

SECTION 3

CREDITS
TO ACCOUNTS

3.1. Elective Deferral Credits. Elective deferrals of Compensation shall be credited to the
Participant’s Account throughout the Plan Year as the Participant otherwise would have been paid
the deferred portion of the Participant’s Compensation. Elective deferrals of Incentive Pay shall
be credited to the Participant’s Account as of the date on which (or as soon as administratively
practicable thereafter) such amounts would otherwise have been paid under the applicable incentive
plan of the Employer. Such credits shall be recorded in cash.

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3.2. Matching Credits.

     3.2.1. Matching Credits on Compensation Deferrals. With respect to one or more Participants
in the Compensation deferral component of the Plan, MGI may make a matching credit to a
Participant’s Account for a Plan Year. MGI shall have sole discretion to determine the matching
credit which shall be credited, if any, and shall not have any obligation for uniformity of
treatment among Participants or of any other person; provided, however, that such matching credit
shall not exceed one hundred percent (100%) of the first four percent (4%) of Compensation deferred
by the Participant for the Plan Year and credited under Section 3.1 above. MGI’s decision to make
a matching credit in any year shall not require approval of similar awards at all to any
Participant or other person at any future date. Matching credits shall be recorded in cash as of
the time or times (or as soon as administratively practicable thereafter) when the credits are
awarded.

     3.2.2. Matching Credits on Incentive Pay Deferrals. With respect to one or more Participants
in the Incentive Pay deferral component of the Plan, MGI may make a matching credit to a
Participant’s Account for a Plan Year. MGI shall have sole discretion to determine the amount
which shall be credited, if any, and shall not have any obligation for uniformity of treatment
among Participants or of any other person. MGI’s decision to make a matching credit in any year
shall not require approval of similar awards at all to any Participant or other person at any
future date. Matching credits shall be recorded in cash as of the time or times (or as soon as
administratively practicable thereafter) when the credits are awarded. The match credited with
respect to an Incentive Pay deferral shall not exceed the lesser of:

	 	(a)	 	one hundred percent (100%) of the first four (4%) of Incentive Pay deferred
by the Participant for the performance period and credited under Section 3.1; or
	 
	 	(b)	 	four percent (4%) of the Participant’s Compensation for the Plan Year
immediately preceding the Plan Year in which the Incentive Pay deferral is credited
to the Plan, less the total match credited with respect to Compensation deferred by
the Participant for such preceding Plan Year under Section 3.2.1.

3.3. Supplemental Profit Sharing Credits. With respect to one or more Participants in the
supplemental profit sharing component of the Plan, MGI may make a profit sharing credit to a
Participant’s Account for a Plan Year to the extent that it is determined that a Participant’s
Profit Sharing Contribution under the MoneyGram International, Inc. 401(k) Plan was reduced by
sections 401(a)(17) or 415 of the Code or any other legal limitations. MGI shall have sole
discretion to determine the amount of the reduction which shall be credited to this Plan, if any,
and shall not have any obligation for uniformity of treatment among Participants or of any other
person. In no event, however, shall the amount credited under this Plan with respect to a Plan
Year exceed the amount by which the Participant’s Profit Sharing Contribution under the MoneyGram
International, Inc. 401(k) Plan was reduced by sections 401(a)(17) and 415 of the Code or any other
legal limitations for such Plan Year. MGI’s decision to make a supplemental profit sharing credit
in any year shall not require approval of similar awards at all to any Participant or other person
at any future date. Supplemental

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profit sharing credits shall be recorded in cash as of the time
or times (or as soon as administratively practicable thereafter) when the credits are awarded.

SECTION 4

ADJUSTMENT
OF ACCOUNTS

4.1. Establishment of Accounts. There shall be established for each Participant unfunded,
bookkeeping Accounts which shall be adjusted each Valuation Date.

4.2. Adjustments of Accounts. From time to time but not less frequently than each Valuation Date,
MGI shall cause the value of each Account or portion of an Account to be increased (or decreased)
from time to time for distributions, credits (including any earnings, gains or losses thereon) and
expenses, if any, charged to the Account.

4.3. Investment Adjustments. The Human Resources Committee shall designate from time to time one
or more investment options in which Accounts may be deemed invested. Such deemed investment
options may include any investment which the Human Resources Committee deems appropriate,
including, but not limited to, fixed interest credits, notional mutual fund(s) or an investment index. The Human Resources
Committee shall have the sole discretion to determine the number of deemed investment options to be
designated hereunder and the nature of the options and may change or eliminate the investment
options from time to time. The Human Resources Committee shall adopt rules specifying the deemed
investment options, the circumstances under which a particular option may be elected (or shall be
automatically utilized), the minimum or maximum percentages which may be allocated to the
investment option, the procedures (if any) for Participants making or changing elections, the
extent (if any) to which beneficiaries of deceased Participants may make investment elections and
the effect of a Participant’s or beneficiary’s failure to make an effective investment election
with respect to all or any portion of an Account.

SECTION 5

VESTING
OF ACCOUNTS

The Account of each Participant shall be fully (100%) vested and nonforfeitable at all times.
Notwithstanding the foregoing, if MGI determines in its discretion that a Participant has
improperly received a credit under this Plan for any reason (including, but not limited to, an
erroneous calculation or other mistake of fact, or on account of a restatement of earnings), the
Account shall be reduced by the amount of the improper credit.

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SECTION 6

MATURITY

The vested portion of a Participant’s Account shall mature and shall become distributable in
accordance with Section 7 upon the earliest occurrence of any of the following events:

	 	(a)	 	the Participant incurs a Termination of Employment;
	 
	 	(b)	 	the Participant dies; and
	 
	 	(c)	 	the Participant incurs a Disability.

SECTION 7

DISTRIBUTIONS

7.1. Scheduled Distributions.

     7.1.1. Scheduled Distributions of Compensation Deferrals and Matching Credits. In connection
with each election to defer Compensation, a Participant may irrevocably elect to receive a Scheduled Distribution. The Scheduled Distribution shall be a
lump sum payment in an amount that is equal to the portion of the Annual Deferral Amount (i.e., the
Compensation deferral plus any matching credits thereon for such Plan Year, if any) the Participant
elected to have distributed as a Scheduled Distribution, plus amounts credited or debited in the
manner provided in Section 4 on that amount, calculated as of the Valuation Date immediately
preceding the date on which the Scheduled Distribution becomes payable. Subject to the other terms
and conditions of this Plan, each Scheduled Distribution elected shall be paid out during a sixty
(60)-day period commencing immediately after the first day of any Plan Year designated by the
Participant. The Plan Year designated by the Participant must be at least three (3) Plan Years
after the end of the Plan Year to which the Participant’s deferral election relates. By way of
example, if a Scheduled Distribution is elected for Compensation deferred for the Plan Year
commencing January 1, 2006, the earliest Scheduled Distribution could become payable during a sixty
(60)-day period commencing January 1, 2010.

     7.1.2. Scheduled Distributions of Incentive Pay Deferrals and Matching Credits. In connection
with each election to defer Incentive Pay, a Participant may irrevocably elect to receive a
Scheduled Distribution. The Scheduled Distribution shall be a lump sum payment in an amount that
is equal to the portion of the Annual Deferral Amount (i.e., the Incentive Pay deferral credited
during a Plan Year, plus any matching credits thereon, if any) the Participant elected to have
distributed as a Scheduled Distribution, plus amounts credited or debited in the manner provided in
Section 4 on that amount, calculated as of the Valuation Date immediately preceding the date on
which the Scheduled Distribution becomes payable. Subject to the other terms and conditions of
this Plan, each Scheduled Distribution elected shall be paid out during a sixty (60)-day period
commencing immediately after the first day of any Plan Year designated by the Participant. The
Plan Year designated by the Participant must be at least three (3) Plan Years after the end of the
Plan Year during which the Incentive Pay deferral is actually credited to the Plan. By way of
example, if a Scheduled Distribution is elected for Incentive Pay deferrals that are credited in
the Plan Year

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commencing January 1, 2006, the earliest Scheduled Distribution could become payable
during a sixty (60)-day period commencing January 1, 2010.

     7.1.3. Event of Maturity Takes Precedence Over Scheduled Distributions. If an Event of
Maturity occurs that triggers payment under Section 7.3, any Scheduled Distribution elections
outstanding but unpaid shall not be paid in accordance with this Section 7.1, but shall be paid in
accordance with Section 7.3. Notwithstanding the foregoing, the Human Resources Committee shall
interpret this Section 7.1.3 in a manner that is consistent with Code Section 409A and other
applicable tax law, including but not limited to guidance issued after the effective date of this
Plan.

7.2. Hardship Withdrawals. A Participant who has not incurred an Event of Maturity but who has
incurred an Unforeseeable Emergency may request a withdrawal from such Participant’s Account. In
the event that MGI, upon written petition of the Participant, determines in his or her sole
discretion that the Participant has suffered an Unforeseeable Emergency, the Employer shall
distribute to the Participant as soon as reasonably
practicable following such determination, an amount, not in excess of the value (based on the
immediately preceding Valuation Date) of the Participant’s Account, necessary to satisfy the
emergency. Immediately upon the distribution, such Participant’s deferral agreement shall be
cancelled in accordance with Section 2.2.

7.3. Payment Upon Event of Maturity.

     7.3.1. Time of Payment. Upon the occurrence of an Event of Maturity effective as to a
Participant, payment of such Participant’s entire Account balance (reduced by the amount of any
applicable payroll, withholding and other taxes) shall commence in the form designated under
Section 7.3.2 below. Distribution shall not be made to any Beneficiary until MGI has determined
that the Beneficiary is entitled to payment. Notwithstanding the foregoing, where payment under
this Section 7 is made to any “key employee” (as defined under section 409A of the Code) on account
of Termination of Employment, such payment shall commence no earlier than six (6) months following
a Termination of Employment (or upon the death of the employee, if earlier) if required to comply
with section 409A of the Code.

     7.3.2. Form of Payment. If a Participant’s Account becomes distributable by reason of one of
the Events of Maturity listed in Section 6, distribution of the Participant’s entire Account
balance shall be made in a single lump sum; provided, however, that if the Event of Maturity is the
Participant’s Termination of Employment, distribution shall be made: (i) in a single lump sum, or
(ii) in annual installments over a period not to exceed five (5) years, in accordance with such
Participant’s initial enrollment election under Section 2.2 (on forms furnished and filed with
MGI). In the event no election is made by the Participant, payment shall be made in a single lump
sum. For purposes of this Section 7.3.2, the following rules shall apply:

	 	(a)	 	Lump sum distributions shall be valued as soon as administratively
practicable following the Valuation Date coincident with or next following the
Participant’s Event of Maturity (or in the case of a key employee whose Event of
Maturity is a Termination of Employment, the date which is six (6)

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	 	 	 	months following such Event of Maturity). Actual distribution shall be made as soon as
administratively practicable after such determination.
	 
	 	(b)	 	The amount of each annual installment shall be determined as of the
Valuation Date coincident with or next following each December 31, by dividing the
amount of the Account as of such Valuation Date by the number of remaining
installment payments to be made. Such installments shall be paid as soon as
administratively practicable after such determination. In the case of a key
employee, installments shall be determined as of the Valuation Date coincident with
or next following the December 31 which is at least six (6) months following such
Participant’s Termination of Employment.
	 
	 	(c)	 	If the Participant dies following a Termination of Employment but before
installments are completed, all remaining installments shall be made to the
beneficiary or beneficiaries designated under Section 7.4 in a single lump sum.

7.4. Designation of Beneficiaries. A deceased Participant’s entire Account balance shall be
payable to the beneficiary or beneficiaries designated by the Participant on forms furnished and
filed with MGI. In the absence of a designation or if such designation fails, such benefit shall
be payable in accordance with the rules for automatic beneficiaries under the MoneyGram
International, Inc. 401(k) Plan.

7.5. No Spousal Rights. No spouse or surviving spouse of a Participant and no person designated to
be a Beneficiary shall have any rights or interest in the benefits credited under this Plan
including, but not limited to, the right to be the sole Beneficiary or to consent to the
designation of Beneficiaries (or the changing of designated Beneficiaries) by the Participant.

7.6. Death Prior to Full Distribution. If, at the death of the Participant, any payment to the
Participant was due or otherwise pending but not actually paid, the amount of such payment shall be
included in the Account which is payable to the Beneficiary (and shall not be paid to the
Participant’s estate).

7.7. Distributions in Cash. Distributions from this Plan shall be made in cash.

SECTION 8

FUNDING
OF PLAN

8.1. Unfunded Obligation. The obligation of the Employers to make payments under this Plan
constitutes only the unsecured (but legally enforceable) promise of the Employers to make such
payments. No Participant shall have any lien, prior claim or other security interest in any
property of the Employers. The Employers shall have no obligation to establish or maintain any
fund, trust or account (other than a bookkeeping account or reserve) for the purpose of funding or
paying the benefits promised under this Plan. If such a fund, trust or account is established, the
property therein

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shall remain the sole and exclusive property of the Employer that established it.
The Employers shall be obligated to pay the benefits of this Plan out of their general assets.

8.2. Corporate Obligation. Neither MGI, the Board of Directors of MGI, the Chief Executive
Officer, the Human Resources Committee, the Employers nor any of their directors, officers, agents
or employees in any way secure or guarantee the payment of any benefit or amount which may become
due and payable hereunder to or with respect to any Participant. Each person entitled or claiming
to be entitled at any time to any benefit hereunder shall look solely to the assets of the
Employers for such payments as unsecured general
creditors. If, or to the extent that, Accounts have been paid to or with respect to a present or
former Participant and that payment purports to be the payment of a benefit hereunder, such former
Participant or other person or persons, as the case may be, shall have no further right or interest
in the other assets of the Employers in connection with this Plan. No person shall be under any
liability or responsibility for failure to effect any of the objectives or purposes of this Plan by
reason of the insolvency of the Employers.

SECTION 9

AMENDMENT
AND TERMINATION

9.1. Amendment and Termination. The Board of Directors of MGI (based upon recommendation by
the Human Resources Committee) may unilaterally amend the Plan Statement prospectively,
retroactively or both, at any time and for any reason deemed sufficient by it without notice to any
person affected by this Plan and may likewise terminate this Plan both with regard to persons
expecting to receive benefits in the future; provided, however, that the Participant’s vested
accrued benefit as of the date of such amendment or termination, if any, shall not be, without the
written consent of the Participant, diminished or delayed by such amendment or termination. If
there is a termination of the Plan with respect to all Participants, MGI shall have the right, in
its sole discretion, and notwithstanding any elections made by the Participant, to amend the Plan
to immediately pay all benefits in a lump sum following such Plan termination, to the extent
permissible under Section 409A of the Code and related Treasury regulations and guidance.

9.2. No Oral Amendments. No modification of the terms of the Plan Statement or termination of this
Plan shall be effective unless it is in writing and approved by the Board of Directors of MGI by a
person authorized to execute such writing. No oral representation concerning the interpretation or
effect of the Plan Statement shall be effective to amend the Plan Statement.

9.3. Plan Binding on Successors. MGI 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 MGI), by agreement, to expressly assume and agree to perform this Plan in the same manner
and to the same extent that MGI would be required to perform it if no such succession had taken
place.

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SECTION 10

DETERMINATIONS
— RULES AND REGULATIONS

10.1. Determinations. MGI shall make such determinations as may be required from time to time
in the administration of this Plan. MGI shall have the discretionary authority and responsibility to interpret and construe the Plan Statement
and to determine all factual and legal questions under this Plan, including but not limited to the
entitlement of Participants and Beneficiaries, and the amounts of their respective interests. Each
interested party may act and rely upon all information reported to them hereunder and need not
inquire into the accuracy thereof, nor be charged with any notice to the contrary.

10.2. Method of Executing Instruments. Information to be supplied or written notices to be made or
consents to be given by MGI or any other person pursuant to any provision of the Plan Statement may
be signed in the name of MGI by any officer or other person who has been authorized to make such
certification or to give such notices or consents.

10.3. Claims Procedure. The claim and review procedures set forth in this Section shall be the
mandatory claim and review procedures for the resolution of disputes and disposition of claims
filed under the Plan. An application for a distribution shall be considered as a claim for the
purposes of this Section.

     10.3.1. Initial Claim. An individual may, subject to any applicable deadline, file with MGI a
written claim for benefits under the Plan in a form and manner prescribed by MGI.

	 	(a)	 	If the claim is denied in whole or in part, MGI shall notify the claimant
of the adverse benefit determination within ninety (90) days after receipt of the
claim.
	 
	 	(b)	 	The ninety (90) day period for making the claim determination may be
extended for ninety (90) days if MGI determines that special circumstances require an
extension of time for determination of the claim, provided that MGI notifies the
claimant, prior to the expiration of the initial ninety (90) day period, of the
special circumstances requiring an extension and the date by which a claim
determination is expected to be made.

     10.3.2. Notice of Initial Adverse Determination. A notice of an adverse determination shall
set forth in a manner calculated to be understood by the claimant:

	 	(a)	 	the specific reasons for the adverse determination;
	 
	 	(b)	 	references to the specific provisions of the Plan Statement (or other
applicable Plan document) on which the adverse determination is based;

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	 	(c)	 	a description of any additional material or information necessary to
perfect the claim and an explanation of why such material or information is
necessary; and
	 
	 	(d)	 	a description of the claim and review procedures, including the time limits
applicable to such procedure, and a statement of the claimant’s right to bring a
civil action under ERISA section 502(a) following an adverse determination on review.

     10.3.3. Request for Review. Within sixty (60) days after receipt of an initial adverse
benefit determination notice, the claimant may file with MGI a written request for a review of the
adverse determination and may, in connection therewith submit written comments, documents, records
and other information relating to the claim benefits. Any request for review of the initial
adverse determination not filed within sixty (60) days after receipt of the initial adverse
determination notice shall be untimely.

     10.3.4. Claim on Review. If the claim, upon review, is denied in whole or in part, MGI shall
notify the claimant of the adverse benefit determination within sixty (60) days after receipt of
such a request for review.

	 	(a)	 	The sixty (60) day period for deciding the claim on review may be extended
for sixty (60) days if MGI determines that special circumstances require an extension
of time for determination of the claim, provided that MGI notifies the claimant,
prior to the expiration of the initial sixty (60) day period, of the special
circumstances requiring an extension and the date by which a claim determination is
expected to be made.
	 
	 	(b)	 	In the event that the time period is extended due to a claimant’s failure
to submit information necessary to decide a claim on review, the claimant shall have
sixty (60) days within which to provide the necessary information and the period for
making the claim determination on review shall be tolled from the date on which the
notification of the extension is sent to the claimant until the date on which the
claimant responds to the request for additional information or, if earlier, the
expiration of sixty (60) days.
	 
	 	(c)	 	MGI’s review of a denied claim shall take into account all comments,
documents, records, and other information submitted by the claimant relating to the
claim, without regard to whether such information was submitted or considered in the
initial benefit determination.

     10.3.5. Notice of Adverse Determination for Claim on Review. A notice of an adverse
determination for a claim on review shall set forth in a manner calculated to be understood by the
claimant:

	 	(a)	 	the specific reasons for the denial;

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	 	(b)	 	references to the specific provisions of the Plan Statement (or other
applicable Plan document) on which the adverse determination is based;
	 
	 	(c)	 	a statement that the claimant is entitled to receive, upon request and free
of charge, reasonable access to, and copies of, all documents, records, and other
information relevant to the claimant’s claim for benefits;
	 
	 	(d)	 	a statement describing any voluntary appeal procedures offered by the Plan
and the claimant’s right to obtain information about such procedures; and
	 
	 	(e)	 	a statement of the claimant’s right to bring an action under ERISA section
502(a).

10.4. Rules and Regulations.

     10.4.1. Adoption of Rules. Any rule not in conflict or at variance with the provisions hereof
may be adopted by MGI.

     10.4.2. Specific Rules.

	 	(a)	 	Any decision or determination to be made by MGI shall be made by the Chief
Executive Officer unless delegated as provided for in the Plan, in which case
references in this Section 10 to the Chief Executive Officer shall be treated as
references to the Chief Executive Officer’s delegate. No inquiry or question shall
be deemed to be a claim or a request for a review of a denied claim unless made in
accordance with the established claim procedures. MGI may require that any claim for
benefits and any request for a review of a denied claim be filed on forms to be
furnished by MGI upon request.
	 
	 	(b)	 	All decisions on claims and on requests for a review of denied claims shall
be made by MGI.
	 
	 	(c)	 	Claimants may be represented by a lawyer or other representative at their
own expense, but MGI reserves the right to require the claimant to furnish written
authorization and establish reasonable procedures for determining whether an
individual has been authorized to act on behalf of a claimant. A claimant’s
representative shall be entitled to copies of all notices given to the claimant.
	 
	 	(d)	 	The decision on a claim and on a request for a review of a denied claim may
be provided to the claimant in electronic form instead of in writing at the
discretion of MGI.
	 
	 	(e)	 	In connection with the review of a denied claim, the claimant or the
claimant’s representative shall be provided, upon request and free of charge,

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	 	 	 	reasonable access to, and copies of, all documents, records, and other information
relevant to the claimant’s claim for benefits.
	 
	 	(f)	 	The time period within which a benefit determination will be made shall
begin to run at the time a claim or request for review is filed in accordance with
the claims procedures, without regard to whether all the information necessary to
make a benefit determination accompanies the filing.
	 
	 	(g)	 	The claims and review procedures shall be administered with appropriate
safeguards so that benefit claim determinations are made in accordance with governing
plan documents and, where appropriate, the plan provisions have been applied
consistently with respect to similarly situated claimants.
	 
	 	(h)	 	For the purpose of this Section, a document, record, or other information
shall be considered “relevant” if such document, record, or other information: (i)
was relied upon in making the benefit determination; (ii) was submitted, considered,
or generated in the course of making the benefit determination, without regard to
whether such document, record, or other information was relied upon in making the
benefit determination; (iii) demonstrates compliance with the administration
processes and safeguards designed to ensure that the benefit claim determination was
made in accordance with governing plan documents and that, where appropriate, the
Plan provisions have been applied consistently with respect to similarly situated
claimants; and (iv) constitutes a statement of policy or guidance with respect to the
Plan concerning the denied treatment option or benefit for the claimant’s diagnosis,
without regard to whether such advice or statement was relied upon in making the
benefit determination.
	 
	 	(i)	 	MGI may, in its discretion, rely on any applicable statute of limitation or
deadline as a basis for denial of any claim.

     10.4.3. Limitations and Exhaustion.

	 	(a)	 	No claim shall be considered under these administrative procedures unless
it is filed with MGI within two (2) years after the Participant knew (or reasonably
should have known) of the general nature of the dispute giving rise to the claim.
Every untimely claim shall be denied by MGI without regard to the merits of the
claim. No suit may be brought by or on behalf of any Participant or Beneficiary on
any matter pertaining to this Plan unless the action is commenced in the proper forum
before the earlier of:

	 	(i)	 	three (3) years after the Participant knew (or
reasonably should have known) of the general nature of the dispute
giving rise to the action, or

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	 	(ii)	 	sixty (60) days after the Participant has
exhausted these administrative procedures.

	 	(b)	 	These administrative procedures are the exclusive means for resolving any
dispute arising under this Plan:

	 	(i)	 	no Participant or Beneficiary shall be
permitted to litigate any such matter unless a timely claim has been
filed under these administrative procedures and these administrative
procedures have been exhausted; and
	 
	 	(ii)	 	determinations under these administrative
procedures (including determinations as to whether the claim was timely
filed) shall be afforded the maximum deference permitted by law.

	 	(c)	 	For the purpose of applying the deadlines to file a claim or a legal
action, knowledge of all facts that a Participant knew or reasonably should have
known shall be imputed to every claimant who is or claims to be a Beneficiary of the
Participant or otherwise claims to derive an entitlement by reference to the
Participant for the purpose of applying the previously specified periods.

SECTION 11

PLAN
ADMINISTRATION

11.1. Authority.

     11.1.1. MGI. Functions generally assigned to MGI shall be discharged by its Chief Executive
Officer, except where delegated and allocated as provided herein.

     11.1.2. Chief Executive Officer. Except as hereinafter provided, the Chief Executive Officer
of MGI may delegate or redelegate and allocate and reallocate to one or more persons or to a
committee of persons jointly or severally, and whether or not such persons are directors, officers
or employees, such functions assigned to the Chief Executive Officer or to MGI generally hereunder,
as the Chief Executive Officer may from time to time deem advisable.

     11.1.3. Board of Directors. Notwithstanding the foregoing, the Board of Directors of MGI
shall have the exclusive authority (which may not be delegated except to a committee of the Board)
to amend the Plan Statement and to terminate this Plan, based upon recommendation by the Human
Resources Committee. In addition, where necessary to comply with applicable corporate or
securities law, or applicable rules of the New York Stock Exchange, the Human Resources Committee
shall have the exclusive authority to make determinations with respect to benefits under this Plan
(e.g., with respect to executive officers).

-18-

 

11.2. Conflict of Interest. If any individual to whom authority has been delegated or redelegated
hereunder shall also be a Participant in this Plan, such Participant shall have no authority with
respect to any matter specially affecting such Participant’s individual interest hereunder or the
interest of a person superior to him or her in the organization (as distinguished from the
interests of all Participants and Beneficiaries or a broad class of Participants and
Beneficiaries), all such authority being reserved exclusively to other individuals as the case may
be, to the exclusion of such Participant, and such Participant shall act only in such Participant’s
individual capacity in connection with any such matter.

11.3. Service of Process. In the absence of any designation to the contrary by the Chief Executive
Officer, the Secretary of MGI is designated as the appropriate and exclusive agent for the receipt
of service of process directed to this Plan in any legal proceeding, including arbitration,
involving this Plan.

SECTION 12

CONSTRUCTION

12.1. ERISA Status. This Plan is adopted with the understanding that it is an unfunded plan
maintained primarily for the purpose of providing deferred compensation for a select group of
management or highly compensated employees as provided in section 201(2), section 301(3) and
section 401(a)(1) of ERISA. Each provision shall be interpreted and administered accordingly.

12.2. IRC Status. This Plan is intended to be a nonqualified deferred compensation arrangement.
The rules of section 401(a) et. seq. of the Code shall not apply to this Plan. The rules of
section 3121(v) and section 3306(r)(2) of the Code shall apply to this Plan.

12.3. Effect on Other Plans. This Plan shall not alter, enlarge or diminish any person’s
employment rights or obligations or rights or obligations under any other qualified or nonqualified
plan. It is specifically contemplated that this Plan will, from time to time, be amended and
possibly terminated.

12.4. Disqualification. Notwithstanding any other provision of the Plan Statement or any election
or designation made under this Plan, any individual who feloniously and intentionally kills a
Participant shall be deemed for all purposes of this Plan and all elections and designations made
under this Plan to have died before such Participant. A final judgment of conviction of felonious
and intentional killing is conclusive for this purpose. In the absence of a conviction of
felonious and intentional killing, MGI shall determine whether the killing was felonious and
intentional for this purpose.

12.5. Rules of Document Construction.

	 	(a)	 	An individual shall be considered to have attained a given age on such
individual’s birthday for that age (and not on the day before). Individuals

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	 	 	 	born on February 29 in a leap year shall be considered to have their birthdays on February 28
in each year that is not a leap year.
	 
	 	(b)	 	Whenever appropriate, words used herein in the singular may be read in the
plural, or words used herein in the plural may be read in the singular; the masculine
may include the feminine; and the words “hereof,” “herein” or “hereunder” or other
similar compounds of the word “here” shall mean and refer to the entire Plan
Statement and not to any particular paragraph or Section of the Plan Statement unless
the context clearly indicates to the contrary.
	 
	 	(c)	 	The titles given to the various Sections of the Plan Statement are inserted
for convenience of reference only and are not part of the Plan Statement, and they
shall not be considered in determining the purpose, meaning or intent of any
provision hereof.
	 
	 	(d)	 	Notwithstanding any thing apparently to the contrary contained in the Plan
Statement, the Plan Statement shall be construed and administered to prevent the
duplication of benefits provided under this Plan and any other qualified or
nonqualified plan maintained in whole or in part by the Employers.

12.6. References to Laws. Any reference in the Plan Statement to a statute or regulation shall be
considered also to mean and refer to any subsequent amendment or replacement of that statute or
regulation unless, under the circumstances, it would be inappropriate to do so. The terms
“spouse,” “nonspouse,” “married,” “surviving spouse,” and other similar terms shall be construed,
interpreted and applied on a basis consistent with the federal statute known as the Defense of
Marriage Act.

12.7. Choice of Law. Except to the extent that federal law is controlling, this Plan Statement be
construed and enforced in accordance with the laws of the State of Minnesota.

12.8. ERISA Administrator. MGI shall be the plan administrator of this Plan.

12.9. Delegation. No person shall be liable for an act or omission of another person with regard
to a responsibility that has been allocated to or delegated to such other person pursuant to the
terms of the Plan Statement or pursuant to procedures set forth in the Plan Statement.

12.10. Not an Employment Contract. This Plan is not and shall not be deemed to constitute a
contract of employment between any Employer and any employee or other person, nor shall anything
herein contained be deemed to give any employee or other person any right to be retained in any
Employer’s employ or in any way limit or restrict any Employer’s right or power to discharge any
employee or other person at any time and to treat him without regard to the effect which such
treatment might have upon him as a Participant in this Plan. Neither the terms of the Plan
Statement nor the benefits under this Plan nor the continuance thereof shall be a term of the
employment of any employee. The Employers shall not be obliged to continue this Plan.

-20-

 

12.11. Tax Withholding. The Employers (or any other person legally obligated to do so) shall
withhold the amount of any federal, state or local income tax, payroll tax or other tax required to
be withheld under applicable law with respect to any amount payable under this Plan. All benefits
otherwise due hereunder shall be reduced by the amount to be withheld.

12.12. Expenses. All expenses of administering the benefits due under this Plan shall be borne by
the Employers.

12.13. Spendthrift Provision. No Participant or Beneficiary shall have any interest in any Account
which can be transferred nor shall any Participant or Beneficiary have any power to anticipate,
alienate, dispose of, pledge or encumber the same while in the possession or control of the
Employers. MGI shall not recognize any such effort to convey any interest under this Plan. No
benefit payable under this Plan shall be subject to attachment, garnishment, execution following
judgment or other legal process before actual payment to such person.

The power to designate Beneficiaries to receive the Account of a Participant in the event of such
Participant’s death shall not permit or be construed to permit such power or right to be exercised
by the Participant so as thereby to anticipate, pledge, mortgage or encumber such Participant’s
Account or any part thereof, and any attempt of a Participant so to exercise said power in
violation of this provision shall be of no force and effect and shall be disregarded by the
Employers.

This section shall not prevent MGI from exercising, in its discretion, any of the applicable powers
and options granted to it upon the occurrence of an Event of Maturity, as such powers may be
conferred upon it by any applicable provision hereof.

12.14. Amendment History. This Plan was formerly known as the “MONEYGRAM INTERNATIONAL, INC.
SUPPLEMENTAL 401(k) PLAN” adopted August 19, 2005, but effective January 1, 2006. That Plan was a
successor plan to the MONEYGRAM INTERNATIONAL, INC. SUPPLEMENTAL PROFIT SHARING PLAN adopted May
10, 2005.

-21-

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