Document:

INCENTIVE PLAN

 

Exhibit 10.6

MONEYGRAM INTERNATIONAL, INC.

MANAGEMENT INCENTIVE PLAN

Pursuant to the 2004 MoneyGram International, Inc. Omnibus Incentive Plan

As Stated _______, 2004

	I.	 	PURPOSE:
	 
	 	 	The purpose of the MoneyGram International, Inc. Management Incentive
Plan (Plan) is to provide key executives of MoneyGram International, Inc.
(Moneygram) and its subsidiaries with an incentive to achieve goals as
set forth under this Plan for each calendar year (Plan Year) for their
respective companies and to provide effective management and leadership
to that end.
	 
	II.	 	PHILOSOPHY:
	 
	 	 	The Plan will provide key executives incentive bonuses based upon
appropriately weighted pre-defined income and other performance
measurements.
	 
	III.	 	SUBSIDIARIES, SUBSIDIARY GROUPS AND DIVISIONS:

	 	A.	 	Each subsidiary, subsidiary group, line of business or
division listed below is a “Company” for the purposes of this Plan:
	 
	 	Name of Company
	 
	 	Global Funds Transfer

Payment Systems
	 
	 	MoneyGram may, by action of its Board of Directors or its Human Resources
Committee, add or remove business units on the list of participant
companies from time to time.

	 	B.	 	FUNDING LIMIT:
	 
	 	 	 	A “funding limit” shall be established annually for each Company
participant who has been designated an Executive Officer as defined
under Section 16(b) of the Securities Exchange Act. The funding
limit shall be an amount determined by multiplying the actual net
income of the Company for the Plan Year by the percent of such
income approved by the Human Resources Committee of the MoneyGram
International, Inc. Board of Directors (Committee) for such funding

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	 	 	 	limit. The executive cannot be paid a larger bonus than the
funding limit provided by this clause, but may be paid less in the
discretion of the Committee based on the Performance Goals set
forth below and other such factors which the Committee may
consider.
	 
	 	C.	 	PERFORMANCE GOALS:

	 	1.	 	OPERATING OR PRE-TAX INCOME (as calculated for
external reporting purposes):
	 
	 	 	 	An appropriate “operating income” or “pre-tax income” target
for the plan year for each Company may be recommended by the
Chief Executive Officer of MoneyGram to the Committee for
approval taking into account overall corporate objectives,
historical income and Plan Year financial plan income (on the
same basis as determined below) and, if appropriate, other
circumstances.
	 
	 	 	 	Operating or pre-tax income to be used in calculating the bonus
pool of each Company shall mean operating income before
minority interest, interest expense and taxes, after deduction
of corporate overhead, or pre-tax income after minority
interest, in each case adjusted to appropriately exclude the
effects of gains and losses from the sale or other disposition
of capital assets other than vehicles. In addition, an
adjustment to actual operating or pre-tax income will be made
for any increase or decrease in cost to a subsidiary in
connection with a change in the actual formula allocation of
corporate overhead over amounts included in the Plan for the
year.
	 
	 	 	 	Special treatment of any other significant unusual or
non-recurring items (for purposes of determining actual or
target operating or pre-tax income) arising after a Company’s
targets are set may be recommended by the Chief Executive
Officer of MoneyGram to the Committee for approval, including,
for example, appropriate adjustment of operating or pre-tax
income target or actuals to reflect planned effects of an
acquisition approved after target has been set. Other examples
include unusual items or effects of a change in accounting
principle.
	 
	 	 	 	Incentives to be paid under this Plan must be deducted from the
subsidiary corporation’s earnings by the end of the year.
Goals must be achieved after deducting from actual results all
incentive compensation applicable to the year, including those
incentives earned under this Plan.
	 
	 	2.	 	VALUE ADDED MEASUREMENT:
	 
	 	 	 	An appropriate “Value Added” target for the plan year for
certain companies may be recommended by the Chief Executive
Officer of MoneyGram International, Inc. to the Committee for
approval. This measurement is intended to place increased
emphasis on securing an adequate return to MoneyGram on all
capital employed in the

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	 	 	 	business. MoneyGram Value Added (MVA) compares net operating
income to the return required on capital invested in the
business.
	 
	 	 	 	In calculating the bonus pool of each applicable Company, MVA
shall mean Net Operating Profit After Taxes (NOPAT is defined
as sales minus operating expenses minus taxes) minus a Capital
Charge calculated by multiplying a Cost of Capital times the
actual Capital (Capital is defined as total assets less current
and other liabilities exclusive of debt). Certain adjustments
are necessary to determine NOPAT and Capital.
	 
	 	3.	 	CASH FLOW:
	 
	 	 	 	An appropriate “Cash Flow” target for the plan year for certain
companies may be recommended by the Chief Executive Officer of
MoneyGram International, Inc. to the Committee for approval.
This measurement is intended to place increased emphasis on
delivering available cash to MoneyGram.
	 
	 	 	 	Operating Cash Flow is defined as the net change in cash
resulting from the operations of the Company. Cash flows from
operations exclude the impact of investing activities (acquiring
and disposing of investments and productive long-lived assets)
and financing activities (borrowing and repaying debt, payment of
dividends, and treasury stock repurchases).
	 
	 	4.	 	OTHER PERFORMANCE MEASUREMENTS:
	 
	 	 	 	An appropriate number of performance measurements other than
operating or pre-tax income, MVA and cash flow may be
established for each Company, to place increased emphasis on
areas of importance to achieving overall corporate objectives,
with the Chief Executive Officer of MoneyGram to recommend to
the Committee the measures to be used and, at the end of the
year, the level of achievement against each.
	 
	 	5.	 	REVENUE:
	 
	 	 	 	The bonus pool earned will be subject to a further calculation
whereby the total bonus pool otherwise accruable will be
adjusted by 95% (threshold) up to 105% (maximum), depending on
the achievement against the revenue target.

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	 	6.	 	ESTABLISHING TARGETS:
	 
	 	 	 	The targets for revenue, operating or pre-tax income, MVA, cash
flow and for the categories of discretionary performance
measurements to be employed will be established by the
Committee no later than 90 days after the beginning of the Plan
Year after receiving the recommendations of the Chief Executive
Officer of MoneyGram International, Inc.

	 	D.	 	PARTICIPANT ELIGIBILITY:
	 
	 	 	 	The Committee will select the Executive Officers as defined under
Section 16(b) of the Securities Exchange Act eligible for
participation no later than 90 days after the beginning of the Plan
Year. Other personnel will be eligible for participation as
designated by each Company President or Chief Executive Officer and
recommended to the Chief Executive Officer of MoneyGram
International, Inc. for approval, limited only to those executives
who occupy a position in which they can significantly affect
operating results as pre-defined by appropriate and consistent
criteria, i.e., base salary not less than $49,000 per year, or base
salary not less than 50% of the Company’s Chief Executive Officer,
or position not more than the third organizational level below the
Company Chief Executive Officer or another applicable criteria.
	 
	 	 	 	NOTE: Individuals not qualifying under the criteria established
for the Plan Year who were included in the previous year will be
grandfathered (continue as qualified participants until retirement,
reassignment, or termination of employment) if designated by the
Company President or Chief Executive Officer, and approved by the
Chief Executive Officer of MoneyGram International, Inc.
	 
	 	E.	 	TARGET BONUSES:
	 
	 	 	 	Target bonuses will be approved by the Committee for each Executive
Officer in writing within the following parameters no later than 90
days after the beginning of the Plan Year and will be expressed as
a percentage of salary paid during the year. Target bonuses for
other eligible personnel will be established in writing within the
following parameters subject to approval by the Chief Executive
Officer of MoneyGram International, Inc.
	 
	 	 	 	Actual bonus awards will be dependent on Company performance versus
the targets established. A threshold performance will be required
before any bonus award is earned under the net income goal. Awards
will also be capped when stretch performance levels are achieved.

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	 	 	As a Percentage of
Salary

	Subsidiary Positions (1)
	 	Threshold(2)
	 	Target
	 	Cap

	President/General Manager
	 	 	25.0	%	 	 	50.0	%	 	 	100.0	%
	Executive Vice President-Senior
Vice President, and Other Operating
	 	 	22.5	%	 	 	45.0	%	 	 	90.0	%
	Executives
	 	 	20.0	%	 	 	40.0	%	 	 	80.0	%
	Vice Presidents
	 	 	17.5	%	 	 	35.0	%	 	 	70.0	%
	 
	 	 	15.0	%	 	 	30.0	%	 	 	60.0	%
	Key Management Reporting to Officers
	 	 	12.5	%	 	 	25.0	%	 	 	50.0	% (3)
	 
	 	 	10.0	%	 	 	20.0	%	 	 	40.0	% (3)
	Staff Professionals
	 	 	7.5	%	 	 	15.0	%	 	 	30.0	% (3)
	 
	 	 	5.0	%	 	 	10.0	%	 	 	20.0	% (3)

	(1)	 	Target Bonus and Cap, as determined by the Committee, is dependent upon
organization reporting
relationships.
	(2)	 	Reflects minimum achievement of all performance targets. Threshold could
be lower if minimum
achievement of only one performance target is met.
	(3)	 	For certain positions, Target Bonus is the maximum formula award that may
be earned.

	 	F.	 	BONUS POOL TARGET:

	 	1.	 	The “Bonus Pool Target” will be initially
established no later than 90 days after the beginning of the
Plan Year and will be adjusted to equal the sum of the target
bonuses of all designated participants in each Company based
upon actual Plan Year salaries, as outlined in paragraph D
above, plus 15% for Special Achievement Awards.
	 
	 	2.	 	The bonus pool will accrue in accordance with the
Bonus Pool Accrual Formula recommended by the Chief Executive
Officer of MoneyGram International, Inc. and approved by the
Committee.
	 
	 	3.	 	Bonus pool accruals not paid out shall not be
carried forward to any succeeding year.

	 	G.	 	INDIVIDUAL BONUS AWARDS:

	 	1.	 	Indicated bonus awards will be equal to the product
of the target bonus percentage times the weighted average
percentage of bonus pool accrued as determined in paragraph F
above times the individual’s actual base salary earnings during
the Plan Year, subject to adjustments as follows:

	 	a)	 	discretionary upward or downward adjustment
of formula bonus awards by the Committee after considering
the recommendation of the Company President with the
approval of the Chief Executive Officer of MoneyGram
International, Inc. for those executives not affected by
Section 162(m) of the Internal Revenue Code, and

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	 	b)	 	discretionary downward adjustment of awards
by the Committee for those Executive Officers affected by
Section 162(m) of the Internal Revenue Code, and
	 
	 	c)	 	no individual award may exceed the
individual’s capped target award or the funding limit with
respect to Executive Officers, and the aggregate recommended
bonuses may not exceed the bonus pool accrued for other than
Special Achievement Awards.

	 	2.	 	Bonuses awarded to the participating management
staff of subsidiary groups may be paid from funds accrued based
upon the target bonus for such participant(s) times the
weighted average performance of the Companies in the subsidiary
group, subject to adjustments as above.

	IV.	 	MONEYGRAM INTERNATIONAL, INC. CORPORATE STAFF:

	 	A.	 	FUNDING LIMIT:
	 
	 	 	 	A “funding limit” shall be established annually for each Corporate
participant who has been designated an Executive Officer as defined
under Section 16(b) of the Securities Exchange Act. The funding
limit will be an amount determined by multiplying the actual net
income from continuing operations of MoneyGram International, Inc.
(as used in the income per share calculation described herein) for
the Plan Year by the percent of such income approved by the
Committee for such funding limit. The executive cannot be paid a
larger bonus than the funding limit provided by this clause, but may
be paid less in the discretion of the Committee based on the
Performance Goals set forth below and such other factors which the
Committee may consider.
	 
	 	B.	 	PERFORMANCE GOALS:

	 	1.	 	INCOME PER SHARE:
	 
	 	 	 	An appropriate “income per share” from continuing operations
target for MoneyGram International, Inc. may be recommended by
the Chief Executive Officer of MoneyGram International, Inc. to
the Committee for approval after considering historical income
per share from continuing operations, Plan Year financial plan
income, overall corporate objectives, and, if appropriate, other
circumstances.
	 
	 	 	 	Income per share from continuing operations is determined before
unusual or extraordinary items, effects of changes in accounting
principles or a change in federal income tax rates after the
target has been set. Reclassification of a major business unit
to discontinued operations status after targets have been set
would also require adjustment because of the effect on continuing
operations results. While gains on disposition of a business
would normally not be included in determining actual Plan Year
net income or income per share, in the event of the sale of a
subsidiary or major business unit, a portion of gain would be
included equal to the difference between the sold unit’s planned
net income for the year and actual results to date of sale plus
calculated interest savings on proceeds

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	 	 	 	for the balance of the year, so that actual results are not
penalized for selling a business.
	 
	 	 	 	Incentives to be paid under this Plan must be deducted from
MoneyGram’s earnings by the end of the year. Goals must be
achieved after deducting from actual results all incentive
compensation applicable to the year, including those incentives
earned under this Plan.
	 
	 	2.	 	OPERATING INCOME:
	 
	 	 	 	An appropriate “operating income” may be recommended by the Chief
Executive Officer of MoneyGram International, Inc. to the
Committee for approval.
	 
	 	 	 	Operating income is defined as operating income before minority
interest, interest expense, interest income, and taxes, excluding
unallocated corporate overhead expenses, unusual, non-cash
charges (such as goodwill impairments and restructuring charges),
and spin-off related costs.
	 
	 	3.	 	VALUE ADDED MEASUREMENT:
	 
	 	 	 	An appropriate “Value Added” target for the plan year for
Corporate may be recommended by the Chief Executive Officer of
MoneyGram for approval by the Human Resources Committee. This
measurement is intended to place increased emphasis on securing
an adequate return to MoneyGram on all capital employed in the
business. MoneyGram Value Added (MVA) compares operating income
to the return required on capital invested in the business.
	 
	 	 	 	In calculating the bonus pool for Corporate, MVA shall mean Net
Operating Profit After Taxes (NOPAT is defined as sales minus
operating expenses minus taxes) minus a Capital Charge calculated
by multiplying a Cost of Capital times the actual Capital
(Capital is defined as total assets less current and other
liabilities exclusive of debt). Certain adjustments are
necessary to determine NOPAT and Capital.
	 
	 	4.	 	CASH FLOW:
	 
	 	 	 	An appropriate “Cash Flow” target for the plan year for certain
companies may be recommended by the Chief Executive Officer of
MoneyGram International, Inc. to the Committee for approval.
This measurement is intended to place increased emphasis on
delivering available cash to MoneyGram.
	 
	 	 	 	Operating Cash Flow is defined as the net change in cash
resulting from the operations of the Company. Cash flows from
operations exclude the impact of investing activities (acquiring
and disposing of investments and productive long-lived assets)
and financing activities (borrowing and repaying debt, payment of
dividends, and treasury stock repurchases).
	 
	 	5.	 	OTHER PERFORMANCE MEASUREMENTS:

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	 	 	 	An appropriate number of performance measurements other than
income per share will be established for Corporate, with the
Chief Executive Officer of MoneyGram to recommend to the
Committee the level of achievement against each of the measures.
	 
	 	6.	 	REVENUE:
	 
	 	 	 	The bonus pool earned will be subject to a further calculation
whereby the total bonus pool otherwise accruable will be
adjusted by 95% (threshold) up to 105% (maximum) depending on
the achievement against the revenue target.
	 
	 	7.	 	ESTABLISHING TARGETS:
	 
	 	 	 	The actual targets for revenue, income per share, cash flow,
operating income, MVA and for the performance measurements to be
used will be established by the Committee no later than 90 days
after the beginning of the Plan Year after receiving the
recommendations of the Chief Executive Officer of MoneyGram
International, Inc.
	 
	 	C.	 	PARTICIPANT ELIGIBILITY:
	 
	 	 	 	The Committee will select the Executive Officers as defined under
Section 16(b) of the Securities Exchange Act eligible for
participation no later than 90 days after the beginning of the Plan
Year. Other personnel will be eligible for participation as
recommended by the appropriate staff Vice President and as approved
by the Chief Executive Officer of MoneyGram International, Inc.,
limited only to those executives who occupy a position in which they
can significantly affect operating results as defined by the
following criteria:

	 	a)	 	Salary grade
	 
	 	b)	 	Not more than Organizational Level Four below
the Chief Executive Officer.

	 	 	 	NOTE: Individuals not qualifying under the criteria established for
the Plan Year who were included in the previous year will be
grandfathered (continue as qualified participants until retirement,
reassignment, or termination of employment) if designated by the
appropriate Vice President and approved by the Chief Executive
Officer of MoneyGram International, Inc.
	 
	 	D.	 	TARGET BONUSES:
	 
	 	 	 	Target bonuses will be approved by the Committee for each Executive
Officer in writing within the following parameters no later than 90
days after the beginning of the Plan Year and will be expressed as a
percentage of salary. Target bonuses for other eligible personnel
will be established in writing within the following parameters
subject to approval by the Chief Executive Officer of MoneyGram
International, Inc.

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	 	 	 	Actual bonus awards will be dependent on Company performance versus
the targets established. A threshold performance will be required
before any bonus award is earned under the income per share goal.
Awards also will be capped when stretch performance levels are
achieved.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	As a Percentage of Salary

	Corporate Positions(1)
	 	Threshold(2)
	 	Target
	 	Cap

	President & Chief Executive Officer
	 	 	45.0	%	 	 	90.0	%	 	 	180.0	%
	Senior Advisory Group
	 	 	25.0	%	 	 	50.0	%	 	 	100.0	%
	 
	 	 	22.5	%	 	 	45.0	%	 	 	90.0	%
	 
	 	 	20.0	%	 	 	40.0	%	 	 	80.0	%
	Vice Presidents/Corporate Staff Officers
	 	 	20.0	%	 	 	40.0	%	 	 	80.0	%
	 
	 	 	17.5	%	 	 	35.0	%	 	 	70.0	%
	 
	 	 	15.0	%	 	 	30.0	%	 	 	60.0	%
	Staff Directors(2)
	 	 	15.0	%	 	 	30.0	%	 	 	60.0	% (3)
	 
	 	 	12.5	%	 	 	25.0	%	 	 	50.0	% (3)
	 
	 	 	10.0	%	 	 	20.0	%	 	 	40.0	% (3)
	Staff Professionals*
	 	 	10.0	%	 	 	20.0	%	 	 	40.0	% (3)
	 
	 	 	7.5	%	 	 	15.0	%	 	 	30.0	% (3)

	(1)	 	Target Bonus and Cap, as determined by the Committee, is dependent upon
organization reporting
relationships.
	(2)	 	Reflects minimum of achievement of all performance targets. Threshold
could be lower if
minimum achievement of only one performance target is met.
	

	(3)	 	For most positions below the Director level, Target Bonus is the
maximum formula award that may be earned.
	

	 	E.	 	BONUS POOL TARGET:

	 	1.	 	The “Bonus Pool Target” will be established no
later than 90 days after the beginning of the Plan Year and
will be adjusted to equal the sum of the target bonuses of all
qualified participants based upon actual Plan Year base
salaries, as outlined in paragraph C above, plus 15% for
Special Achievement Awards.
	 
	 	2.	 	The bonus pool will accrue in accordance with the
Bonus Pool Accrual Formula recommended by the Chief Executive
Officer of MoneyGram International, Inc. and approved by the
Committee.
	 
	 	3.	 	Bonus pool accruals not paid out shall not be
carried forward to any succeeding year.

	 	F.	 	INDIVIDUAL BONUS AWARDS:
	 	 	 	Indicated bonus awards will be equal to the product of the target
bonus percentage times the weighted average percentage of bonus pool
accrued as determined in paragraph D above times the individual’s
actual Plan Year base salary earnings, subject to adjustments as
follows:

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	 	a)	 	discretionary upward or downward adjustment
of formula awards by the Committee after considering the
recommendations of the Chief Executive Officer of MoneyGram
International, Inc. for those executives not affected by
Section 162(m) of the Internal Revenue Code,
	 
	 	b)	 	discretionary downward adjustment of awards
by the Committee for those Executive Officers affected by
Section 162(m) of the Internal Revenue Code, and
	 
	 	c)	 	no individual award may exceed the
individual’s capped target award or the funding limit with
respect to Executive Officers and the aggregate recommended
bonuses may not exceed the bonus pool for other than Special
Achievement Awards.

	V.	 	REPAYMENT PROVISIONS:

	 	A.	 	NON-COMPETE:
	 
	 	 	 	Unless a Change of Control (as defined in the MoneyGram
International, Inc. Omnibus Incentive Plan, as amended) shall have
occurred after the date hereof:

	 	1.	 	In order to better protect the goodwill of
MoneyGram and its Affiliates (as defined in the Plan) and to
prevent the disclosure of MoneyGram’s or its Affiliates’
trade secrets and confidential information and thereby help
insure the long-term success of the business, each participant
in this Plan, without prior written consent of MoneyGram,
will not engage in any activity or provide any services,
whether as a director, manager, supervisor, employee, adviser,
agent, consultant, owner of more than five (5) percent of any
enterprise or otherwise, for a period of two (2) years
following the date of such participant’s termination of
employment with MoneyGram or any of its Affiliates, in
connection with the manufacture, development, advertising,
promotion, design, or sale of any service or product which is
the same as or similar to or competitive with any services or
products of MoneyGram or its Affiliates (including both
existing services or products as well as services or products
known to such participant, as a consequence of such
participant’s employment with MoneyGram or one of its
Affiliates, to be in development):

	 	a)	 	with respect to which such participant’s
work has been directly concerned at any time during the
two (2) years preceding termination of employment with
MoneyGram or one of its Affiliates, or
	 
	 	b)	 	with respect to which during that period
of time such participant, as a consequence of
participant’s job performance and duties, acquired
knowledge of trade secrets or other confidential
information of MoneyGram or its Affiliates.

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	 	2.	 	For purposes of the provisions of paragraph V A,
it shall be conclusively presumed that a participant in this
Plan has knowledge of information he or she was directly
exposed to through actual receipt or review of memos or
documents containing such information, or through actual
attendance at meetings at which such information was discussed
or disclosed.
	 
	 	3.	 	If, at any time within two (2) years following
the date of a participant’s termination of employment with
MoneyGram or any of its Affiliates, such participant engages
in any conduct agreed to be avoided in accordance with
paragraph V A, then all bonuses paid under this Plan to such
participant during the last 12 months of employment shall be
returned or otherwise repaid by such participant to MoneyGram.
Participants in this Plan consent to the deduction from any
amounts MoneyGram or any of its Affiliates owes to such
participants to the extent of the amounts such participants
owe MoneyGram hereunder.

	 	B.	 	MISCONDUCT:
	 
	 	 	 	Unless a Change of Control shall have occurred after the date
hereof, all bonuses paid for 2003 and thereafter under this Plan to
any participant shall be returned or otherwise repaid by such
participant to MoneyGram, if MoneyGram reasonably determines that
during a participant’s employment with MoneyGram or any of its
Affiliates:

	 	a)	 	such participant knowingly participated
in misconduct that causes a misstatement of the financial
statements of MoneyGram or any of its Affiliates or
misconduct which represents a material violation of any
code of ethics of MoneyGram applicable to such participant
or of the    compliance program or similar
program of MoneyGram; or
	 
	 	b)	 	such participant was aware of and failed
to report, as required by any code of ethics of MoneyGram
applicable to such participant or by the
        
compliance program or similar program of MoneyGram,
misconduct that causes a misstatement of the financial
statements of MoneyGram or any of its Affiliates or
misconduct which represents a material knowing violation
of any code of ethics of MoneyGram applicable to such
participant or of the
         compliance program or
similar program of MoneyGram.

	 	 	 	Participants in this Plan consent to the deduction from any amounts
MoneyGram or any of its Affiliates owes to such participants to the
extent of the amounts such participants owe MoneyGram hereunder.
	 
	 	C.	 	ACTS CONTRARY TO MONEYGRAM:
	 
	 	 	 	Unless a Change of Control shall have occurred after the date
hereof, if MoneyGram reasonably determines that at any time within
two (2)

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	 	 	 	years after the award of any bonus under this Plan to a participant
that such participant has acted significantly contrary to the best
interests of MoneyGram, including, but not limited to, any direct
or indirect intentional disparagement of MoneyGram, then any bonus
paid under this Plan to such participant during the prior 2-year
period shall be returned or otherwise repaid by the participant to
MoneyGram. Participants in this Plan consent to the deduction from
any amounts MoneyGram or any of its Affiliates owes to such
participants to the extent of the amounts such participants owe
MoneyGram hereunder.
	 
	 	D.	 	The Corporation’s reasonable determination required under
paragraphs V B and V C shall be made by the Human Resources
Committee of the Corporation’s Board of Directors, in the case of
executive officers of the Corporation, and by the Chief Executive
Officer and Corporate Compliance Officer of the Corporation, in the
case of all other officers and employees.

	VI.	 	SPECIAL ACHIEVEMENT AWARDS:
	 
	 	 	Special bonuses of up to 15% of base salary for exceptional performance to
employees (primarily exempt employees) who are not participants in this
Plan, including newly hired employees, may be recommended at the
discretion of the Chief Executive Officer to the Committee from the
separate funds for discretionary awards provided for under paragraphs III
F and IV E.
	 
	VII.	 	APPROVAL AND DISTRIBUTION:
	 
	 	 	The individual incentive bonus amounts and the terms of payment thereof
will be fixed following the close of the Plan Year by the Committee. 
	 
	VIII.	 	COMPENSATION ADVISORY COMMITTEE:
	 
	 	 	The Compensation Advisory Committee is appointed by the Chief Executive
Officer of MoneyGram International, Inc. to assist the Committee in the
implementation and administration of this Plan. The Compensation Advisory
Committee shall propose administrative guidelines to the Committee to
govern interpretations of this Plan and to resolve ambiguities, if any,
but the Compensation Advisory Committee will not have the power to
terminate, alter, amend, or modify this Plan or any actions hereunder in
any way at any time.
	 
	IX.	 	SPECIAL COMPENSATION STATUS:
	 
	 	 	All bonuses paid under this Plan shall be deemed to be special
compensation and, therefore, unless otherwise provided for in another plan
or agreement, will not be included in determining the earnings of the
recipients for the purposes of any pension, group insurance or other plan
or agreement of a Company or of MoneyGram International, Inc.
Participants in this Plan shall not be eligible for any contractual or
other short-term (sales, productivity, etc.) incentive plan except in

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	 	 	those cases where participation is weighted between this Plan and any such
other short-term incentive plan.
	 
	X.	 	DEFERRALS:
	 
	 	 	Participants subject to taxation of income by the United States may submit
to the Committee, prior to November 15 of the year in which the bonus is
being earned a written request that all or a portion, but not less than a
specified minimum, of their bonus awards to be determined, if any, be
irrevocably deferred substantially in accordance with the terms and
conditions of a deferred compensation plan approved by the Board of
Directors of MoneyGram International, Inc. or, if applicable, one of its
subsidiaries if such plan has been adopted. Participants subject to
taxation of income by other jurisdictions may submit to the Committee a
written request that all or a portion of their bonus awards be deferred in
accordance with the terms and conditions of a plan which is adopted by the
Board of Directors of a participant’s Company. Upon the receipt of any
such request, the Committee thereunder shall determine whether such
request should be honored in whole or part and shall forthwith advise each
participant of its determination on such request.
	 
	XI.	 	PLAN TERMINATION:
	 
	 	 	This Plan shall continue in effect until such time as it may be canceled
or otherwise terminated by action of the Board of Directors of MoneyGram
International, Inc. and will not become effective with respect to any
Company unless and until its Board of Directors adopts a specific plan for
such Company. While it is contemplated that incentive awards from the
Plan will be made, the Board of Directors of MoneyGram International,
Inc., or any other Company hereunder, may terminate, amend, alter, or
modify this Plan at any time and from time to time. Participation in the
Plan shall create no right to participate in any future year’s Plan.
	 
	XII.	 	EMPLOYEE RIGHTS:
	 
	 	 	No participant in this Plan shall be deemed to have a right to any
part or share of this Plan, except as provided in Paragraph XIII.
This Plan does not create for any employee or participant any right
to be retained in service by any Company, nor affect the right of
any such Company to discharge any employee or participant from
employment. Except as provided for in administrative guidelines, a
participant who is not an employee of MoneyGram International, Inc.
or one of its subsidiaries on the date bonuses are paid will not
receive a bonus payment.
	 
	XIII.	 	EFFECT OF CHANGE OF CONTROL:
	 
	 	 	Notwithstanding anything to the contrary in this Plan, in the event of a
Change of Control (as defined in the 2004 MoneyGram International, Inc.
Omnibus Incentive Plan) each participant in the Plan shall be entitled to
a prorata bonus award calculated on the basis of achievement of
performance goals through the date of the Change of Control.
	 
	XIV.	 	EFFECTIVE DATE:

13

 

	 	 	The Plan shall be effective
                          ,
2004.

14DEFERRED COMPENSATION PLAN

 

Exhibit 10.7

TRAVELERS EXPRESS COMPANY, INC.

DEFERRED COMPENSATION PLAN

AS STATED_______, 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 Travelers Express
Company, 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 Travelers
Express Company, 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.

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
common stock (“Common Stock”) of the Corporation’s
parent, MoneyGram International, Inc. (“MGI”) 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 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

2

 

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 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 to the cash balance or specified
portion thereof divided by the closing price of the Common Stock (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)

3

 

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 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
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
 MGI (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
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.

4

 

     (d) In
the event of a dividend of Common Stock declared and paid by MGI, 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
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 MGI (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.

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

5

 

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 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.

6

 

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
               , 2004,
but the Plan shall not become operative with respect to a select
group of management or highly-compensated employees of each
subsidiary only upon the adoption of the Plan by that
Subsidiary’s Board of Directors.

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

TRAVELERS EXPRESS COMPANY, INC.

By:                                                          

Its:                                                          

7

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