Exhibit 10.2
EMPLOYEE MATTERS
AGREEMENT
THIS EMPLOYEE MATTERS AGREEMENT is
made as of September 29, 2006 between First Data Corporation,
a Delaware corporation (“ First Data ”),
and The Western Union Company, a Delaware corporation (“
Western Union ”) and, as of the date hereof, a
wholly-owned subsidiary of First Data.
RECITALS
A. First Data and Western Union have
entered into a Separation and Distribution Agreement dated as of
September 29, 2006 (the “ Distribution
Agreement ”) pursuant to which First Data will
distribute on a pro rata basis to the holders of First Data’s
Common Stock, $0.01 par value per share (“ First Data
Common Stock ”), without any consideration being paid
by the holders of such First Data Common Stock, all of the
outstanding shares of Western Union’s Common Stock, $0.01 par
value per share (“ Western Union Common Stock
”) then owned by First Data (the “
Distribution ”).
B. In connection with the
Distribution, First Data and Western Union desire to enter into
this Employee Matters Agreement.
In consideration of the mutual
promises contained herein and in the Distribution Agreement, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Unless otherwise defined herein, each
capitalized term shall have the meaning specified for such term in
the Distribution Agreement. As used in this Agreement:
“ Agreement
” means this Employee Matters Agreement together with those
parts of the Distribution Agreement referenced herein and all
Schedules hereto and all amendments, modifications and changes
hereto and thereto.
“ Business
Employee ” means a Transferred Employee or any other
individual employed at any time on or prior to the Distribution
Date by Western Union or any of its Subsidiaries or Affiliates who
has, as of the Distribution Date, or who, immediately prior to his
or her termination of employment with all of First Data, its
Subsidiaries and their respective Affiliates, had employment duties
primarily related to the Transferred Business.
“ COBRA ”
means the Consolidated Omnibus Budget Reconciliation Act of 1985,
as codified at Part 6 of Subtitle B of Title I of ERISA and at
Section 4980B of the Code, as amended.
“ Code ”
means the U.S. Internal Revenue Code of 1986, as
amended.
“ Domestic Business
Employee ” means a Business Employee who is located
in the United States or who is an expatriate Business Employee
employed by a Western Union U.S.
entity but who is performing services outside of
the United States for a temporary period of time at the request of
his employer.
“ ERISA ”
means the U.S. Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. §1001, et . seq .
“ First Data Non-ERISA
Benefit Arrangement ” means any Non-ERISA Benefit
Arrangement sponsored or maintained by First Data.
“ First Data
Plan ” means any Pension Plan or Welfare Plan
sponsored or maintained by First Data.
“ IRS ”
means the U.S. Internal Revenue Service.
“ Non-Domestic Business
Employee ” means a Business Employee who is located
outside the United States or who is an inpatriate Business Employee
in the U.S. employed by a Western Union Non-U.S. entity but who is
performing services in the United States for a temporary period of
time at the request of his employer.
“ Non-ERISA Benefit
Arrangement ” means any contract, agreement, policy,
practice, program, plan, trust or arrangement, other than a Pension
Plan or Welfare Plan, providing for benefits, perquisites or
compensation of any nature to any Business Employee, or to any
family member, dependent or beneficiary of any such Business
Employee, including, without limitation, disability, severance,
health, dental, life, accidental death and dismemberment, travel
and accident, tuition reimbursement, supplemental unemployment,
vacation, sick, personal or bereavement days, holidays, retirement,
deferred compensation, profit sharing, bonus, stock-based
compensation or other forms of incentive compensation.
“ Pension Plan
” means any pension plan as defined in Section 3(2) of
ERISA, without regard to Section 4(b)(4) or 4(b)(5) of
ERISA.
“ Transferred
Employee ” means an employee of First Data or any
First Data Subsidiary (other than Western Union or any Western
Union Subsidiary) whose employment is transferred to Western Union
immediately prior to the Distribution Date.
“ Welfare Plan
” means any employee welfare plan as defined in
Section 3(1) of ERISA, without regard to Section 4(b)(4)
or 4(b)(5) of ERISA.
1.02 In this Agreement, unless the context clearly
indicates otherwise:
(a) words used in the singular
include the plural and words used in the plural include the
singular;
(b) references to any Person
includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are permitted by
this Agreement, and a reference to such Person’s
“Affiliates” shall be deemed to mean such
Person’s Affiliates following the Distribution;
(c) references to any gender
includes the other gender;
(d) the words “include,”
“includes” and “including” shall be deemed
to be followed by the words “without
limitation”;
(e) references to any Article,
Section or Schedules means such Article or Section of, or such
Schedule to, this Agreement, as the case may be, and references in
any Section or definition to any clause means such clause of such
Section or definition;
(f) the words “herein,”
“hereunder,” “hereof,” “hereto”
and words of similar import shall be deemed references to this
Agreement as a whole and not to any particular Section or other
provision hereof;
(g) references to any agreement,
instrument or other document means such agreement, instrument or
other document as amended, supplemented and modified from time to
time to the extent permitted by the provisions thereof and by this
Agreement;
(h) references to any law (including
statutes and ordinances) means such law (including all rules and
regulations promulgated thereunder) as amended, modified, codified
or reenacted, in whole or in part, and in effect at the time of
determining compliance or applicability;
(i) relative to the determination of
any period of time, “from” means “from and
including,” “to” means “to but
excluding” and “through” means “through and
including”;
(j) accounting terms used herein
shall have the meanings historically ascribed to them by First Data
and its Subsidiaries, including Western Union, in its and their
internal accounting and financial policies and procedures in effect
prior to the date of this Agreement;
(k) if there is any conflict between
the provisions of the Distribution Agreement and this Agreement,
the provisions of this Agreement shall control with respect to the
subject matter hereof; if there is any conflict between the
provisions of the body of this Agreement and the Schedule hereto,
the provisions of the body of this Agreement shall control unless
explicitly stated otherwise in such Schedule;
(l) the titles to Articles and
headings of Sections contained in this Agreement have been inserted
for convenience of reference only and shall not be deemed to be a
part of or to affect the meaning or interpretation of this
Agreement;
(m) any portion of this Agreement
obligating a Party to take any action or refrain from taking any
action, as the case may be, shall mean that such Party shall also
be obligated to cause its relevant Affiliates to take such action
or refrain from taking such action, as the case may be;
and
(n) unless otherwise specified in
this Agreement, all references to dollar amounts herein shall be in
respect of lawful currency of the United States.
ARTICLE II
ASSIGNMENT OF
EMPLOYEES
Effective immediately prior to the
Distribution Date, the employment of the Transferred Employees by
First Data shall be terminated and thereupon shall commence with
and shall be assigned and transferred to Western Union or a Western
Union Subsidiary. Notwithstanding anything set forth below or
herein to the contrary, nothing in this Agreement shall create any
obligation on the part of any Western Union Party to continue the
employment of any employee for any definite period following the
Distribution Date or to change the employment status of any
employee from “at will.” Notwithstanding the foregoing,
if and only to the extent necessary to preserve payroll, benefits,
or other legal entitlements with respect to employees outside the
United States, a Western Union Party and a First Data Party may
enter into one or more agreements whereby such Party may lease
employees from the other company or its Subsidiary for a period of
not more than three calendar months following the Distribution
Date. Any such agreement(s) shall require the company benefiting
from the services of such employee(s) to fully reimburse the
leasing company for the full cost of the employee(s) remuneration
and shall contain other terms and conditions consistent with an
arm’s length commercial relationship between the leasing
entity and the service recipient.
ARTICLE III
PENSION PLANS
3.01 U.S. Defined Contribution
Plans.
(a) Western Union
ISP.
(1) Establishment of Western
Union Company Incentive Savings Plan. On or before, but
effective as of the close of business on the Distribution Date,
Western Union shall adopt, establish and maintain a 401(k) profit
sharing Pension Plan and trust intended to be qualified under
Section 401(a) of the Code and exempt from federal income tax
under Section 501(a) of the Code (the “ Western
Union ISP ”). As soon as practicable after the
adoption of the Western Union ISP, Western Union shall submit an
application for determination to the IRS for a determination that
the Western Union ISP is qualified under Section 401(a) of the
Code and that the related trust is exempt from federal income tax
under Section 501(a) of the Code, and shall take any actions
not inconsistent with Western Union’s other general
commitments contained in this Agreement and make any amendments
necessary to receive such determination.
(2) Transfer of Account Balances
and Unallocated Amounts. As soon as administratively
practicable after the Distribution Date, there shall be transferred
from the First Data Corporation Master Trust for Defined
Contribution Plans (“ DC Master Trust ”)
to the trust established by Western Union for the Western Union ISP
assets having a value as of the applicable valuation date that are
equal to the value of the account balances of, and liabilities with
respect to, all Business Employees (other than Business Employees
whose employment has
terminated prior to the Distribution
Date and other than Business Employees located in Puerto Rico) with
an account balance under the First Data Corporation Incentive
Savings Plan (“ First Data ISP ”) as of
such valuation date. In addition, as soon as administratively
practicable after the Distribution Date, there shall be transferred
from the DC Master Trust to the trust established by Western Union
to hold Western Union ISP assets a pro rata share of all
unallocated amounts held in the DC Master Trust (other than
unallocated forfeitures attributable to the Western Union Financial
Services, Inc. Retirement Savings Plan for Bargaining Unit
Employees), determined based upon the ratio of the sum of the
account balances of the Business Employees described in the
immediately preceding sentence as of the applicable valuation date
to the sum of all account balances held in the DC Master Trust as
of such valuation date. Such transferred assets shall be in cash,
shares of securities, promissory notes evidencing outstanding plan
loans of such Business Employees, and shares of First Data Common
Stock and Western Union Common Stock, and such transfer shall be
made in accordance with Section 414(l) of the Code.
Liabilities under any qualified domestic relations orders (as
defined in Section 414(p) of the Code) received with respect
to any accounts transferred to the Western Union ISP shall be
transferred to and assumed by the Western Union ISP at the time
such assets attributable to such accounts are transferred. Western
Union shall assume and thereafter be solely responsible for all
then existing and future employer liabilities related to such
Business Employees under the Western Union ISP and the
administration thereof, and the First Data Parties shall have no
liability therefor.
(b) Western Union Financial
Services, Inc. Retirement Savings Plan for Bargaining Unit
Employees. Following the Distribution Date, Western Union
Financial Services, Inc. shall continue to be the plan sponsor of
the Western Union Financial Services, Inc. Retirement Savings Plan
for Bargaining Unit Employees (the “ RSP
”). As soon as administratively practicable after the
Distribution Date, there shall be transferred from the DC Master
Trust to the trust established by Western Union Financial Services,
Inc. (or its designee) for the RSP assets (the “ RSP
Trust ”) having a value as of the applicable
valuation date that are equal to the value of the account balances
of, and liabilities with respect to, the RSP as of such valuation
date. In addition, as soon as administratively practicable after
the Distribution Date, there shall be transferred from the DC
Master Trust to the RSP Trust all unallocated forfeitures
attributable to the RSP as well as a pro rata share of all other
unallocated amounts held in the DC Master Trust, determined based
upon the ratio of the sum of the account balances of the RSP as of
the applicable valuation date to the sum of all account balances
held in the DC Master Trust as of such valuation date. Following
the date of such asset transfer, the First Data Parties shall have
no liability relating to the RSP.
(c) Western Union Pension Plan
and Western Union Financial Services, Inc. Pension Plan.
Following the Distribution Date, Western Union Financial Services,
Inc. shall continue to be the plan sponsor of the Western Union
Pension Plan and the Western Union Financial Services, Inc. Pension
Plan. As soon as administratively practicable after the
Distribution Date, there shall be retitled in the name of the
Western Union Master Pension Trust as established by Western Union
Financial Services, Inc. (or its designee) assets having a value as
of the applicable valuation date that are equal to the
value of the accrued benefits of,
and liabilities with respect to, the Western Union Pension Plan and
the Western Union Financial Services, Inc. Pension Plan as of such
valuation date, as determined by First Data and Western Union.
Following the date of the transaction contemplated in the
immediately preceding sentence, the First Data Parties shall have
no liability arising out of or otherwise with respect to the
Western Union Pension Plan or the Western Union Financial Services,
Inc. Pension Plan.
3.02 Supplemental Non-Qualified
Deferred Compensation Plan. On or before, but effective as of the close of
business on Distribution Date, Western Union shall adopt a
non-qualified deferred compensation plan (the “ Western
Union Supplemental Incentive Savings Plan ”). Western
Union shall assume, and shall cause the Western Union Supplemental
Incentive Savings Plan to assume, responsibility for all
liabilities and fully perform, pay and discharge all obligations,
when such obligations become due, to the Business Employees under
the First Data Corporation Supplemental Incentive Savings Plan
(“ SISP-1 and SISP-2 ”) immediately prior
to the Distribution Date. Following such date, the First Data
Parties shall have no liability arising out of or otherwise with
respect to the SISP-1 and SISP-2.
3.03 Non-U.S. Retirement
Plans. Following the
Distribution Date, Western Union shall cause its Non-U.S.
Subsidiaries to continue to maintain in full force and effect
retirement plans as were sponsored and maintained by such
Subsidiaries immediately prior to the Distribution Date, and
neither First Data nor any First Data Subsidiary shall have any
liability or obligation with respect to such plans or any
participants or former participants in such plans with respect to
their participation therein. In addition, effective either prior to
or as of the Distribution Date, Western Union shall cause its
Non-U.S. Subsidiaries in the United Kingdom, Japan, Canada, and
Australia to adopt retirement plans with appropriate eligibility
and benefits terms to ensure that Non-Domestic Business Employees
in such countries are either (1) eligible to participate in
the same type of plan and enjoy the same level of benefits for
which such Non-Domestic Business Employees were eligible
immediately prior to the Distribution Date (or date of plan
adoption, if earlier), or (2) eligible to participate in a
plan intended to provide a comparable level of benefits for which
such Non-Domestic Business Employees were eligible immediately
prior to the Distribution Date (or date of plan adoption, if
earlier).
ARTICLE IV
WELFARE PLANS
4.01 Western Union Financial
Services, Inc. Health and Welfare Benefit Plan.
Following the Distribution Date,
Western Union Financial Services, Inc. shall continue to be the
plan sponsor of the Western Union Financial Services, Inc. Health
and Welfare Benefit Plan, and the First Data Parties shall have no
liability relating to such plan. The Western Union Financial
Services, Inc. Health and Welfare Benefit Plan covers only
collectively bargained employees. As of the date of this Agreement,
all eligible non-union Domestic Business Employees participate in
the First Data Corporation Health and Welfare Benefit
Plan.
4.02 Continued Participation in
First Data U.S. Welfare Plans; Establishment of Separate U.S.
Welfare Plan Contracts. For the period beginning at the close of
business on the Distribution Date and ending as of 11:59 p.m. on
December 31, 2006, all eligible non-union Domestic Business
Employees shall continue to be eligible to participate in the First
Data Corporation Health and Welfare Benefit Plan. First Data and
Western Union shall take reasonable steps to have separate provider
contracts established under the terms of the First Data Corporation
Health and Welfare Benefit Plan to provide coverage to Domestic
Business Employees during such period. In consideration for the
continued participation of the eligible non-union Domestic Business
Employees in the First Data Corporation Health and Welfare Benefit
Plan through December 31, 2006, Western Union shall pay to
First Data, or reimburse it for, such amounts as are set forth in
the Health and Life Benefits Schedule to the Transition Services
Agreement.
4.03 Western Union’s
Welfare Plans. (a) On or before, but effective as of
January 1, 2007, Western Union shall have adopted for the
benefit of eligible Domestic Business Employees and their
respective eligible dependents, health (including medical, vision
and dental), life, accidental death and dismemberment, disability
and other Welfare Plans as determined by Western Union (the “
Western Union Welfare Plans ”). Domestic
Business Employees shall be eligible to participate in the Western
Union Welfare Plans as of January 1, 2007 on the terms
established by Western Union.
(b) Following the Distribution Date,
Western Union shall cause its Non-U.S. Subsidiaries to continue to
maintain in full force and effect Welfare Plans as were sponsored
and maintained at such Subsidiaries immediately prior to the
Distribution Date, and neither First Data nor any First Data
Subsidiary shall have any liability or obligation with respect to
such plans or any participants or former participants in such plans
with respect to their participation therein. First Data and Western
Union shall have separate provider contracts established for
employees of First Data and Western Union Non-U.S. Subsidiaries
effective on or prior to the Distribution Date. In addition,
effective either prior to or as of the Distribution Date, Western
Union shall cause its Non-U.S. Subsidiaries in the United Kingdom,
Japan, Canada, and Australia to adopt Welfare Plans with
appropriate eligibility and benefits terms, to ensure that
Non-Domestic Business Employees in such countries are either
(1) eligible to participate in the same type of plan and enjoy
the same level of benefits for which such Non-Domestic Business
Employees were eligible immediately prior to the Distribution Date
(or date of plan adoption, if earlier), or (2) eligible to
participate in a plan intended to provide a comparable level of
benefits for which such Non-Domestic Business Employees were
eligible immediately prior to the Distribution Date (or date of
plan adoption, if earlier), and neither First Data nor any First
Data Subsidiary shall have any liability or obligation with respect
to such plans or any participants in such plans.
4.04 Welfare Plan
Liabilities.
(a) Western Union
Liabilities. Except as otherwise provided in this Agreement,
Western Union shall assume, and be solely responsible for all First
Data and Western Union Welfare Plan liabilities incurred by any
Business Employee on or after the Distribution Date.
(b) First Data Liabilities.
First Data shall continue to be responsible after the Distribution
Date for employer liabilities under the First Data Corporation
Health and Welfare Benefit Plan and any Non-U.S Welfare Benefit
Plan incurred with respect to Business Employees and their eligible
dependents only with respect to the following (except as otherwise
provided in this Agreement):
(1) Continuation Coverage for
Terminated Domestic Business Employees and their Dependents.
Any Domestic Business Employee whose employment terminates prior to
January 1, 2007 for any reason, including a Domestic Business
Employee currently receiving First Data Corporation Health and
Welfare Plan benefits pursuant to a termination agreement or an
“Agreement and Release” under the applicable First Data
severance policy, and any dependent of such Domestic Business
Employee, who elected or is eligible to elect, pursuant to rights
under COBRA or any comparable state law, to continue participation
in the First Data Corporation Health and Welfare Benefit Plan on
the applicable date of termination;
(2) Disabled Persons. First
Data shall continue to be responsible after the Distribution Date
for all claims for long-term disability incurred prior to the
Distribution Date by any non-union Domestic Business Employee who
is absent from active employment due to a total disability, as
defined in the First Data Corporation Health and Welfare Benefit
Plan, on or prior to the Distribution Date to the extent that such
long-term disability benefits are provided under an insurance
contract. First Data shall also be responsible for long-term
disability benefits for any Domestic Business Employee who is
receiving weekly short-term disability benefits as of the
Distribution Date and who becomes eligible for long-term disability
benefits thereafter, provided that the total disability relates to
the same condition for which weekly short-term disability benefits
were paid and, provided further, that such long-term disability
benefits are payable under an insurance contract. Western Union
shall assume and be solely responsible for all other claims for
long-term disability payable on or after the Distribution Date with
respect to any Business Employee and shall continue to be
responsible for all claims for short-term disability benefits for
any Domestic Business Employee, without regard to when the
disability occurred.
4.05 Flexible Spending
Accounts. For the period
beginning at the close of business on the Distribution Date and
ending as of 11:59 p.m. on December 31, 2006, all eligible
non-union Domestic Business Employees shall continue to be eligible
to participate in the First Data Flexible Spending Account Plan
(the “ First Data FSA ”). Payflex, the
current First Data FSA vendor, shall maintain the flexible spending
account balances for all Domestic Business Employees under the
First Data FSA as of December 31, 2006. All 2006 Claims made
by Domestic Business Employees shall be submitted to Payflex. Any
forfeitures attributable to Domestic Business Employees under the
First Data FSA which occur after all 2006 Claims have been
processed by Payflex shall be used by First Data as permitted under
applicable regulations and an equivalent amount reimbursed to
Western Union. For purposes of this Section 4.05, the term
“ 2006 Claims ” means: (i) any
claims by Domestic Business Employees incurred on or prior to
December 31, 2006, and (ii) any claims by Domestic
Business Employees incurred through
March 15, 2007 and which are designated by
the Domestic Business Employees to be offset against their
respective December 31, 2006 balances under the First Data
FSA. Effective January 1, 2007, Western Union shall adopt and
maintain a flexible spending account plan (the “
Western Union FSA ”) with a new FSA vendor. All
claims incurred under the Western Union FSA by Domestic Business
Employees shall be made to the new Western Union FSA
vendor.
4.06 First Data
Assets. First Data shall
retain all claim reserves, bank accounts, trust funds or other
balances maintained by or on behalf of the First Data Corporation
Health and Welfare Benefit Plan.
ARTICLE V
EQUITY COMPENSATION
PLANS
5.01 Stock
Options.
(a) First Data and Western Union
shall take any and all action as shall be necessary or appropriate,
including without limitation, approval of the provisions of this
Article V by the Western Union Board of Directors and the
Compensation Committee of the First Data Board of Directors, so
that options issued under the First Data Corporation 1992 Long Term
Incentive Plan, the 2002 First Data Corporation Long Term Incentive
Plan, the First Data Corporation 1993 Director’s Stock Option
Plan, the Concord EFS, Inc. 1993 Incentive Stock Option Plan, the
Concord EFS, Inc. 2002 Stock Option Plan, and the Star Systems,
Inc. 2000 Equity Incentive Plan (collectively, the “
First Data LTIPs ”) to purchase First Data
Common Stock (“ First Data Stock Options
”) held at the close of business on the Distribution Date by
current and former employees and directors of First Data and its
Subsidiaries and Affiliate
