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Exhibit 10.01
SEPARATION AGREEMENT
AND RELEASE OF ALL CLAIMS
This
Separation Agreement and Release of All Claims
(“Agreement”) is entered into by and between Philip W.
Milne (“Mr. Milne”) and MoneyGram International,
Inc., a Delaware corporation, and its predecessors, successors,
affiliates, subsidiaries and related companies
(“MoneyGram”) as of June 18, 2008.
WHEREAS, MoneyGram employs Mr. Milne in the position of
President and Chief Executive Officer and Mr. Milne also
serves as the Chairman of the Board of Directors of MoneyGram;
WHEREAS, the parties have mutually agreed that
Mr. Milne’s employment with MoneyGram and his position
on its Board of Directors will terminate effective June 19,
2008 (the “Separation Date”);
WHEREAS , Mr. Milne is a participant in the MoneyGram
International, Inc. Special Executive Severance Plan (Tier I) (the
“Severance Plan”) and may be entitled to certain
payments and benefits pursuant to the Severance Plan;
WHEREAS , MoneyGram and Mr. Milne are parties to an
Amended and Restated Employment Agreement dated November 5,
2007 and effective July 1, 2005 (the “Employment
Agreement”), which Employment Agreement provides for a
two-year non-competition period following the termination of
Mr. Milne’s employment;
WHEREAS , Mr. Milne may be entitled to certain payments
and benefits pursuant to the Employment Agreement, which payments
and benefits are to be applied to and set off against
MoneyGram’s obligations under the Severance Plan;
WHEREAS , Mr. Milne and MoneyGram Payment Systems,
Inc., including its parent companies, predecessors, successors,
affiliates, and subsidiaries are parties to an Employee Trade
Secret, Confidential Information and Post-Employment Restriction
Agreement dated and effective April 14, 2006 (the
“Post-Employment Restriction Agreement”);
WHEREAS , Mr. Milne and MoneyGram have agreed to amend
and restate Mr. Milne’s obligations under the
Post-Employment Restriction Agreement;
WHEREAS, Mr. Milne and MoneyGram have agreed upon the
following payments, benefits, and other terms and conditions under
which they will end their employment relationship and all other
relationships and wish to resolve all actual and potential disputes
between them.
NOW,
THEREFORE, in consideration of the mutual promises, agreements,
covenants, and provisions contained in this Agreement, the
sufficiency of which is hereby acknowledged, MoneyGram and Mr.
Milne agree as follows:
1.
Termination of Employment .
Mr. Milne’s employment with MoneyGram shall terminate
effective as of the Separation Date. Effective as of that date,
Mr. Milne hereby resigns from MoneyGram’s Board of
Directors and from any other position he holds with MoneyGram
and/or its parent, subsidiary, or affiliate companies.
2.
Release of Claims by Mr. Milne . In
consideration for the receipt of the payments and other benefits
described in this Agreement, to which Mr. Milne understands
and acknowledges he may not otherwise be entitled without executing
this Agreement, Mr. Milne hereby releases and forever
discharges MoneyGram, its parent companies, predecessors,
successors, affiliates, subsidiaries, related companies,
shareholders, and their respective members managers, partners,
employees, officers, agents, and directors (individually a
“Released Party” and collectively the “Released
Parties”) from the following:
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2.1 |
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All claims arising out of or relating to Mr. Milne’s
employment with MoneyGram and/or Mr. Milne’s separation
from that employment; |
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2.2 |
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All claims arising out of or relating to the statements,
actions, or omissions of the Released Parties; |
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2.3 |
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All claims for any alleged unlawful discrimination, harassment,
retaliation or reprisal, or other alleged unlawful practices
arising under any federal, state, or local statute, ordinance, or
regulation, including without limitation, claims under Title VII of
the Civil Rights Act of 1964, as amended; the Age Discrimination in
Employment Act of 1967, as amended; the Americans with Disabilities
Act of 1990; the Family and Medical Leave Act of 1993; the Equal
Pay Act of 1963; the Worker Adjustment and Retraining Notification
Act; the Employee Retirement Income Security Act of 1974; the Fair
Credit Reporting Act; the Minnesota Human Rights Act, any other
federal, state or local anti-discrimination acts, state wage
payment statutes and non-interference or non-retaliation
statutes; |
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2.4 |
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All claims for alleged wrongful discharge; breach of contract;
breach of implied contract; failure to keep any promise; breach of
a covenant of good faith and fair dealing; breach of fiduciary
duty; promissory estoppel; Mr. Milne’s activities, if
any, as a “whistleblower”; defamation; infliction of
emotional distress; fraud; misrepresentation; negligence;
harassment; retaliation or reprisal; constructive discharge;
assault; battery; false imprisonment; invasion of privacy;
interference with contractual or business relationships; any other
wrongful employment practices; and violation of any other principle
of common law; |
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2.5 |
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All claims for compensation of any kind, including without
limitation, commission payments, bonus payments, vacation pay,
expense reimbursements, reimbursement for health and welfare
benefits, and perquisites; |
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2.6 |
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All claims for back pay, front pay, reinstatement, other
equitable relief, compensatory damages, damages for alleged
personal injury, liquidated damages, and punitive damages; and |
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2.7 |
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All claims for attorneys’ fees, costs, and interest
except for those arising from section 4.8 of this Agreement or
Section 7 of the Severance Plan. |
Mr. Milne acknowledges
and agrees that this release extends to and includes any and all
claims, known or unknown, asserted or unasserted, direct or
indirect, which he has or may have by reason of any matter, fact or
thing occurring up through the date of his signature on this
Agreement. MoneyGram acknowledges and understands, however, that
(1) Mr. Milne does not release any claims that the law
does not allow to be waived by private agreement; (2) Except
as otherwise provided in this Agreement, Mr. Milne does not
release any claims that arise from events or actions occurring
after the date on which Mr. Milne signs this Agreement; and
(3) Mr. Milne does not release any claims to
indemnification or insurance coverage (including but not limited to
D&O coverage) that he may have with respect to any claims made
or threatened against him in his capacity as an officer, director,
or employee of MoneyGram.
3. Release of
Claims by MoneyGram. Except as otherwise set forth in this
Agreement, and with the exception of any suits, claims,
counter-claims, actions, causes of action, rights, judgments,
damages, costs, attorneys’ fees, losses, debts, setoffs or
defenses arising from any criminal conduct by Mr. Milne,
MoneyGram, its parent companies, predecessors, successors,
affiliates, subsidiaries, and related companies hereby releases and
forever discharges Mr. Milne from any and all suits, claims,
counter-claims, actions, causes of action, rights, judgments,
damages, costs, attorneys’ fees, losses, debts, setoffs or
defenses to the extent known by the members of MoneyGram’s
Board of Directors or its (a) EVP & Chief Operating
Officer, (b) EVP & Chief Financial Officer, (c) EVP,
General Counsel & Secretary, (d) EVP, Human Resources
& Corporate Services, and (e) EVP & Chief Compliance
Officer – Government Affairs (its “Senior Leadership
Team”) as of the date on which MoneyGram signs this
Agreement.
4.
Payments and Benefits . In exchange for the release
of claims in this Agreement and in further consideration for the
post-employment restrictions set forth in Exhibit A to this
Agreement, MoneyGram shall make the following payments and provide
the following benefits to Mr. Milne:
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4.1 |
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Salary Severance. A payment in the amount of $2,054,167,
less any and all applicable voluntary and required withholdings,
representing salary severance, and payable on the first day of the
seventh month following the Separation Date; |
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4.2 |
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Bonus Severance. A payment in the amount of $3,277,600,
less any and all applicable voluntary and required withholdings,
representing Management and Line of Business Incentive Plan bonus
severance and a payment in the amount of $4,176,050, less any and
all applicable voluntary and required withholdings, representing
Performance Unit Incentive Plan bonus severance (collectively
“Bonus Severance”). Mr. Milne acknowledges and
agrees that the Bonus Severance shall be payable in lieu of the
following to which he has relinquished all actual or potential
claims: |
4.2.1 the
pro-rata Management and Line of Business Incentive Plan bonus
severance payable under the Employment Agreement;
4.2.2 the
accelerated vesting of any and all Performance Unit Incentive Plan
awards provided for under the Employment Agreement;
4.2.3
MoneyGram’s obligation under the Employment Agreement to
continue to maintain and pay the premiums with respect to
Milne’s family medical and dental coverage from April 1,
2011 for the remainder of Milne’s and his spouse’s
lifetimes (hereinafter, the “Lifetime Medical
Obligation”); and
4.2.4 the
accelerated vesting of any unvested stock options, restricted stock
awards or other equity incentives.
Payment of Bonus
Severance shall be made on the first day of the seventh month
following the Separation Date; provided, however, that the portion
of Bonus Severance representing payment in lieu of the Lifetime
Medical Obligation shall be paid on January 2, 2009 to satisfy
the requirements of section 409A of the Internal Revenue Code.
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4.3 |
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Special Retirement Benefits. Mr. Milne or his
beneficiaries shall be paid special retirement benefits under the
MoneyGram Supplemental Pension Plan (“SERP”) as and
when Mr. Milne or such beneficiaries become entitled to
benefits under the SERP, equal to the excess of (i) the
retirement benefits that would be payable to Mr. Milne or such
beneficiaries under the SERP if Mr. Milne’s employment
had continued through March 24, 2011 (the “Severance
Period”), assuming all of his accrued benefits under the SERP
(including those attributable to the Severance Period) were fully
vested, and his final average compensation was equal to the Deemed
Final Average Compensation (as defined in the Severance Plan) over
(ii) the total benefits actually payable to Mr. Milne or his
beneficiaries under the SERP. All such benefits will be payable
pursuant to the terms and conditions of the SERP, and no additional
enhancements will be made to Mr. Milne’s SERP benefits
under the terms of the SERP or otherwise; |
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4.4 |
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Medical and Dental Coverage. Mr. Milne’s
existing company-provided family medical and dental coverage will
continue through June 30, 2008. Beginning July 1, 2008 and
continuing through March 31, 2011, Mr. Milne and his
spouse will continue to receive family medical coverage under the
Comprehensive Major Medical Plan and family dental coverage under
the Comprehensive Enhanced with Orthodontic Coverage Plan and will
receive reimbursement for the tax cost, if any, arising from income
imputed to him due to the provision of these coverages.
Reimbursement for tax cost payable during the first six months
following the Separation Date shall be delayed to the first day of
the seventh month following the Separation Date to satisfy the
requirements of section 409A of the Internal Revenue Code; |
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4.5 |
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Life Insurance. Mr. Milne’s existing
company-provided life insurance coverage will continue through
June 30, 2008. Beginning July 1, 2008 and continuing
through March 31, 2011, Mr. Milne will continue to
receive basic life insurance coverage on the same terms as if he
were still employed by MoneyGram and will receive reimbursement for
the tax cost, if any, arising from income imputed to him due to the
provision of this coverage. Reimbursement for tax cost payable
during the first six months following the Separation Date shall be
delayed to the first day of the seventh month following the
Separation Date to satisfy the requirements of section 409A of the
Internal Revenue Code. Further, to the extent that
Mr. Milne’s right to life insurance coverage set forth
above (or reimbursements for the cost of such coverage, as
applicable) is taxable to Mr. Milne, he shall pay for such
coverage for the first six months following the Separation Date and
shall be reimbursed for such payments on the first day of the
seventh month following the Separation Date to satisfy the
requirements of section 409A of the Internal Revenue Code; |
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4.6 |
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Outplacement Services. Mr. Milne will receive
reimbursement for the cost of reasonable outplacement services for
a period of two (2) years following the Separation Date, up to
a maximum reimbursement of $50,000; |
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4.7 |
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Other Benefits. Mr. Milne will receive a payment in
the amount of $205,000 representing vacation pay and payment in
lieu of certain taxable perquisites to which Mr. Milne may
have otherwise been entitled under Section 6(b)(iv) of the
Severance Plan. Payment of vacation pay shall be made as soon as
practicable following the Separation Date. Payment in lieu of
taxable perquisites shall be delayed until the first day of the
seventh month following the Separation Date. In addition, to
satisfy the requirements of section 409A of the Internal Revenue
Code, the portion of payment representing payment in lieu of
taxable perquisites for the period from January 1, 2009
through March 31, 2011 shall be paid on January 2, 2009;
and |
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4.8 |
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Upon receipt of copies of invoices, and subject to a cap of
$25,000, MoneyGram will pay Mr. Milne’s attorneys’
fees and costs relating to or arising from Mr. Milne’s
attorneys’ review, negotiation and completion of this
Agreement. |
The parties acknowledge
that the above payments and benefits may arise from obligations set
forth in the Employment Agreement, the Severance Plan, or both. The
parties agree that these payments and benefits satisfy any and all
of MoneyGram’s obligations under the Employment Agreement and
the Severance Plan. Mr. Milne shall have no right to any
additional or further payments or benefits pursuant to the
Employment Agreement, the Severance Plan, or otherwise, except as
expressly set forth in Section 6 below.
In the event it should be
determined that any of the payments made hereunder to
Mr. Milne would be subject to an Excise Tax, then
Mr. Milne shall be entitled to receive an additional payment
(the “Gross-Up Payment”) in an amount such that, after
payment by Mr. Milne of all taxes (and any interest and
penalties imposed with respect thereto as a direct result of any
Underpayment as determined under the Severance Plan or any other
action or inaction of MoneyGram, but not any interest and penalties
imposed as a direct result of Mr. Milne’s failure to
timely remit taxes) and Excise Tax imposed upon the Gross-Up
Payment, Mr. Milne will retain an amount of the Gross-Up
Payment equal to the Excise Tax that his been imposed. The
parties’ rights and obligations with respect to any Gross-Up
Payment shall be determined pursuant to and conditioned upon
compliance with the terms of Section 7 of the Severance
Plan.
5.
Payments and Benefits for Post-Employment Restriction
Obligations . Mr. Milne and MoneyGram
acknowledge and agree that a portion of the severance payable
hereunder is attributable to Mr. Milne’s post-employment
restriction obligations. Mr. Milne and MoneyGram further
acknowledge and agree that certain of the consideration to be paid
under this Agreement will be allocated to the value of those
non-competition obligations. Mr. Milne and MoneyGram hereby
agree that Ernst & Young LLP (“Ernst”) will act as
the Accounting Firm for the purposes of determining and allocating
that value. Mr. Milne and MoneyGram agree to cooperate fully
with Ernst in its determination of that value, and to file any
required tax returns or other documents reflecting the value as
determined by Ernst which such cooperation includes, but is not
limited to, being available to meet in person with Ernst personnel
at Ernst’s and/or MoneyGram’s offices. If a tax
authority determines that Mr. Milne has any additional tax
liability or other obligations arising from or relating to such
determination and/or allocation of value, MoneyGram agrees to
defend, utilizing counsel of MoneyGram’s choosing, and fully
indemnify Mr. Milne for and from such additional tax liability
or other obligations.
6. Other
Benefit Coverages after Separation Date .
Mr. Milne’s other benefit coverages not addressed in
section 3 above are affected as follows:
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6.1 |
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Mr. Milne’s participation in the MoneyGram
International, Inc. 401K Program (“401K Program”) and
the employer matching obligation under the 401K Program, will cease
as of the Separation Date, and any distribution of the 401K
Program’s funds will be in accordance with the provisions of
the 401K Program; |
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6.2 |
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The MoneyGram Pension Plan was frozen effective
December 31, 2003. Funds due to Mr. Milne under the
MoneyGram Pension Plan, if any, will be distributed to
Mr. Milne in accordance with the provisions of the MoneyGram
Pension Plan; |
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6.3 |
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Mr. Milne’s business travel accident, short-term
disability and long-term disability coverages will cease as of the
Separation Date. Shortly following the Separation Date,
Mr. Milne will receive information regarding the option, if
any, for conversion of Mr. Milne’s group long-term
disability coverage to individual coverage which such conversion,
if any, shall be at Mr. Milne’s sole expense; |
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6.4 |
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Mr. Milne may possess exercisable Viad Corp. and/or
MoneyGram International, Inc. Stock Option rights. Mr. Milne
agrees to observe MoneyGram’s policy on insider trading and
will not purchase or sell MoneyGram stock while in possession of
inside information, or prior to the next window period that begins
at or after Mr. Milne’s Separation Date. All such rights
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