SPLIT-DOLLAR AGREEMENT AGREEMENT (this "Agreement"), dated as of August 1, 2001, by and among CONCORD EFS, INC., a corporation duly organized and existing under the laws of the State of Delaware (hereinafter sometimes called the "Corporation"), ROSS N. COHEN, an individual resident of the State of Alabama, Trustee of the RONALD V. CONGEMI 2001 TRUST, a trust settled under the laws of the State of Alabama (hereinafter called the "Owner"), and RONALD V. CONGEMI, an individual resident of the State of Tennessee ("Congemi"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, Congemi is a valued officer, director and employee of the Corporation and the Corporation desires to retain him in such capacities; WHEREAS, as an inducement to such continued employment, the Corporation desires to assist Congemi with his personal life insurance program by entering into this Agreement; WHEREAS, the Corporation is desirous of assisting Congemi in paying for life insurance on his life by entering into this Agreement with the Owner; WHEREAS, the Corporation has determined that this assistance can best be provided under a "split-dollar" arrangement and the Owner has applied for Insurance Policy No. 1Y200636 (the "Policy") issued by The New England Life Insurance Company (the "Insurer") in the face amount of $21,000,000 on Congemi's life; and WHEREAS, the Corporation and the Owner agree that the Policy shall be subject to this Split-Dollar Agreement. 1 <PAGE> NOW, THEREFORE, in consideration of the premises, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the Corporation, Congemi and the Owner hereby mutually covenant and agree as follows: Section 1. Purchase of the Policy and Term of Funding Period 1.1 The Owner will purchase the Policy contemporaneously with the execution of this Agreement. The Corporation, Congemi and the Owner agree that (i) they will take all necessary actions to cause the Policy to be issued to the Owner and cause the Policy to conform to the terms of this Agreement, and (ii) the Policy will be subject to the terms and conditions of this Agreement and the Collateral Assignment, as that term is defined in Section 3 2 hereof. 1.2 The term during which the Corporation will fund the Policy under this Agreement shall commence on August 1, 2001, and shall end on the earlier of August 1, 2011, or the normal retirement date of Congemi, whichever shall first occur (the "Term"). For purposes of this Section 1, the term "normal retirement date" means the latter of (i) the date of the 65th birthday of Congemi or (ii) the date of the tenth anniversary of the date of hire of Congemi by the Corporation. 1.3 During the Term, the Corporation agrees to pay all premiums due on the Policy to the Insurer pursuant to the terms of the Policy, provided, however, that the Corporation agrees to pay an amount to the Insurer on the Policy not to exceed $1,500,000 per year. The Corporation shall, upon request of the Owner, promptly furnish the Owner evidence of timely payment of such premiums. 2 <PAGE> Section 2. Federal Income Tax Treatment 2.1 The Corporation and the Owner agree that, pursuant to Internal Revenue Notice 2001-10, 2001-5 IRB 459 (the "Notice"), for federal income tax purposes, the transactions set forth in this Agreement shall be characterized as an investment in the Policy for the Corporation's own account and accounted for and reported under Sections 61 and 83 of the Internal Revenue Code of 1986, as amended (the "Code"), and the Treasury regulations promulgated thereunder, as set forth in Section IV, A., 3 of the Notice. Notwithstanding the foregoing, the Corporation and the Owner reserve the right to amend or modify such federal income tax treatment pursuant to further guidance issued by the Internal Revenue Service subsequent to the date of this Agreement. 2.2 In accordance with Section 2.1 hereinabove, the Corporation and the Owner agree that (a) the Corporation will be treated as having acquired beneficial ownership of the Policy through its share of the premium payments; (b) the Owner will have compensation income under Section 61 of the Code equal to the value of the life insurance protection provided to the Owner each year that the arrangement remains in effect, reduced by any payments made by the Owner for such life insurance protection, (c) the Owner will have compensation income under Section 61 of the Code equal to any dividends or similar distributions made to the Owner under the Policy (including any dividends described in Rev. Rule. 66-110 applied to provide additional policy benefits), and (d) the Owner will have compensation income under Section 83(a) of the Code to the extent that the Owner acquires a substantially vested interest in the cash surrender value of the Policy, reduced under Section 83(a)(2) of the Code by any consideration paid by the Owner for such interest in the cash surrender value. 3 <PAGE> Section 3. Policy Ownership and Repayment of Premium Payments 3.1 The Owner shall be the sole and absolute owner of the Policy and may exercise all ownership rights granted to the owner thereof by the terms of the Policy, except as may otherwise be expressly provided herein. All incidents of ownership in the Policy are expressly retained by the Owner, including, as example and not as a limitation of the foregoing, the right to change the beneficiary of the Policy, the right to borrow on the security of the Policy (but only to the extent of the difference between (a) the cash value of the Policy and (b) the cumulative amount of the Corporation's interest in the Policy in excess of the amount of all outstanding prior loans to the Corporation made against the Policy); the right to pledge or assign its interest in the Policy for such loans or advances; the right, in the event of a termination of the Agreement, to realize against the cash value of the Policy (to the extent such cash value exceeds the Corporation's interest therein); the right, in the event of the Employee's death (as defined in Section 8.2 hereof), to exercise settlement options and realize against the proceeds of the Policy to the extent said proceeds exceed the Corporation's interest; and the right, subject to the interest of the Corporation to be reimbursed for its interest, to surrender or cancel the policy. The Owner has the right to assign its ownership rights to any person or entity it, in its absolute discretion, chooses, but such an assignment will be subject to the collateral assignment to the Corporation set forth in Section 3.2 hereof. 3.2 Except as may otherwise be expressly provided herein, the Corporation shall have no rights, interests or privileges of ownership in the Policy. To secure the repayment to the Corporation of the amount due the Corporation under Section 4.l(a) hereof, the Owner has, contemporaneously herewith, assigned an interest in the Policy to the Corporation as collateral (the "Collateral Assignment"), substantially in the form attached hereto as Exhibit A. which ---------- gives the Corporation the limited power to enforce its right to be repaid the amount due the 4 <PAGE> Corporation under Section 4.l(a) hereof. The Corporation may neither have nor exercise any right as collateral assignee of the Policy that could in any way defeat or impair the Owner's right to receive the net cash surrender value of the Policy decreased by any outstanding Policy loans to him on the death benefit proceeds of the Policy in excess of the amount due the Corporation under Section 4.l(a) hereof. The Collateral Assignment shall not be terminated, altered or amended by the Owner without the express prior written consent of the Corporation, except that the Owner may assign its ownership rights to a third party, subject to the Collateral Assignment, as provided in Section 3.1 hereof. 3.3 The Owner will not exercise any right under the Policy without first giving the Corporation written notice of the Owner's intention to exercise such right; provided, however, that a change of beneficiary having no effect on the Corporation's status as a beneficiary shall not require such notice. The Owner shall take no action with respect to the Policy that would in any way compromise or jeopardize the Corporation's right to be repaid the amount due the Corporation under Section 4.l(a) hereof, without the Corporation's express written consent. 3.4 The Corporation may not, without the prior written consent of the Owner, exercise its rights under the Policy, including, but not limited to, the transfer or assignment of its interest in the Policy to any person or entity as collateral. Section 4. Beneficiary Provisions 4.1 At the earliest time the life insurance proceeds become payable under the Policy, the Corporation and the Owner agree the Corporation and the Owner shall promptly take all action necessary to obtain payment of the death benefit provided under the Policy from the Insurer of the amount payable under the Policy, and payment of such death benefit will be divided and shared as follows: 5 <PAGE> (a) The Corporation, as collateral assignee under the Collateral Assignment, will be entitled to receive an amount of such death benefit payment equal to the aggregate premiums paid by it as of the date of the Employee's death (as defined in Section 8.2 hereof) reduced by the sum of (i) any amounts previously received by the Corporation from or to the credit of the Owner as a repayment of the liabilities created hereunder and (ii) any outstanding indebtedness incurred by the Corporation and owed to the Insurer which was secured by the Policy, including interest accrued thereon. If the Corporation has paid additional premiums attributable to a rider providing for waiver of premium in the event of the Congemi's disability, the term "premiums", as used in this Section 4 will not include any premiums waived pursuant to the terms of such rider while this Agreement is in force; and (b) The beneficiary or beneficiaries specified by the Owner as then in effect under the Policy shall receive the balance of the payment of such death benefit, if any. 4.2 It is agreed and understood that receipt by the Corporation of any death benefit proceeds as a beneficiary under the Policy shall be considered a repayment of the Corporation's premium payments under Section 4.1(a) hereof to the extent of such proceeds. To the extent that the Corporation does not receive death benefit proceeds or in the event that such proceeds are insufficient to repay the Corporation the amount provided in Section 4.l(a), the Owner shall be liable for the remaining balance of the amount provided in Section 4.1(a). Section 5. Termination of Agreement Notwithstanding anything to the contrary herein, this Agreement shall terminate on the first to occur of the following: 6 <PAGE> (a) Express cancellation of this Agreement by the Owner upon ninety (90) days written notice to the Corporation; or (b) Lapse or termination of the Policy after mutual written consent of the Owner and the Corporation to such lapse or termination. Section 6. Employee Retirement Income Security Act of 1974 6.1 For the purpose of the Employee Retirement Income Security Act of 1974 ("ERISA"), the Corporation will be the named fiduciary (the "Named Fiduciary") and the plan administrator (the "Plan Administrator") of the split-dollar life insurance arrangement created by this Agreement (the "Plan") for which this Agreement is hereby designated the written plan instrument. 6.2 The Corporation's Board of Directors may authorize a person or group of persons to fulfill the responsibilities of the Corporation as Plan Administrator, The Named Fiduciary or the Plan Administrator may employ others to render advice with regard to its responsibilities under the Plan. The Named Fiduciary may also allocate fiduciary responsibilities to others and may exercise any other powers necessary for the discharge of its duties, to the extent such exercise is not in conflict with ERISA. 6.3 The following claims procedures shall control the determination of benefit payments under the Plan: (a) Filing of a Claim for Benefits. Any insured, beneficiary or other ------------------------------ individual ("Claimant") entitled to benefits under the Plan or under the Policy will file a claim request with the Insurer with respect to such benefits (the "Claim for Benefits"). The Plan Administrator will, upon written request of a Claimant, make available copies 7 <PAGE> of any claim forms or instructions provided by the Insurer or advise the Claimant where copies of such forms or instructions may be obtained. (b) Denial of Claim. A Claim for Benefits will be denied if the --------------- Insurer determines that the Claimant is not entitled to receive such benefits. Notice of denial shall be furnished to the Claimant within a reasonable period of time after receipt of the Claim for Benefits by the Insurer. (c) Content of Notice. The Insurer shall provide to every Claimant ----------------- who is denied a Claim for Benefits written notice setting forth, in a manner calculated to be understood by the Claimant, the following: 1. The specific reason or reasons for the denial; 2. Specific reference to pertinent Plan provisions on which the denial is based; 3. A description of any additional material or information necessary for the Claimant to perfect the claim, and an explanation of why such material or information is necessary; and 4. An explanation of the Plan's Claim Review Procedure as set forth below. (d) Claim Review Procedure. The purpose of the Claim Review Procedure ---------------------- is to provide a method by which a Claimant may have a reasonable opportunity to appeal a denial of a Claim for Benefits to the Insurer for a full and fair review. To accomplish that purpose, the Claimant or his duly authorized representative: 1. May request a review upon written application to the Insurer; 8 <PAGE> 2. May review pertinent Plan documents; and 3. May submit issues and comments in writing to the Insurer. A Claimant (or his duly authorized representative) shall request a review by filing a written application for review with the Insurer at any time within 60 days after receipt by the Claimant of written notice of the denial of his Claim for Benefits. (e) Decision on Review. A decision on review of a denied Claim for ------------------ Benefits shall be made in the following manner: 1. The decision on review shall be made by the Insurer, who may in its discretion hold a hearing on the denied claim. Such decision shall be made promptly, and not later than 60 days after receipt of the request for review, unless special circumstances (such as the need to hold a hearing) require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review. 2. The decision on review shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the Claimant, and specific references to the pertinent Plan provisions upon which the decision is based. Section 7. Reorganization 7.1 Nothing contained in this Agreement shall prevent any consolidation or merger of the Corporation with or into any other corporation or corporations (whether or not affiliated with the Corporation, or successive consolidations or mergers in which the Corporation or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance or lease (or successive sales, conveyances or leases) of all or substantially all of the property of the 9 <PAGE> Corporation to any other corporation (whether or not affiliated with the Corporation) authorized to acquire and operate the same and which shall be organized under the laws of a State of the United States or the District of Columbia; provided, however, and the Company hereby covenants and agrees, that upon any such consolidation, merger, sale, conveyance or lease, the due and punctual performance and observance of all of the covenants and conditions of this Agreement to be performed by the Corporation shall be expressly assumed, by written instrument executed and delivered to Congemi, by the corporation (if other than the Corporation) formed by such consolidation, or into which the Corporation shall have been merged, or by the corporation which shall have acquired or leased such property. 7.2 In case of any such consolidation, merger, sale, conveyance or lease, and upon the assumption, as provided in Section 7,1 above, by the successor corporation of the due and punctual performance and observance of all covenants and conditions of this Agreement to be performed by the Corporation, such successor corporation shall succeed to and be substituted for the Corporation with the same effect as it had been named herein as the "Corporation". In the event of any such consolidation, merger, sale, conveyance or lease, the party named as the "Corporation" in this Agreement or any successor which shall thereafter have become such in the manner prescribed in Section 7.1 above may be dissolved, wound-up and liquidated at any time thereafter and such party shall be released from its liabilities and obligations under this Agreement. 7.3 Except as provided in Section 7.2 above, upon any distribution of assets of the Corporation, upon any dissolution, winding up, total or partial liquidation of the Corporation, voluntary or involuntary, or upon any reorganization or similar proceeding relating to the Corporation or any of its property, whether, bankruptcy, insolvency or receivership proceedings, 10 <PAGE> or upon a general assignment for the benefit of creditors, or any other marshalling of the assets and liabilities of the Corporation (each a "Winding Up"), the Corporation shall, prior to the taking of any corporate action in furtherance of any Winding Up, set aside in trust, irrevocably, for the benefit of Congemi, sufficient funds to satisfy all then-remaining obligations and liabilities of the Corporation under this Agreement; and if such trust is not established for the benefit of Congemi, then, upon any payment or distribution of assets of the Corporation of any kind or character, whether in cash, property or securities, an amount sufficient to satisfy such obligations and liabilities shall be paid by the liquidating trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly to Congemi in satisfaction of the Corporation's obligations and liabilities hereunder. Section 8. Miscellaneous Provisions 8.1 This Agreement will be governed by and construed in accordance with the laws of the State of Tennessee applied without giving effect to any conflicts-of-law principles. 8.2 For purposes of this Agreement, the phrases, "Employee dies", "Employee's death" or the "death of the Employee", mean the death of Congemi, 8.3 This Agreement shall not be deemed to constitute a contract of employment between the parties, nor shall any provision hereof restrict the right of the Corporation to discharge Congemi, or restrict the right of Congemi to terminate employment. 8.4 This Agreement sets forth the entire agreement among the parties concerning the subject matter hereof, and any amendment or discharge will be made only in writing. This Agreement is binding on, enforceable by and against and shall benefit the parties, their legal 11 <PAGE> representatives, successors and assigns. No beneficiary under the Policy shall obtain any vested right to have this Agreement continued in full. 8.5 (a) Notwithstanding the provisions of this Agreement, any life insurance company which has issued a policy of insurance which is subject to the provisions of this Agreement, including, but not limited to, the Insurer and the Policy, is hereby authorized to act in accordance with the terms of such policy as if this Agreement did not exist, and the payment or other performance of its contractual obligations by any such insurance company, in accordance with the terms of any such policy, shall completely discharge such insurance company from all claim, suits and demands of all persons whatsoever. (b) Notwithstanding Section 6 hereof, the Insurer is not deemed a party to this split-dollar arrangement, is not bound by the split-dollar arrangement, or deemed to have notice of the provisions of this split-dollar arrangement. Rather, the Insurer will be bound only by the provisions of and endorsements on the Policy, and any payments made or actions taken by it in accordance with said provisions or endorsements will fully discharge it from all claims, suits and demands of all persons whatsoever. 8.6 Whenever possible each provision of this Agreement is to be interpreted in a manner as to be effective and valid under applicable law, but if any provision is prohibited or invalid under applicable law, that provision will be ineffective to the extent of the prohibition or invalidity, without invalidating the remainder of the provisions or the remaining portions of this Agreement. To the extent permitted by law, the parties waive any provision of the law that renders a provision contained in this Agreement prohibited or unenforceable in any respect. 12 <PAGE> IN WITNESS WHEREOF, the parties hereto have hereunto set their hands and affixed their seals as of the date first above written. CONCORD EFS, INC. By: /s/ William E. Lucado ------------------------------------------- Its:_____________________________________________ RONALD V. CONGEMI 2001 TRUST By: /s/ Ross N. Cohen -------------------------------------------- Ross N. Cohen Its Trustee /s/ Ronald V. Congemi (L.S.) ------------------------------------------- RONALD V. CONGEMI 13
Source: OneCLE Business Contracts.