UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
(mark one)
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x
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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for the Quarterly Period Ended
March 31, 2014
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¨
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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for the transition period from to .
Commission File Number: 001-31950
___________________________________
MONEYGRAM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
___________________________________
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Delaware
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16-1690064
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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2828 N. Harwood St., 15
th
Floor
Dallas, Texas
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75201
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(Address of principal executive offices)
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(Zip Code)
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(214) 999-7552
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
___________________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes
x
No
¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes
x
No
¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
¨
No
x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of
April 30, 2014
,
54,583,973
shares of common stock, $0.01 par value, were outstanding.
TABLE OF CONTENTS
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EX-10.2
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EX-10.3
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EX-10.4
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EX-10.5
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EX-10.6
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EX-10.7
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EX-10.8
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EX-31.1
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EX-31.2
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EX-32.1
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EX-32.2
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EX-101
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
UNAUDITED
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(Amounts in millions, except share data)
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March 31, 2014
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December 31, 2013
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ASSETS
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Cash and cash equivalents
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$
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—
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$
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—
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Cash and cash equivalents (substantially restricted)
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2,153.9
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2,228.5
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Receivables, net (substantially restricted)
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890.0
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767.7
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Interest-bearing investments (substantially restricted)
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935.8
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1,011.6
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Available-for-sale investments (substantially restricted)
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41.6
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48.1
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Property and equipment, net
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133.6
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134.8
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Goodwill
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434.9
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435.2
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Other assets
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171.6
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161.0
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Total assets
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$
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4,761.4
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$
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4,786.9
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LIABILITIES
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Payment service obligations
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$
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3,691.7
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$
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3,737.1
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Debt
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840.8
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842.9
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Pension and other postretirement benefits
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96.3
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98.4
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Accounts payable and other liabilities
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172.1
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185.5
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Total liabilities
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4,800.9
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4,863.9
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COMMITMENTS AND CONTINGENCIES (NOTE 12)
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STOCKHOLDERS’ DEFICIT
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Participating Convertible Preferred Stock - Series D, $0.01 par value, 200,000 shares authorized, 109,239 issued at March 31, 2014 and December 31, 2013, respectively
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281.9
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281.9
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Common stock, $0.01 par value, 162,500,000 shares authorized, 62,263,963 shares issued at March 31, 2014 and December 31, 2013, respectively
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0.6
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0.6
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Additional paid-in capital
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1,014.8
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1,011.8
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Retained loss
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(1,177.2
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)
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(1,214.4
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Accumulated other comprehensive loss
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(37.4
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(33.0
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Treasury stock: 4,241,725 and 4,300,782 shares at March 31, 2014 and December 31, 2013, respectively
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(122.2
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(123.9
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Total stockholders’ deficit
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(39.5
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(77.0
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Total liabilities and stockholders’ deficit
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$
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4,761.4
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$
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4,786.9
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See Notes to Consolidated Financial Statements
3
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
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Three Months Ended March 31,
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(Amounts in millions, except per share data)
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2014
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2013
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REVENUE
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Fee and other revenue
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$
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367.7
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$
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337.7
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Investment revenue
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7.2
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2.8
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Total revenue
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374.9
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340.5
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OPERATING EXPENSES
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Fee and other commissions expense
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170.9
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154.3
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Investment commissions expense
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0.1
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0.1
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Total commissions expense
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171.0
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154.4
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Compensation and benefits
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69.7
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65.5
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Transaction and operations support
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71.3
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51.5
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Occupancy, equipment and supplies
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12.8
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13.0
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Depreciation and amortization
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13.1
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11.8
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Total operating expenses
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337.9
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296.2
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OPERATING INCOME
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37.0
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44.3
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OTHER EXPENSE
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Interest expense
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9.7
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17.4
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Debt extinguishment costs
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—
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45.3
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Total other expense
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9.7
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62.7
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Income (loss) before income taxes
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27.3
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(18.4
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Income tax benefit
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(11.7
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(5.8
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NET INCOME (LOSS)
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$
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39.0
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$
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(12.6
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EARNINGS (LOSS) PER COMMON SHARE
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Basic
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$
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0.54
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$
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(0.18
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Diluted
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$
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0.54
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$
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(0.18
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Weighted-average outstanding common shares and equivalents used in computing earnings (loss) per share
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Basic
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71.6
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71.5
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Diluted
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71.9
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71.5
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See Notes to Consolidated Financial Statements
4
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
UNAUDITED
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Three Months Ended March 31,
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(Amounts in millions)
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2014
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2013
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NET INCOME (LOSS)
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$
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39.0
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$
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(12.6
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OTHER COMPREHENSIVE LOSS
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Net unrealized holding gains on available-for-sale securities arising during the period, net of tax expense (benefit) of $0.5 and ($0.1)
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(4.4
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—
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Net change in pension liability, net of tax benefit of $0.6 and $0.5
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1.0
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1.2
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Unrealized foreign currency translation adjustments, net of tax benefit of $0.6 and $1.0
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(1.0
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(1.6
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Other comprehensive loss
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(4.4
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(0.4
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COMPREHENSIVE INCOME (LOSS)
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$
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34.6
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$
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(13.0
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)
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See Notes to Consolidated Financial Statements
5
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
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Three Months Ended March 31,
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(Amounts in millions)
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2014
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2013
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income (loss)
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$
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39.0
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$
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(12.6
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Adjustments to reconcile net income (loss) to net cash provided by operating activities:
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Depreciation and amortization
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13.1
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11.8
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Signing bonus amortization
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11.8
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8.8
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Signing bonus payments
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(4.9
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(8.6
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Loss on debt extinguishment
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—
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45.3
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Amortization of debt discount and deferred financing costs
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0.6
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1.4
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Provision for uncollectible receivables
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1.8
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2.4
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Non-cash compensation and pension expense
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5.5
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4.5
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Change in other assets
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(15.7
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6.0
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Change in accounts payable and other liabilities
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(14.4
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(49.2
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Other non-cash items, net
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0.4
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(1.6
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Total adjustments
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(1.8
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20.8
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Change in cash and cash equivalents (substantially restricted)
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74.6
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253.0
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Change in receivables (substantially restricted)
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(123.9
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)
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33.7
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Change in payment service obligations
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(45.4
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)
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(236.4
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)
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Net cash (used in) provided by operating activities
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(57.5
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)
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58.5
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Proceeds from maturities of investments classified as available-for-sale (substantially restricted)
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1.3
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6.7
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Purchases of interest-bearing investments (substantially restricted)
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(135.8
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)
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(264.7
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)
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Proceeds from maturities of interest-bearing investments (substantially restricted)
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210.8
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211.1
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Purchases of property and equipment
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(17.1
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(15.2
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Net cash provided by (used in) investing activities
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59.2
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(62.1
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Proceeds from issuance of debt
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—
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850.0
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Transaction costs for issuance and amendment of debt
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—
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(11.8
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Payments on debt
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(2.1
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)
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(813.1
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Prepayment penalty
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—
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(21.5
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)
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Proceeds from exercise of stock options
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0.4
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—
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Net cash (used in) provided by financing activities
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(1.7
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)
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3.6
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NET CHANGE IN CASH AND CASH EQUIVALENTS
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—
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—
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CASH AND CASH EQUIVALENTS—Beginning of period
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—
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—
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CASH AND CASH EQUIVALENTS—End of period
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$
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—
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$
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—
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Supplemental cash flow information:
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Cash payments for interest
|
$
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9.1
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$
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15.6
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Cash payments for income taxes
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$
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0.1
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$
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0.1
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Change in accrued purchases of property and equipment
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$
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(5.2
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)
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$
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3.2
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See Notes to Consolidated Financial Statements
6
MONEYGRAM INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
UNAUDITED
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(Amounts in millions)
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Preferred
Stock
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Common
Stock
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Additional
Paid-In
Capital
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Retained
Loss
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Accumulated
Other
Comprehensive
Loss
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Treasury
Stock
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Total
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|
January 1, 2014
|
$
|
281.9
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$
|
0.6
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$
|
1,011.8
|
|
|
$
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(1,214.4
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)
|
|
$
|
(33.0
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)
|
|
$
|
(123.9
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)
|
|
$
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(77.0
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)
|
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Net income
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—
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|
|
—
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—
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39.0
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—
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—
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39.0
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Stock-based compensation activity
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—
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—
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3.0
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(1.8
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)
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—
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1.7
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2.9
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Net change in available-for-sale securities, net of tax
|
—
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|
—
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|
|
—
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|
—
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(4.4
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)
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—
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|
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(4.4
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)
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Net change in pension liability, net of tax
|
—
|
|
|
—
|
|
|
—
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|
|
—
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1.0
|
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|
—
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1.0
|
|
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Unrealized foreign currency translation adjustment, net of tax
|
—
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|
|
—
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|
|
—
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|
|
—
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|
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(1.0
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)
|
|
—
|
|
|
(1.0
|
)
|
|
March 31, 2014
|
$
|
281.9
|
|
|
$
|
0.6
|
|
|
$
|
1,014.8
|
|
|
$
|
(1,177.2
|
)
|
|
$
|
(37.4
|
)
|
|
$
|
(122.2
|
)
|
|
$
|
(39.5
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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|
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|
|
|
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|
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(Amounts in millions)
|
Preferred
Stock
|
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Common
Stock
|
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Additional
Paid-In
Capital
|
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Retained
Loss
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Treasury
Stock
|
|
Total
|
|
January 1, 2013
|
$
|
281.9
|
|
|
$
|
0.6
|
|
|
$
|
1,001.0
|
|
|
$
|
(1,265.9
|
)
|
|
$
|
(52.3
|
)
|
|
$
|
(126.7
|
)
|
|
$
|
(161.4
|
)
|
|
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(12.6
|
)
|
|
—
|
|
|
—
|
|
|
(12.6
|
)
|
|
Stock-based compensation activity
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
Capital contribution from investors
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
Net change in pension liability, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.2
|
|
|
—
|
|
|
1.2
|
|
|
Unrealized foreign currency translation adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
(1.6
|
)
|
|
March 31, 2013
|
$
|
281.9
|
|
|
$
|
0.6
|
|
|
$
|
1,003.7
|
|
|
$
|
(1,278.5
|
)
|
|
$
|
(52.7
|
)
|
|
$
|
(126.7
|
)
|
|
$
|
(171.7
|
)
|
See Notes to Consolidated Financial Statements
7
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 — Description of the Business and Basis of Presentation
References to “MoneyGram,” the “Company,” “we,” “us” and “our” are to MoneyGram International, Inc. and its subsidiaries and consolidated entities.
Nature of Operations
— MoneyGram offers products and services under its
two
reporting segments: Global Funds Transfer ("GFT") and Financial Paper Products ("FPP"). The GFT segment provides global money transfer services and bill payment services to consumers through a network of agents. The FPP segment provides official check outsourcing services and money orders through financial institutions and agents.
Basis of Presentation
— The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal recurring nature. Operating results for the
three
months ended
March 31, 2014
are not necessarily indicative of the results that may be expected for future periods. For further information, refer to the Consolidated Financial Statements and Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2013
.
Use of Estimates
— The process of preparing financial statements in conformity with U.S. GAAP requires the use of estimates and judgments that affect the reported amount of assets, liabilities, revenue and expenses. These estimates and judgments are based on historical experience, future expectations and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and judgments are reviewed on an ongoing basis and are revised when necessary. Changes in estimates are recorded in the period of change. Actual amounts may differ from these estimates.
Recently Issued Accounting Standards
— In July of 2013, the FASB issued ASU No. 2013-11,
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
(EITF Issue 13-C; "ASC 740"). These changes to ASC 740 require an entity to present an unrecognized tax benefit as a liability in the financial statements if (i) a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position, or (ii) the tax law of the applicable jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset to settle any additional income taxes that would result from the disallowance of a tax position. Otherwise, an unrecognized tax benefit is required to be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. Previously, there was diversity in practice as no explicit guidance existed. Management has determined that the adoption of these changes will not have a significant impact on the Consolidated Financial Statements.
Note 2 — Reorganization and Restructuring Costs
In the first quarter of 2014, the Company announced the implementation of our Global Transformation Program, which includes certain reorganization and restructuring activities centered around facilities and headcount rationalization, system efficiencies and headcount right-shoring and outsourcing. The Company projects that the program will conclude at the end of the 2015 fiscal year. The activities include employee termination benefits and other costs which qualify as restructuring activities as defined by ASC 420,
Exit or Disposal Cost Obligations,
as well as certain reorganization activities related to the relocation of various operations to existing or new Company facilities and third party providers which are outside the scope of ASC 420. The following figures are the Company’s estimates and are subject to change as the Global Transformation Program continues to be implemented.
The following table is a roll-forward of the restructuring costs accrual related to 2014 Global Transformation Program as of
March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Severance, outplacement and related benefits
|
|
Other
(1)
|
|
Total
|
|
Balance, December 31, 2013
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Expenses
|
2.2
|
|
|
0.8
|
|
|
3.0
|
|
|
Cash payments
|
(0.1
|
)
|
|
(0.4
|
)
|
|
(0.5
|
)
|
|
Balance, March 31, 2014
|
$
|
2.1
|
|
|
$
|
0.4
|
|
|
$
|
2.5
|
|
(1)
Other primarily relates to expenses for relocation and professional fees. All such expenses are recorded as incurred.
The following table is a summary of the cumulative reorganization and restructuring costs incurred to date and the estimated remaining reorganization and restructuring costs to be incurred for the 2014 Global Transformation Program as of
March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Severance, outplacement and related benefits
|
|
Other
(1)
|
|
Total
|
|
Restructuring Costs in operating expenses
|
|
|
|
|
|
|
Cumulative restructuring costs incurred to date
|
$
|
2.2
|
|
|
$
|
0.8
|
|
|
$
|
3.0
|
|
|
Estimated additional restructuring costs to be incurred
|
8.4
|
|
|
1.3
|
|
|
9.7
|
|
|
Total restructuring costs in operating expenses
|
$
|
10.6
|
|
|
$
|
2.1
|
|
|
$
|
12.7
|
|
|
|
|
|
|
|
|
|
Reorganization Costs in operating expenses
(2)
|
|
|
|
|
|
|
Cumulative reorganization costs incurred to date
|
$
|
—
|
|
|
$
|
0.1
|
|
|
$
|
0.1
|
|
|
Estimated additional reorganization costs to be incurred
|
—
|
|
|
23.7
|
|
|
23.7
|
|
|
Total reorganization costs in operating expenses
|
$
|
—
|
|
|
$
|
23.8
|
|
|
$
|
23.8
|
|
|
|
|
|
|
|
|
|
Total Reorganization and Restructuring Costs in operating expenses
|
|
|
|
|
|
|
Total cumulative costs incurred to date
|
$
|
2.2
|
|
|
$
|
0.9
|
|
|
$
|
3.1
|
|
|
Total estimated additional costs to be incurred
|
8.4
|
|
|
25.0
|
|
|
33.4
|
|
|
Total reorganization and restructuring costs in operating expenses
|
$
|
10.6
|
|
|
$
|
25.9
|
|
|
$
|
36.5
|
|
(1)
Other primarily relates to expenses for relocation and professional fees. All such expenses were or will be recorded as incurred.
(2)
Reorganization costs include expenses related to the relocation of various operations to existing or new Company facilities and third party providers, including hiring, training, travel and other third party professional fees.
The following table is a summary of expenses related to the reorganization and restructuring activities for the
three months ended March 31, 2014
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended March 31, 2014
|
|
Restructuring costs in operating expenses:
|
|
|
Compensation and benefits
|
$
|
2.2
|
|
|
Transaction and operations support
|
0.8
|
|
|
Total restructuring costs
|
3.0
|
|
|
Reorganization costs in operating expenses:
|
|
|
Compensation and benefits
|
0.1
|
|
|
Total reorganization costs
|
0.1
|
|
|
Total reorganization and restructuring costs
|
$
|
3.1
|
|
The following table is a summary of restructuring expenses related to the 2014 Global Transformation Program incurred by reportable segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
GFT
|
|
FPP
|
|
Other
|
|
Total
|
|
First quarter 2014
|
$
|
2.6
|
|
|
$
|
0.3
|
|
|
$
|
0.1
|
|
|
$
|
3.0
|
|
|
Total cumulative expenses incurred to date
|
$
|
2.6
|
|
|
$
|
0.3
|
|
|
$
|
0.1
|
|
|
$
|
3.0
|
|
|
|
|
|
|
|
|
|
|
|
Total estimated additional expenses to be incurred
|
8.4
|
|
|
0.8
|
|
|
0.5
|
|
|
9.7
|
|
|
Total restructuring expenses
|
$
|
11.0
|
|
|
$
|
1.1
|
|
|
$
|
0.6
|
|
|
$
|
12.7
|
|
Note 3 — Assets in Excess of Payment Service Obligations
The following table shows the amount of assets in excess of payment service obligations at
March 31, 2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2014
|
|
December 31, 2013
|
|
Cash and cash equivalents (substantially restricted)
|
$
|
2,153.9
|
|
|
$
|
2,228.5
|
|
|
Receivables, net (substantially restricted)
|
890.0
|
|
|
767.7
|
|
|
Interest-bearing investments (substantially restricted)
|
935.8
|
|
|
1,011.6
|
|
|
Available-for-sale investments (substantially restricted)
|
41.6
|
|
|
48.1
|
|
|
|
4,021.3
|
|
|
4,055.9
|
|
|
Payment service obligations
|
(3,691.7
|
)
|
|
(3,737.1
|
)
|
|
Assets in excess of payment service obligations
|
$
|
329.6
|
|
|
$
|
318.8
|
|
The Company was in compliance with its contractual and financial regulatory requirements as of
March 31, 2014
and
December 31, 2013
. See Note 7
—
Debt
for additional disclosure in regards to the Company's compliance with its contractual and financial regulatory requirements.
Note 4 — Fair Value Measurement
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability, or the exit price, in an orderly transaction between market participants on the measurement date. A three-level hierarchy is used for fair value measurements based upon the observability of the inputs to the valuation of an asset or liability as of the measurement date. Under the hierarchy, the highest priority is given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1), followed by observable inputs (Level 2) and unobservable inputs (Level 3). A financial instrument’s level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Following is a description of the Company’s valuation methodologies used to estimate the fair value for assets and liabilities:
Assets and liabilities that are measured at fair value on a recurring basis:
|
|
|
|
•
|
Available-for-sale investments
— For U.S. government agencies and residential mortgage-backed securities collateralized by U.S. government agency securities, fair value measures are generally obtained from independent sources, including a pricing service. Because market quotes are generally not readily available or accessible for these specific securities, the pricing service generally measures fair value through the use of pricing models and observable inputs for similar assets and market data. Accordingly, these securities are classified as Level 2 financial instruments. The Company periodically corroborates the valuations provided by the pricing service through internal valuations utilizing externally developed cash flow models, comparison to actual transaction prices for any sold securities and any broker quotes received on the same security.
|
For other asset–backed securities and investments in limited partnerships, market quotes are generally not available. If available, the Company will utilize a fair value measurement from a pricing service. The pricing service utilizes a pricing model based on market observable data and indices, such as quotes for comparable securities, yield curves, default indices, interest rates and historical prepayment speeds. If a fair value measurement is not available from the pricing service, the Company will utilize a broker quote, if available. Because the inputs and assumptions that brokers use to develop prices
are unknown, most valuations that are based on brokers' quotes are classified as Level 3. If no broker quote is available, or if such quote cannot be corroborated by market data or internal valuations, the Company may perform internal valuations utilizing externally developed cash flow models. These pricing models are based on market observable spreads and, when available, observable market indices. The pricing models also use inputs such as the rate of future prepayments and expected default rates on the principal, which are derived by the Company based on the characteristics of the underlying structure and historical prepayment speeds experienced at the interest rate levels projected for the underlying collateral. The pricing models for certain asset-backed securities also include significant non-observable inputs such as internally assessed credit ratings for non-rated securities combined with externally provided credit spreads. Observability of market inputs to the valuation models used for pricing certain of the Company's investments has deteriorated with the disruption to the credit markets as overall liquidity and trading activity in these sectors has been substantially reduced. Accordingly, securities valued using a pricing model are classified as Level 3 financial instruments.
|
|
|
|
•
|
Derivative financial instruments
— Derivatives consist of forward contracts to manage income statement exposure to foreign currency exchange risk arising from the Company’s assets and liabilities denominated in foreign currencies. The Company’s forward contracts are well-established products, allowing the use of standardized models with market-based inputs. These models do not contain a high level of subjectivity and the inputs are readily observable. Accordingly, the Company has classified its forward contracts as Level 2 financial instruments. See Note 6 —
Derivative Financial Instruments
for additional disclosure on the Company's forward contracts.
|
|
|
|
|
•
|
Deferred compensation
— The assets associated with the deferred compensation plan that are funded through voluntary contributions by the Company consist of investments in money market securities and mutual funds. These investments were classified as Level 1 as there are quoted market prices for these funds.
|
The following tables summarize the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis at
March 31, 2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at March 31, 2014
|
|
(Amounts in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
Available-for-sale investments (substantially restricted):
|
|
|
|
|
|
|
|
|
U.S. government agencies
|
$
|
—
|
|
|
$
|
8.0
|
|
|
$
|
—
|
|
|
$
|
8.0
|
|
|
Residential mortgage-backed securities — agencies
|
—
|
|
|
18.0
|
|
|
—
|
|
|
18.0
|
|
|
Other asset-backed securities
|
—
|
|
|
—
|
|
|
15.6
|
|
|
15.6
|
|
|
Investment related to deferred compensation trust
|
9.8
|
|
|
—
|
|
|
—
|
|
|
9.8
|
|
|
Forward contracts
|
—
|
|
|
1.4
|
|
|
—
|
|
|
1.4
|
|
|
Total financial assets
|
$
|
9.8
|
|
|
$
|
27.4
|
|
|
$
|
15.6
|
|
|
$
|
52.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value at December 31, 2013
|
|
(Amounts in millions)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
Financial assets:
|
|
|
|
|
|
|
|
|
Available-for-sale investments (substantially restricted):
|
|
|
|
|
|
|
|
|
U.S. government agencies
|
$
|
—
|
|
|
$
|
8.0
|
|
|
$
|
—
|
|
|
$
|
8.0
|
|
|
Residential mortgage-backed securities — agencies
|
—
|
|
|
19.5
|
|
|
—
|
|
|
19.5
|
|
|
Other asset-backed securities
|
—
|
|
|
—
|
|
|
20.6
|
|
|
20.6
|
|
|
Investment related to deferred compensation trust
|
9.6
|
|
|
—
|
|
|
—
|
|
|
9.6
|
|
|
Forward contracts
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
Total financial assets
|
$
|
9.6
|
|
|
$
|
27.7
|
|
|
$
|
20.6
|
|
|
$
|
57.9
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
|
|
Forward contracts
|
$
|
—
|
|
|
$
|
0.6
|
|
|
$
|
—
|
|
|
$
|
0.6
|
|
The following is a summary of the unobservable inputs used in other asset-backed securities classified as Level 3 at
March 31, 2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2014
|
|
December 31, 2013
|
|
(Amounts in millions, except net average price)
|
Unobservable Input
|
|
Pricing
Source
|
|
Market
Value
|
|
Net
Average Price
(1)
|
|
Market Value
|
|
Net Average Price
(1)
|
|
Alt-A
|
Price
|
|
Third party pricing service
|
|
$
|
0.1
|
|
|
$
|
23.52
|
|
|
$
|
0.1
|
|
|
$
|
17.01
|
|
|
Home Equity
|
Price
|
|
Third party pricing service
|
|
0.1
|
|
|
28.24
|
|
|
0.2
|
|
|
51.87
|
|
|
Indirect Exposure - High Grade
|
Price
|
|
Third party pricing service
|
|
8.2
|
|
|
7.90
|
|
|
8.2
|
|
|
7.90
|
|
|
Indirect Exposure - Mezzanine
|
Price
|
|
Third party pricing service
|
|
1.7
|
|
|
1.82
|
|
|
2.6
|
|
|
2.12
|
|
|
Indirect Exposure - Mezzanine
|
Price
|
|
Broker
|
|
1.5
|
|
|
2.00
|
|
|
5.0
|
|
|
6.01
|
|
|
Other
|
Discount margin
|
|
Manual
|
|
4.0
|
|
|
21.75
|
|
|
4.5
|
|
|
23.85
|
|
|
Total
|
|
|
|
|
$
|
15.6
|
|
|
$
|
4.24
|
|
|
$
|
20.6
|
|
|
$
|
5.24
|
|
(1)
Net average price is per
$100.00
The following table provides a roll-forward of the other asset-backed securities classified as Level 3, which are measured at fair value on a recurring basis, for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Beginning balance
|
$
|
20.6
|
|
|
$
|
18.0
|
|
|
Principal paydowns
|
(3.8
|
)
|
|
(0.1
|
)
|
|
Unrealized gains
|
—
|
|
|
0.8
|
|
|
Unrealized losses
|
(1.2
|
)
|
|
(1.0
|
)
|
|
Ending balance
|
$
|
15.6
|
|
|
$
|
17.7
|
|
There were
no
other-than-temporary impairments during the
three
months ended
March 31, 2014
and
2013
.
Assets and liabilities that are disclosed at fair value
—
Debt and interest-bearing investments (substantially restricted) are carried at amortized cost; however, the Company estimates the fair value of debt for disclosure purposes. The fair value of debt is estimated using market quotations, where available, credit ratings, observable market indices and other market data (Level 2). The following table is a summary of fair value and carrying value of debt as of
March 31,
2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
Carrying Value
|
|
(Amounts in millions)
|
March 31, 2014
|
|
December 31, 2013
|
|
March 31, 2014
|
|
December 31, 2013
|
|
Senior secured credit facility and incremental term loan
|
$
|
841.9
|
|
|
$
|
849.2
|
|
|
$
|
840.8
|
|
|
$
|
842.9
|
|
The carrying amounts for the Company's cash and cash equivalents (substantially restricted) and the interest-bearing investments (substantially restricted) approximate fair value as of
March 31, 2014
and
December 31, 2013
.
Assets and liabilities measured at fair value on a non-recurring basis
—
Assets and liabilities that are measured at fair value on a non-recurring basis relate primarily to the Company's tangible fixed assets, goodwill and other intangible assets, which are re-measured only in the event of an impairment. No impairments of fixed assets, goodwill and other intangible assets were recorded during the
three
months ended
March 31, 2014
and
2013
.
Fair value re-measurements are normally based on significant unobservable inputs (Level 3). Tangible and intangible fixed asset fair values are normally derived using a discounted cash flow model based on expected future cash flows discounted using a weighted-average cost of capital rate. If it is determined an impairment has occurred, the carrying value of the asset is reduced to fair value with a corresponding charge to the "Other expense" line in the Consolidated Statements of Operations.
The Company also records the investments in its defined benefit pension plan, or the Pension Plan, trust at fair value. The majority of the Pension Plan’s investments are common collective trusts held by the Pension Plan’s trustee. The fair values of the Pension Plan's investments are determined by the trustee based on the current market values of the underlying assets. In instances where market prices are not available, market values are determined by using bid quotations obtained from major market makers or security exchanges or bid quotations for identical or similar obligations. See Note 10 —
Pension and Other Benefits
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2013
for additional disclosure of investments held by the Pension Plan.
Note 5 — Investment Portfolio
The Company’s portfolio is invested in cash and cash equivalents, interest-bearing investments and available-for-sale investments, all of which are substantially restricted. See Note 2 —
Summary of Significant Accounting Policies
in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2013
for additional disclosure in regards to substantially restricted assets. The following table shows the components of the investment portfolio as of
March 31, 2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2014
|
|
December 31, 2013
|
|
Cash
|
$
|
2,143.0
|
|
|
$
|
2,204.5
|
|
|
Money-market securities
|
10.9
|
|
|
24.0
|
|
|
Cash and cash equivalents (substantially restricted)
|
2,153.9
|
|
|
2,228.5
|
|
|
Interest-bearing investments (substantially restricted)
|
935.8
|
|
|
1,011.6
|
|
|
Available-for-sale investments (substantially restricted)
|
41.6
|
|
|
48.1
|
|
|
Total investment portfolio
|
$
|
3,131.3
|
|
|
$
|
3,288.2
|
|
Cash and Cash Equivalents (substantially restricted)
—
Cash and cash equivalents consist of interest-bearing deposit accounts, non-interest bearing
transaction accounts and money market securities. The Company's money market securities are invested in
four
funds, all of which are AAA rated and consist of U.S. Treasury bills, notes or other obligations issued or guaranteed by the U.S. government and its agencies, as well as repurchase agreements secured by such instruments.
Interest-bearing Investments (substantially restricted)
—
Interest-bearing investments consist of time deposits and certificates of deposit with original maturities of up to 24 months, and are issued from financial institutions rated A- or better as of
March 31, 2014
.
Available-for-sale Investments (substantially restricted)
—
Available-for-sale investments consist of mortgage-backed securities, other asset-backed securities and agency debenture securities. The following table is a summary of the amortized cost and fair value of available-for-sale investments as of
March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Net
Average
Price
(1)
|
|
(Amounts in millions, except net average price)
|
|
|
|
|
|
Residential mortgage-backed securities — agencies
|
$
|
16.4
|
|
|
$
|
1.6
|
|
|
$
|
—
|
|
|
$
|
18.0
|
|
|
$
|
110.28
|
|
|
Other asset-backed securities
|
5.5
|
|
|
10.1
|
|
|
—
|
|
|
15.6
|
|
|
4.24
|
|
|
U.S. government agencies
|
7.9
|
|
|
0.1
|
|
|
—
|
|
|
8.0
|
|
|
99.94
|
|
|
Total
|
$
|
29.8
|
|
|
$
|
11.8
|
|
|
$
|
—
|
|
|
$
|
41.6
|
|
|
$
|
10.60
|
|
(1)
Net average price is per
$100.00
The following table is a summary of the amortized cost and fair value of available-for-sale investments as of
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
Net
Average
Price
(1)
|
|
(Amounts in millions, except net average price)
|
|
|
|
|
|
Residential mortgage-backed securities — agencies
|
$
|
17.8
|
|
|
$
|
1.7
|
|
|
$
|
—
|
|
|
$
|
19.5
|
|
|
$
|
110.45
|
|
|
Other asset-backed securities
|
5.9
|
|
|
14.7
|
|
|
—
|
|
|
20.6
|
|
|
5.24
|
|
|
U.S. government agencies
|
7.7
|
|
|
0.3
|
|
|
—
|
|
|
8.0
|
|
|
99.87
|
|
|
Total
|
$
|
31.4
|
|
|
$
|
16.7
|
|
|
$
|
—
|
|
|
$
|
48.1
|
|
|
$
|
11.50
|
|
(1)
Net average price is per
$100.00
At
March 31, 2014
and
December 31, 2013
,
63 percent
and
57 percent
, respectively, of the available-for-sale portfolio were invested in debentures of U.S. government agencies or securities collateralized by U.S. government agency debentures. These securities have the implicit backing of the U.S. government and the Company expects to receive full par value upon maturity or pay-down, as well as all interest payments. Included in other asset-backed securities are collateralized debt obligations backed primarily by high-grade debt, mezzanine equity tranches of collateralized debt obligations and home equity loans, along with private equity investments, as summarized in Note 4
—
Fair Value Measurement.
The other asset-backed securities continue to
have market exposure, and this risk is factored into the fair value estimates of the Company, with the average price of an asset-backed security at
$0.04
per dollar of par value at
March 31, 2014
.
Gains and Losses and Other-than-temporary Impairments
— At
March 31, 2014
and
December 31, 2013
, net unrealized gains of
$12.9 million
and
$17.3 million
, respectively, were included in the Consolidated Balance Sheets in “Accumulated other comprehensive loss.”
Investment Ratings
—
In rating the securities in its investment portfolio, the Company uses ratings from Moody’s Investor Service (“Moody’s”), Standard & Poors (“S&P”) and Fitch Ratings (“Fitch”). If the rating agencies have split ratings, the Company uses the highest two out of three ratings across the rating agencies for disclosure purposes. If none of the rating agencies have the same rating, the Company uses the lowest rating across the agencies for disclosure purposes. Securities issued or backed by U.S. government agencies are included in the AAA rating category. Investment grade is defined as a security having a Moody’s equivalent rating of Aaa, Aa, A or Baa or an S&P or Fitch equivalent rating of AAA, AA, A or BBB. The Company’s investments at
March 31, 2014
and
December 31, 2013
consisted of the following ratings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2014
|
|
December 31, 2013
|
|
|
Number of
Securities
|
|
Fair
Value
|
|
Percent of
Investments
|
|
Number of
Securities
|
|
Fair
Value
|
|
Percent of
Investments
|
|
(Dollars in millions)
|
|
|
|
|
|
|
Investment grade
|
15
|
|
$
|
25.8
|
|
|
62
|
%
|
|
16
|
|
$
|
30.8
|
|
|
64
|
%
|
|
Below investment grade
|
48
|
|
15.8
|
|
|
38
|
%
|
|
50
|
|
17.3
|
|
|
36
|
%
|
|
Total
|
63
|
|
$
|
41.6
|
|
|
100
|
%
|
|
66
|
|
$
|
48.1
|
|
|
100
|
%
|
Had the Company used the lowest rating from the rating agencies in the information presented above, there would be
no
change and a
$3.4 million
change to investment grade fair value as of
March 31, 2014
and
December 31, 2013
, respectively.
Contractual Maturities
— Actual maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations, sometimes without call or prepayment penalties. Maturities of mortgage-backed and other asset-backed securities depend on the repayment characteristics and experience of the underlying obligations. The following table is a summary of amortized cost and fair value of available-for-sale securities by contractual maturity as of
March 31, 2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2014
|
|
December 31, 2013
|
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Amortized
Cost
|
|
Fair
Value
|
|
(Amounts in millions)
|
|
|
|
|
After one year through five years
|
$
|
7.9
|
|
|
$
|
8.0
|
|
|
$
|
7.7
|
|
|
$
|
8.0
|
|
|
Mortgage-backed and other asset-backed securities
|
21.9
|
|
|
33.6
|
|
|
23.7
|
|
|
40.1
|
|
|
Total
|
$
|
29.8
|
|
|
$
|
41.6
|
|
|
$
|
31.4
|
|
|
$
|
48.1
|
|
Fair Value Determination
—
The Company uses various sources of pricing for its fair value estimates of its available-for-sale portfolio. The percentage of the portfolio for which the various pricing sources were used is as follows at
March 31, 2014
and
December 31, 2013
:
67 percent
and
64 percent
, respectively, used a third party pricing service;
four percent
and
10 percent
, respectively, used broker pricing; and
29 percent
and
26 percent
, respectively, used internal pricing.
Assessment of Unrealized Losses
—
The Company had
no
unrealized losses in its available-for-sale portfolio at
March 31, 2014
and
December 31, 2013
.
Note 6 — Derivative Financial Instruments
The Company uses forward contracts to manage its foreign currency needs and foreign currency exchange risk arising from its assets and liabilities denominated in foreign currencies. While these contracts may mitigate certain foreign currency risk, they are not designated as hedges for accounting purposes. The “Transaction and operations support” line in the Consolidated Statements of Operations and the "Net cash (used in) provided by operating activities" line in the Consolidated Statements of Cash Flows include the following losses (gains) related to assets and liabilities denominated in foreign currencies, for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Net realized foreign currency losses
|
$
|
1.7
|
|
|
$
|
4.3
|
|
|
Net gains from the related forward contracts
|
(1.6
|
)
|
|
(4.5
|
)
|
|
Net losses (gains) from foreign currency transactions and related forward contracts
|
$
|
0.1
|
|
|
$
|
(0.2
|
)
|
As of
March 31, 2014
and
December 31, 2013
, the Company had
$107.1 million
and
$129.0 million
, respectively, of outstanding notional amounts relating to its forward contracts. As of
March 31, 2014
and
December 31, 2013
, the Company reflects the following fair values of derivative forward contract instruments in its Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount of Recognized Assets
|
|
Gross Amount of Offset
|
|
Net Amount of Assets Presented in the Consolidated Balance Sheets
|
|
|
Balance Sheet
Location
|
|
March 31, 2014
|
|
December 31, 2013
|
|
March 31, 2014
|
|
December 31, 2013
|
|
March 31, 2014
|
|
December 31, 2013
|
|
(Amounts in millions)
|
|
|
|
|
|
|
|
Forward contracts
|
Other assets
|
|
$
|
1.7
|
|
|
$
|
0.4
|
|
|
$
|
(0.3
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
1.4
|
|
|
$
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount of Recognized Liabilities
|
|
Gross Amount of Offset
|
|
Net Amount of Liabilities Presented in the Consolidated Balance Sheets
|
|
|
Balance Sheet
Location
|
|
March 31, 2014
|
|
December 31, 2013
|
|
March 31, 2014
|
|
December 31, 2013
|
|
March 31, 2014
|
|
December 31, 2013
|
|
(Amounts in millions)
|
|
|
|
|
|
|
|
Forward contracts
|
Accounts payable and other liabilities
|
|
$
|
(0.3
|
)
|
|
$
|
(0.8
|
)
|
|
$
|
0.3
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
(0.6
|
)
|
The Company's forward contracts are primarily executed with counterparties governed by an International Swaps and Derivatives Association agreement that generally include standard netting arrangements. Hence, asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity.
Note 7 — Debt
The following is a summary of the Company’s outstanding debt at
March 31, 2014
and activity since
December 31, 2013
:
|
|
|
|
|
|
|
|
|
2013 Credit Agreement
|
|
|
Senior secured
credit facility
due 2020
|
|
(Amounts in millions)
|
|
Balance at December 31, 2013
|
$
|
842.9
|
|
|
Payments
|
(2.1
|
)
|
|
Balance at March 31, 2014
|
$
|
840.8
|
|
|
Weighted average interest rate
|
4.25
|
%
|
2013 Credit Agreement
— On March 28, 2013, the Company, as borrower, entered into an Amended and Restated Credit Agreement (the "2013 Credit Agreement") with Bank of America, N.A. ("BOA"), as administrative agent, the financial institutions party
thereto as lenders and the other agents party thereto. The 2013 Credit Agreement provides for (i) a senior secured
five
-year revolving credit facility up to an aggregate principal amount of
$125.0 million
(the "Revolving Credit Facility") and (ii) a senior secured
seven
-year term loan facility of
$850.0 million
(the "Term Credit Facility"). The proceeds of the Term Credit Facility were used to repay in full all outstanding indebtedness under the
$540.0 million
Credit Agreement with BOA, as Administrative Agent, and the lenders party thereto (the "2011 Credit Agreement"), to purchase all of the outstanding second lien notes to Goldman, Sachs & Co. (“Goldman Sachs”) and also have been used to pay certain costs, fees and expenses relating to the 2013 Credit Agreement and the purchase of the second lien notes and for general corporate purposes. The Revolving Credit Facility includes a sub-facility that permits the Company to request the issuance of letters of credit up to an aggregate amount of
$50.0 million
, with borrowings available for general corporate purposes.
The 2013 Credit Agreement is secured by substantially all of the non-financial assets of the Company and its material domestic subsidiaries that guarantee the payment and performance of the Company’s obligations under the 2013 Credit Agreement.
The Company may elect an interest rate under the 2013 Credit Agreement at each reset period based on the BOA prime bank rate or the Eurodollar rate. The interest rate election may be made individually for the Term Credit Facility and each draw under the Revolving Credit Facility. The interest rate will be either the “alternate base rate” (calculated in part based on the BOA prime rate) plus either
200
or
225
basis points (depending on the Company's secured leverage ratio or total leverage ratio, as applicable, at such time) or the Eurodollar rate plus either
300
or
325
basis points (depending on the Company's secured leverage ratio or total leverage ratio, as applicable, at such time). In connection with the initial funding under the 2013 Credit Agreement, the Company elected the Eurodollar rate as its primary interest basis. Under the terms of the 2013 Credit Agreement, the minimum interest rate applicable to Eurodollar borrowings under the Term Credit Facility is
100
basis points plus the applicable margins previously referred to in this paragraph.
Fees on the daily unused availability under the Revolving Credit Facility are
50
basis points. As of
March 31, 2014
, the Company had
$0.4 million
of outstanding letters of credit and
no
borrowings under the Revolving Credit Facility, leaving
$124.6 million
of availability thereunder.
Debt Covenants and Other Restrictions
— Borrowings under the 2013 Credit Agreement are subject to various limitations that restrict the Company’s ability to: incur additional indebtedness; create or incur additional liens; effect mergers and consolidations; make certain acquisitions or investments; sell assets or subsidiary stock; pay dividends and other restricted payments; and effect loans, advances and certain other transactions with affiliates. In addition, the Revolving Credit Facility has covenants that place limitations on the use of proceeds from borrowings under the facility.
The Company is required to maintain Asset Coverage greater than its payment service obligation. Assets used in the determination of the Asset Coverage covenant are cash and cash equivalents, cash and cash equivalents (substantially restricted), receivables, net (substantially restricted), interest-bearing investments (substantially restricted) and available-for-sale investments (substantially restricted). See Note 3
—
Assets in Excess of Payment Service Obligations
for additional disclosure of the Asset Coverage calculation as of
March 31, 2014
.
The 2013 Credit Agreement also has quarterly financial covenants to maintain the following interest coverage and total secured leverage ratios:
|
|
|
|
|
|
|
|
|
Interest Coverage Minimum Ratio
|
|
Total Secured Leverage Not to Exceed
|
|
Present through September 30, 2014
|
2.15:1
|
|
4.375:1
|
|
December 31, 2014 through September 30, 2015
|
2.25:1
|
|
4.000:1
|
|
December 31, 2015 through September 30, 2016
|
2.25:1
|
|
3.750:1
|
|
December 31, 2016 through maturity
|
2.25:1
|
|
3.500:1
|
We continuously monitor our compliance with our debt covenants. At
March 31, 2014
, the Company was in compliance with its financial covenants: our Interest Coverage ratio was
8.21
and our Total Secured Leverage ratio was
2.761
.
Deferred Financing Costs
— The Company capitalized financing costs in "Other assets" in the Consolidated Balance Sheet and amortizes them over the term of the related debt using the effective interest method. Amortization is recorded in “Interest expense” in the Consolidated Statements of Operations. The following is a summary of the deferred financing costs at
March 31, 2014
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended March 31, 2014
|
|
Balance at December 31, 2013
|
$
|
13.3
|
|
|
Amortization of deferred financing costs
|
(0.6
|
)
|
|
Balance at March 31, 2014
|
$
|
12.7
|
|
Interest Paid in Cash
— The Company paid
$9.1 million
of interest for the
three
months ended
March 31, 2014
and
$15.6 million
of interest for the
three
months ended
March 31, 2013
.
Maturities
— At
March 31, 2014
, debt totaling
$125.0 million
will mature in 2018 and
$790.5 million
will mature in 2020, while debt principal totaling
$51.0 million
will be paid quarterly in increments of
$2.1 million
through 2020.
Note 8 — Pensions and Other Benefits
The following table shows net periodic benefit expense for the Company’s Pension Plan and combined supplemental executive retirement plans (“SERPs”), for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Interest cost
|
$
|
2.7
|
|
|
$
|
2.4
|
|
|
Expected return on plan assets
|
(1.8
|
)
|
|
(1.8
|
)
|
|
Recognized net actuarial loss
|
1.7
|
|
|
1.9
|
|
|
Net periodic benefit expense
|
$
|
2.6
|
|
|
$
|
2.5
|
|
The Company made contributions to the Pension Plan of
$2.0 million
for the
three
months ended
March 31, 2014
and
$1.4 million
during the
three
months ended
March 31, 2013
. Contributions made to the combined SERPs were
$1.1 million
for the
three
months ended
March 31, 2014
and
$1.2 million
for the
three
months ended
March 31, 2013
.
The following table is a summary of net periodic benefit expense for the Company’s postretirement medical benefit plans, for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Amortization of prior service credit
|
$
|
(0.2
|
)
|
|
$
|
(0.2
|
)
|
|
Recognized net actuarial loss
|
0.1
|
|
|
0.1
|
|
|
Net periodic benefit expense
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
Note 9 — Stockholders’ Deficit
The following table is a summary of the Company’s authorized, issued and outstanding stock
as of
March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
D Stock
|
|
Common Stock
|
|
Treasury Stock
|
|
(Shares in thousands)
|
Authorized
|
|
Issued
|
|
Outstanding
|
|
Authorized
|
|
Issued
|
|
Outstanding
|
|
|
March 31, 2014
|
200
|
|
|
109
|
|
|
109
|
|
|
162,500
|
|
|
62,264
|
|
|
58,022
|
|
|
(4,242
|
)
|
Common Stock
— The holders of the Company's common stock are entitled to
one
vote per share on all matters to be voted upon by its stockholders. The holders of common stock have no preemptive, conversion or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. The determination to pay dividends on common stock will be at the discretion of the Board of Directors and will depend on applicable laws and the Company’s financial condition, results of operations, cash requirements, prospects and such other factors as the Board of Directors may deem relevant. The Company’s ability to declare or pay dividends or distributions to the holders of the Company’s common stock is restricted under the Company’s 2013 Credit Agreement.
No
dividends were paid during the
three
months ended
March 31, 2014
.
Participation Agreement between the Investors and Wal-Mart Stores, Inc. —
Affiliates of Thomas H. Lee Partners, L.P. ("THL") and affiliates of Goldman, Sachs & Co. ("Goldman Sachs" and collectively with THL, the "Investors") have a Participation Agreement with Wal-Mart Stores, Inc. (“Walmart”), under which the Investors are obligated to pay Walmart certain percentages of any accumulated cash payments received by the Investors in excess of the Investors’ original investment in the Company. While the Company is not a party to, and has no obligations to Walmart or additional obligations to the Investors under, the Participation Agreement, the Company must recognize the Participation Agreement in its consolidated financial statements as the Company indirectly benefits from the agreement. Any future payments by the Investors to Walmart may result in an expense that could be material to the Company’s results of operations, but would have no impact on the Company’s cash flows.
Accumulated Other Comprehensive Loss
—
The following table is a summary of the changes to "Accumulated other comprehensive loss" by component during the
three months ended March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Net unrealized gains on securities classified as available-for-sale, net of tax
|
|
Cumulative foreign currency translation adjustments, net of tax
|
|
Pension and postretirement benefits adjustment, net of tax
|
|
Total
|
|
December 31, 2013
|
$
|
17.3
|
|
|
$
|
3.5
|
|
|
$
|
(53.8
|
)
|
|
$
|
(33.0
|
)
|
|
Other comprehensive income before amortization
|
(0.1
|
)
|
|
(1.0
|
)
|
|
—
|
|
|
(1.1
|
)
|
|
Amounts reclassified/amortized from accumulated other comprehensive loss
|
(4.3
|
)
|
|
—
|
|
|
1.0
|
|
|
(3.3
|
)
|
|
Net current period other comprehensive income
|
(4.4
|
)
|
|
(1.0
|
)
|
|
1.0
|
|
|
(4.4
|
)
|
|
March 31, 2014
|
$
|
12.9
|
|
|
$
|
2.5
|
|
|
$
|
(52.8
|
)
|
|
$
|
(37.4
|
)
|
The following table is a summary of the significant amounts reclassified out of each component of "Accumulated other comprehensive loss" during the
three months ended March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended March 31,
|
|
Statement of Operations Location
|
|
|
|
|
|
|
Unrealized gains on securities classified as available-for-sale, before tax
|
$
|
(4.8
|
)
|
|
"Investment revenue"
|
|
Tax expense, net
|
0.5
|
|
|
|
|
Total gains, net of tax
|
$
|
(4.3
|
)
|
|
|
|
|
|
|
|
|
Pension and postretirement benefits adjustments:
|
|
|
|
|
Prior service credits, before tax
|
(0.2
|
)
|
|
"Compensation and benefits"
|
|
Net actuarial losses, before tax
|
1.8
|
|
|
"Compensation and benefits"
|
|
Total before tax
|
1.6
|
|
|
|
|
Tax benefit, net
|
(0.6
|
)
|
|
|
|
Total, net of tax
|
$
|
1.0
|
|
|
|
|
|
|
|
|
|
Total reclassified for the period, net of tax
|
$
|
(3.3
|
)
|
|
|
Note 10 — Stock-Based Compensation
The following table is a summary of stock-based compensation expense for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Expense recognized related to stock options
|
$
|
1.3
|
|
|
$
|
1.6
|
|
|
Expense recognized related to restricted stock units
|
1.8
|
|
|
0.8
|
|
|
Stock-based compensation expense
|
$
|
3.1
|
|
|
$
|
2.4
|
|
Stock Options
— Option awards are granted with an exercise price equal to the closing market price of the Company’s common stock on the date of grant. All outstanding stock options contain certain forfeiture and non-compete provisions.
For purposes of determining the fair value of stock option awards, the Company uses the Black-Scholes single option pricing model for time-based tranches and awards and a combination of the Monte-Carlo simulation and the Black-Scholes single option pricing model for performance-based tranches.
Pursuant to the terms of grants made in
2014
, all options issued are time-based with a term of
10 years
and vest over a
three-year
period in an equal number of shares each year. The following table provides weighted-average grant-date fair value and assumptions utilized to estimate the grant-date fair value of the options granted during the three months ended March 31,
2014
:
|
|
|
|
|
|
|
|
Expected dividend yield
(1)
|
0.0
|
%
|
|
Expected volatility
(2)
|
65.7% - 68.2%
|
|
|
Risk-free interest rate
(3)
|
1.1% - 1.9%
|
|
|
Expected life
(4)
|
6.0 - 6.3 years
|
|
|
Weighted-average grant-date fair value per option
|
$
|
12.14
|
|
|
|
|
|
(1)
|
Expected dividend yield represents the level of dividends expected to be paid on the Company’s common stock over the expected term of the option. The Company does not anticipate declaring any dividends at this time.
|
|
|
|
|
(2)
|
Expected volatility is the amount by which the Company’s stock price has fluctuated or will fluctuate during the expected term of the option. The Company’s expected volatility is calculated based on the historical volatility of the price of the Company’s common stock since the spin-off from Viad Corporation on June 30, 2004. The Company also considers any known or anticipated factors that will likely impact future volatility.
|
|
|
|
|
(3)
|
The risk-free interest rate for the Black-Scholes model is based on the U. S. Treasury yield curve in effect at the time of grant for periods within the expected term of the option.
|
|
|
|
|
(4)
|
Expected life represents the period of time that options are expected to be outstanding. The expected life was determined using the simplified method as the pattern of changes in the value of the Company’s common stock and exercise activity since late 2007 has been inconsistent and substantially different from historical patterns. Additionally, there have been minimal stock option exercises, which would be representative of the Company’s normal exercise activity since 2007. Accordingly, the Company does not believe that historical terms are relevant to the assessment of the expected term of the grant. Based on these factors, the Company does not believe that it has the ability to make a more refined estimate than the use of the simplified method.
|
The following table is a summary of the Company’s stock option activity for the
three months ended
March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
($000,000)
|
|
Options outstanding at December 31, 2013
|
4,792,004
|
|
|
$
|
20.14
|
|
|
|
|
|
|
Granted
|
418,771
|
|
|
20.10
|
|
|
|
|
|
|
Exercised
|
(20,959
|
)
|
|
15.98
|
|
|
|
|
|
|
Forfeited/Expired
|
(287,425
|
)
|
|
16.35
|
|
|
|
|
|
|
Options outstanding at March 31, 2014
|
4,902,391
|
|
|
$
|
20.38
|
|
|
6.7 years
|
|
$
|
4.3
|
|
|
Vested or expected to vest at March 31, 2014
|
4,718,601
|
|
|
$
|
20.44
|
|
|
6.6 years
|
|
$
|
4.2
|
|
|
Options exercisable at March 31, 2014
|
1,927,955
|
|
|
$
|
20.57
|
|
|
5.8 years
|
|
$
|
3.2
|
|
For the
three
months ended
March 31, 2014
, the unrecognized stock option expense related to outstanding options was
$17.2 million
with a remaining weighted-average vesting period of
1.6 years
.
Restricted Stock Units
— For purposes of determining the fair value of restricted stock units and performance based stock units, the fair value is calculated based on the stock price at the time of grant. For performance based restricted stock units, expense is recognized if achievement of the performance goal is deemed probable, with the amount of expense recognized based on the Company’s best estimate of the ultimate achievement level. The following table is a summary of the Company’s restricted stock unit activity for the
three months ended
March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Shares
|
|
Weighted
Average
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
($000,000)
|
|
Restricted stock units outstanding at December 31, 2013
|
1,186,144
|
|
|
$
|
16.73
|
|
|
1.8 years
|
|
$
|
24.6
|
|
|
Granted
|
931,575
|
|
|
20.08
|
|
|
|
|
|
|
Vested and converted to shares
|
(62,100
|
)
|
|
16.74
|
|
|
|
|
|
|
Forfeited
|
(17,505
|
)
|
|
16.55
|
|
|
|
|
|
|
Restricted stock units outstanding at March 31, 2014
|
2,038,114
|
|
|
$
|
18.25
|
|
|
2.2 years
|
|
$
|
36.0
|
|
As of
March 31, 2014
, the Company’s outstanding restricted stock units had unrecognized compensation expense of
$26.2 million
. Unrecognized restricted stock unit expense and the remaining weighted-average vesting period are presented under the Company’s current estimate of achievement of performance goals. Unrecognized restricted stock unit expense as of
March 31, 2014
under the minimum and maximum thresholds are
$1.6 million
and
$29.8 million
, respectively.
The grant-date fair value of restricted stock units vested was
$1.0 million
for the
three
months ended
March 31, 2014
and nominal for the
three
months ended
March 31, 2013
.
Note 11 — Income Taxes
For the
three
months ended
March 31, 2014
, the Company had
$11.7 million
of income tax benefit on pre-tax income of
$27.3 million
, which included reductions of uncertain tax positions of prior years. For the
three
months ended
March 31, 2013
, the Company had
$5.8 million
of income tax benefit on pre-tax loss of
$18.4 million
.
The Company paid
$0.1 million
of federal and state income taxes for the
three
months ended
March 31, 2014
and
March 31, 2013
, respectively. Changes in facts and circumstances may cause the Company to record additional tax expense or benefits in the future.
The IRS has completed its examination of the Company’s consolidated income tax returns through 2009. The IRS issued a Notice of Deficiency for 2005-2007 in April 2012 and a Notice of Deficiency for 2009 in October 2012. The Company filed petitions with the U.S. Tax Court in May 2012 and December 2012 contesting adjustments in the 2005-2007 and 2009 Notices of Deficiency, respectively, related to the security losses. In August 2012, the IRS also issued an Examination Report for 2008. The IRS issued Notices of Deficiency disallowing among other items approximately
$900.0 million
of deductions that the Company took on securities losses in its 2007, 2008 and 2009 tax returns. As of
March 31, 2014
, the IRS and the Company have reached a partial settlement on
$186.9 million
of deductions in dispute. As of
March 31, 2014
, the Company has recognized a cumulative benefit of approximately
$139.9 million
relating to these deductions. The Company continues to believe that the amounts recorded in its consolidated financial statements reflect its best estimate of the ultimate outcome of this matter.
The following table is a roll-forward of unrecognized tax benefits as of
March 31, 2014
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2014
|
|
Beginning balance
|
$
|
52.0
|
|
|
Reductions for tax positions of prior years
|
(22.9
|
)
|
|
Ending balance
|
$
|
29.1
|
|
As of
March 31, 2014
, the liability for unrecognized tax benefits was
$29.1 million
, all of which could impact the effective tax rate if recognized. The Company accrues interest and penalties for unrecognized tax benefits through the “Income tax benefit” line in the Consolidated Statements of Operations. For the
three months ended
March 31, 2014
, the Company reduced its accrual approximately
$0.1 million
and for the three months ended March 31,
2013
, the Company accrued approximately
$1.3 million
, respectively. As of
March 31, 2014
and
December 31, 2013
, the Company had a liability of
$2.0 million
and
$2.1 million
, respectively, for interest and penalties related to its unrecognized tax benefits. As of
March 31, 2014
, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax positions over the next
12 months
.
Note 12 — Commitments and Contingencies
Operating Leases
— The following table is a summary of the minimum future rental payments for all non-cancelable operating leases with an initial term of more than one year at
March 31, 2014
(amounts in millions):
|
|
|
|
|
|
|
|
|
2014
|
|
$
|
11.4
|
|
|
2015
|
|
11.7
|
|
|
2016
|
|
7.6
|
|
|
2017
|
|
6.8
|
|
|
2018
|
|
6.4
|
|
|
Thereafter
|
|
15.8
|
|
|
Total
|
|
$
|
59.7
|
|
Minimum Commission Guarantees
— In limited circumstances as an incentive to new or renewing agents, the Company may grant minimum commission guarantees for a specified period of time at a contractually specified amount. Under the guarantees, the Company will pay to the agent the difference between the contractually specified minimum commission and the actual commissions earned by the agent. Expense related to the guarantee is recognized in the “Fee and other commissions expense” line in the Consolidated Statements of Operations.
As of
March 31, 2014
, the liability for minimum commission guarantees is
$4.4 million
and the maximum amount that could be paid under the minimum commission guarantees was
$13.6 million
over a weighted-average remaining term of
3.6
years. The maximum payment is calculated as the contractually guaranteed minimum commission multiplied by the remaining term of the contract and, therefore, assumes that the agent generates no money transfer transactions during the remainder of its contract. However, under the terms of certain agent contracts, the Company may terminate the contract if the projected or actual volume of transactions falls beneath a contractually specified amount. With respect to minimum commission guarantees expiring in the
three months ended
March 31, 2014
, the Company was not required to make any estimated payments.
Legal Proceedings
— The matters set forth below are subject to uncertainties and outcomes that are not predictable. The Company accrues for these matters as any resulting losses become probable and can be reasonably estimated. Further, the Company maintains insurance coverage for many claims and litigations alleged. In relation to various legal matters, including those described below, the Company had
$2.1 million
and
$1.7 million
of liability recorded in the “Accounts payable and other liabilities” line in the Consolidated Balance Sheets as of
March 31, 2014
and
December 31, 2013
, respectively. A charge of
$0.4 million
and a nominal charge, net of insurance recoveries, were recorded in the “Transaction and operations support” line in the Consolidated Statements of Operations during the
three
months ended
March 31, 2014
and
2013
, respectively, for legal proceedings.
Litigation Commenced Against the Company
The Company is involved in various claims and litigation that arise from time to time in the ordinary course of the Company's business. Management does not believe that after final disposition any of these matters is likely to have a material adverse impact on the Company's financial condition, results of operations and cash flows.
Government Investigations
State Civil Investigative Demands
— MoneyGram has received Civil Investigative Demands from a working group of nine state attorneys general who have initiated an investigation into whether the Company took adequate steps to prevent consumer fraud during the period from 2007 to 2011. The Civil Investigative Demands seek information and documents relating to the Company’s procedures to prevent fraudulent transfers and consumer complaint information. MoneyGram continues to cooperate fully with the states in this matter. MoneyGram has submitted the information and documents requested by the states. No claims have been filed against MoneyGram in connection with this investigation. Accordingly, we are unable to estimate the potential dollar amount of any loss in connection with this investigation or whether any loss in connection with this investigation could have a material
adverse effect on our results of operations, cash flows or financial position. The Company does not believe there is a basis for any claim or recovery with respect to this matter and intends to vigorously defend itself if any claim is asserted.
Other Matters
— The Company is involved in various other government inquiries and other matters that arise from time to time. Management does not believe that after final disposition any of these other matters is likely to have a material adverse impact on the Company’s financial condition, results of operations and cash flows.
Actions Commenced by the Company
CDO Litigation
— In March 2012, the Company initiated an arbitration proceeding before the Financial Industry Regulatory Authority against Goldman Sachs & Co., or Goldman Sachs. The arbitration relates to MoneyGram’s purchase of Residential Mortgage Backed Securities and Collateral Debt Obligations that Goldman Sachs sold to MoneyGram during the 2005 through 2007 timeframe. The Company alleged, among other things, that Goldman Sachs made material misrepresentations and omissions in connection with the sale of these products, ultimately causing significant losses to the Company. On April 25, 2014, MoneyGram and Goldman Sachs agreed to settle all pending and potential litigation or arbitration concerning any Residential Mortgage Backed Securities or mortgage-related Collateralized Debt Obligations that Goldman Sachs sold to MoneyGram during the 2003 through June 30, 2008 time period. In connection with this resolution, Goldman Sachs agreed to make a one-time payment, net of fees and certain expenses, to MoneyGram in the amount of
$13.0 million
, and to make a one-time payment of fees and expenses to MoneyGram’s legal counsel in the amount of
$4.35 million
. This resolution includes terminating the litigation and arbitration between MoneyGram and Goldman Sachs. As of
April 30, 2014
, Goldman Sachs owns, together with certain of its affiliates, approximately
14 percent
of the shares of the Company’s common stock on a diluted basis, assuming conversion of the D Stock currently owned by Goldman Sachs and its affiliates.
Tax Litigation
— On May 14, 2012 and December 17, 2012, the Company filed petitions in the U.S. Tax Court challenging the 2005-2007 and 2009 Notices of Deficiency, respectively, pursuant to which the IRS determined that the Company owes additional corporate income taxes because certain deductions relating to securities losses were capital in nature, rather than ordinary losses. The Company asserts that it properly deducted its securities losses and that, consequently,
no
additional corporate income taxes are owed. The IRS filed its responses to the Company’s petitions in July 2012 and February 2013 reasserting its original position relating to the years 2005-2007 and 2009. The cases have been consolidated before the U.S. Tax Court. In December 2013, the IRS filed a motion with the court for partial summary judgment in the case, and in February 2014 the Company filed its response to that motion which included the Company's request for partial summary judgment.
Note 13 — Earnings per Common Share
For all periods in which it is outstanding, the D Stock is included in the weighted-average number of common shares outstanding utilized to calculate basic earnings per common share because the D Stock is deemed a common stock equivalent. Diluted earnings per common share reflects the potential dilution that could result if securities or incremental shares arising out of the Company’s stock-based compensation plans were exercised or converted into common stock. Diluted earnings per common share assumes the exercise of stock options using the treasury stock method.
The following table is a reconciliation of the weighted-average amounts used in calculating earnings per share for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Basic common shares outstanding
|
71.6
|
|
|
71.5
|
|
|
Shares related to stock options, restricted stock and restricted stock units
|
0.3
|
|
|
—
|
|
|
Diluted common shares outstanding
|
71.9
|
|
|
71.5
|
|
Potential common shares are excluded from the computation of diluted earnings per common share when the effect would be anti-dilutive. All potential common shares are anti-dilutive in periods of net loss available to common stockholders. Stock options are anti-dilutive when the exercise price of these instruments is greater than the average market price of the Company’s common stock for the period. The following table summarizes the weighted-average potential common shares excluded from diluted earnings (loss) per common share, as their effect would be anti-dilutive, for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Shares related to stock options
|
3.5
|
|
|
4.6
|
|
|
Shares related to restricted stock and restricted stock units
|
1.2
|
|
|
0.8
|
|
|
Shares excluded from the computation
|
4.7
|
|
|
5.4
|
|
Note 14 — Segment Information
The Company’s reporting segments are primarily organized based on the nature of products and services offered and the type of consumer served. The Company has
two
reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global money transfers and, in the U.S., Canada and Puerto Rico, bill payment services to consumers through a network of agents and, in select markets, company-operated locations. The Financial Paper Products segment provides money orders to consumers through retail and financial institution locations in the U.S. and Puerto Rico, and provides official check services to financial institutions in the U.S. One of the Company’s agents of both the Global Funds Transfer segment and the Financial Paper Products segment accounted for
27 percent
and
28 percent
of total revenue for the
three months ended March 31, 2014
and
2013
, respectively
. Businesses that are not operated within these segments are categorized as "Other," and primarily relate to discontinued products and businesses, as well as corporate items. Segment pre-tax operating income and segment operating margin are used to review segment performance and to allocate resources.
The following table is a summary of the total revenue by segment for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Global Funds Transfer revenue:
|
|
|
|
|
Money transfer revenue
|
$
|
326.1
|
|
|
$
|
294.4
|
|
|
Bill payment revenue
|
25.6
|
|
|
26.0
|
|
|
Total Global Funds Transfer revenue
|
351.7
|
|
|
320.4
|
|
|
Financial Paper Products revenue:
|
|
|
|
|
Money order revenue
|
14.4
|
|
|
13.7
|
|
|
Official check revenue
|
8.8
|
|
|
6.2
|
|
|
Total Financial Paper Products revenue
|
23.2
|
|
|
19.9
|
|
|
Other revenue
|
—
|
|
|
0.2
|
|
|
Total revenue
|
$
|
374.9
|
|
|
$
|
340.5
|
|
The following table is a summary of the operating income by segment and detail of the income (loss) before income taxes for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Global Funds Transfer operating income
|
$
|
31.5
|
|
|
$
|
41.4
|
|
|
Financial Paper Products operating income
|
9.8
|
|
|
6.9
|
|
|
Total segment operating income
|
41.3
|
|
|
48.3
|
|
|
Other operating loss
|
(4.3
|
)
|
|
(4.0
|
)
|
|
Total operating income
|
37.0
|
|
|
44.3
|
|
|
Interest expense
|
9.7
|
|
|
17.4
|
|
|
Debt extinguishment costs
|
—
|
|
|
45.3
|
|
|
Income (loss) before income taxes
|
$
|
27.3
|
|
|
$
|
(18.4
|
)
|
The following table sets forth the assets by segment as of
March 31, 2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2014
|
|
December 31, 2013
|
|
Global Funds Transfer
|
$
|
1,670.5
|
|
|
$
|
1,611.3
|
|
|
Financial Paper Products
|
2,705.5
|
|
|
2,800.0
|
|
|
Other
|
385.4
|
|
|
375.6
|
|
|
Total assets
|
$
|
4,761.4
|
|
|
$
|
4,786.9
|
|
Note 15 — Subsequent Events
On April 2, 2014, the Company, as borrower, entered into a debt agreement with various lenders with BOA, as administrative agent. The debt agreement provides for (a) an incremental term loan facility in an aggregate principal amount up to
$130.0 million
, (b) an increase in the aggregate revolving loan commitments under the 2013 Credit Agreement from
$125.0 million
to
$150.0 million
and (c) certain other amendments to the 2013 Credit Agreement including, without limitation, (i) amendments to certain of the conditions precedent with respect to these incremental borrowings, (ii) an increase in the maximum secured leverage ratio that the Company is required to comply with as of the last day of each fiscal quarter, and (iii) amendments to permit the Company to engage in share repurchases only from affiliates of THL and Goldman Sachs in an amount up to
$300.0 million
. The Company borrowed the full
$130.0 million
under the loan facility on April 2, 2014, and such proceeds were used to fund a portion of the share repurchase described below.
On April 2, 2014, an underwritten secondary public offering by affiliates and co-investors of THL and affiliates of Goldman Sachs of an aggregate of
9,200,000
shares of the Company’s common stock closed. The selling stockholders received all of the proceeds from the offering. Also on April 2, 2014, the Company completed the repurchase of
8,185,092
shares of common stock from the THL selling stockholders at a price of
$16.25
per share. The Company funded the share repurchase with
$130.0 million
of the proceeds from its term loan facility described above and cash.
As a result of the transactions occurring on April 2, 2014 described above, the Investors will make a payment of approximately
$0.6 million
to Walmart under the Participation agreement described in Note 9 —
Stockholders' Deficit
of the Notes to the Consolidated Financial Statements. This amount will be reflected in the Company's Statement of Operations in the three and six months ended June 30, 2014.
Note 16 — Condensed Consolidating Financial Statements
In the event the Company offers equity or debt securities pursuant to an effective registration statement on Form S-3, these debt securities may be guaranteed by certain of its subsidiaries. Accordingly, the Company is providing condensed consolidating financial information in accordance with SEC Regulation S-X Rule 3-10,
Financial Statements of Guarantors and Issuers of Guaranteed Securities Registered or Being Registered.
If the Company issues debt securities, the following
100 percent
directly or indirectly owned subsidiaries could fully and unconditionally guarantee the debt securities on a joint and several basis: MoneyGram Payment Systems Worldwide, Inc.; MoneyGram Payment Systems, Inc.; and MoneyGram of New York LLC (collectively, the “Guarantors”).
The following information represents condensed, consolidating Balance Sheets as of
March 31, 2014
and
December 31, 2013
, along with condensed, consolidating Statements of Operations, Statements of Comprehensive Income (Loss) and Statements of Cash Flows for the
three
months ended
March 31, 2014
and
2013
. The condensed, consolidating financial information presents financial information in separate columns for MoneyGram International, Inc. on a Parent-only basis carrying its investment in subsidiaries under the equity method; Guarantors on a combined basis, carrying investments in subsidiaries that are not expected to guarantee the debt (collectively, the “Non-Guarantors”) under the equity method; Non-Guarantors on a combined basis; and eliminating entries. The eliminating entries primarily reflect intercompany transactions, such as accounts receivable and payable, fee revenue and commissions expense and the elimination of equity investments and income in subsidiaries.
MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING BALANCE SHEETS
AS OF
MARCH 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cash and cash equivalents (substantially restricted)
|
2.0
|
|
|
2,082.5
|
|
|
69.4
|
|
|
—
|
|
|
2,153.9
|
|
|
Receivables, net (substantially restricted)
|
—
|
|
|
878.7
|
|
|
11.3
|
|
|
—
|
|
|
890.0
|
|
|
Interest-bearing investments (substantially restricted)
|
—
|
|
|
900.0
|
|
|
35.8
|
|
|
—
|
|
|
935.8
|
|
|
Available-for-sale investments (substantially restricted)
|
—
|
|
|
41.6
|
|
|
—
|
|
|
—
|
|
|
41.6
|
|
|
Property and equipment, net
|
—
|
|
|
109.7
|
|
|
23.9
|
|
|
—
|
|
|
133.6
|
|
|
Goodwill
|
—
|
|
|
313.0
|
|
|
121.9
|
|
|
—
|
|
|
434.9
|
|
|
Other assets
|
18.4
|
|
|
159.4
|
|
|
21.4
|
|
|
(27.6
|
)
|
|
171.6
|
|
|
Equity investments in subsidiaries
|
114.3
|
|
|
188.9
|
|
|
—
|
|
|
(303.2
|
)
|
|
—
|
|
|
Intercompany receivables
|
698.7
|
|
|
7.1
|
|
|
2.3
|
|
|
(708.1
|
)
|
|
—
|
|
|
Total assets
|
$
|
833.4
|
|
|
$
|
4,680.9
|
|
|
$
|
286.0
|
|
|
$
|
(1,038.9
|
)
|
|
$
|
4,761.4
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
|
Payment service obligations
|
$
|
—
|
|
|
$
|
3,656.6
|
|
|
$
|
35.1
|
|
|
$
|
—
|
|
|
$
|
3,691.7
|
|
|
Debt
|
840.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
840.8
|
|
|
Pension and other postretirement benefits
|
—
|
|
|
96.3
|
|
|
—
|
|
|
—
|
|
|
96.3
|
|
|
Accounts payable and other liabilities
|
32.1
|
|
|
113.1
|
|
|
54.5
|
|
|
(27.6
|
)
|
|
172.1
|
|
|
Intercompany liabilities
|
—
|
|
|
700.6
|
|
|
7.5
|
|
|
(708.1
|
)
|
|
—
|
|
|
Total liabilities
|
872.9
|
|
|
4,566.6
|
|
|
97.1
|
|
|
(735.7
|
)
|
|
4,800.9
|
|
|
Total stockholders’ (deficit) equity
|
(39.5
|
)
|
|
114.3
|
|
|
188.9
|
|
|
(303.2
|
)
|
|
(39.5
|
)
|
|
Total liabilities and stockholders’ (deficit) equity
|
$
|
833.4
|
|
|
$
|
4,680.9
|
|
|
$
|
286.0
|
|
|
$
|
(1,038.9
|
)
|
|
$
|
4,761.4
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING BALANCE SHEETS
AS OF
DECEMBER 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Cash and cash equivalents (substantially restricted)
|
1.7
|
|
|
2,134.6
|
|
|
92.2
|
|
|
—
|
|
|
2,228.5
|
|
|
Receivables, net (substantially restricted)
|
—
|
|
|
760.8
|
|
|
6.9
|
|
|
—
|
|
|
767.7
|
|
|
Interest-bearing investments (substantially restricted)
|
—
|
|
|
975.0
|
|
|
36.6
|
|
|
—
|
|
|
1,011.6
|
|
|
Available-for-sale investments (substantially restricted)
|
—
|
|
|
48.1
|
|
|
—
|
|
|
—
|
|
|
48.1
|
|
|
Property and equipment, net
|
—
|
|
|
109.5
|
|
|
25.3
|
|
|
—
|
|
|
134.8
|
|
|
Goodwill
|
—
|
|
|
313.0
|
|
|
122.2
|
|
|
—
|
|
|
435.2
|
|
|
Other assets
|
18.1
|
|
|
163.0
|
|
|
17.5
|
|
|
(37.6
|
)
|
|
161.0
|
|
|
Equity investments in subsidiaries
|
81.0
|
|
|
194.7
|
|
|
—
|
|
|
(275.7
|
)
|
|
—
|
|
|
Intercompany receivables
|
703.6
|
|
|
4.0
|
|
|
10.3
|
|
|
(717.9
|
)
|
|
—
|
|
|
Total assets
|
$
|
804.4
|
|
|
$
|
4,702.7
|
|
|
$
|
311.0
|
|
|
$
|
(1,031.2
|
)
|
|
$
|
4,786.9
|
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
|
Payment service obligations
|
$
|
—
|
|
|
$
|
3,699.5
|
|
|
$
|
37.6
|
|
|
$
|
—
|
|
|
$
|
3,737.1
|
|
|
Debt
|
842.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
842.9
|
|
|
Pension and other postretirement benefits
|
—
|
|
|
98.4
|
|
|
—
|
|
|
—
|
|
|
98.4
|
|
|
Accounts payable and other liabilities
|
38.5
|
|
|
112.9
|
|
|
71.7
|
|
|
(37.6
|
)
|
|
185.5
|
|
|
Intercompany liabilities
|
—
|
|
|
710.9
|
|
|
7.0
|
|
|
(717.9
|
)
|
|
—
|
|
|
Total liabilities
|
881.4
|
|
|
4,621.7
|
|
|
116.3
|
|
|
(755.5
|
)
|
|
4,863.9
|
|
|
Total stockholders’ (deficit) equity
|
(77.0
|
)
|
|
81.0
|
|
|
194.7
|
|
|
(275.7
|
)
|
|
(77.0
|
)
|
|
Total liabilities and stockholders’ (deficit) equity
|
$
|
804.4
|
|
|
$
|
4,702.7
|
|
|
$
|
311.0
|
|
|
$
|
(1,031.2
|
)
|
|
$
|
4,786.9
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
Fee and other revenue
|
$
|
—
|
|
|
$
|
405.5
|
|
|
$
|
75.3
|
|
|
$
|
(113.1
|
)
|
|
$
|
367.7
|
|
|
Investment revenue
|
—
|
|
|
7.2
|
|
|
—
|
|
|
—
|
|
|
7.2
|
|
|
Total revenue
|
—
|
|
|
412.7
|
|
|
75.3
|
|
|
(113.1
|
)
|
|
374.9
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Fee and other commissions expense
|
—
|
|
|
208.8
|
|
|
43.4
|
|
|
(81.3
|
)
|
|
170.9
|
|
|
Investment commissions expense
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
Total commissions expense
|
—
|
|
|
208.9
|
|
|
43.4
|
|
|
(81.3
|
)
|
|
171.0
|
|
|
Compensation and benefits
|
—
|
|
|
52.7
|
|
|
17.0
|
|
|
—
|
|
|
69.7
|
|
|
Transaction and operations support
|
2.0
|
|
|
87.8
|
|
|
13.3
|
|
|
(31.8
|
)
|
|
71.3
|
|
|
Occupancy, equipment and supplies
|
—
|
|
|
9.4
|
|
|
3.4
|
|
|
—
|
|
|
12.8
|
|
|
Depreciation and amortization
|
—
|
|
|
9.6
|
|
|
3.5
|
|
|
—
|
|
|
13.1
|
|
|
Total operating expenses
|
2.0
|
|
|
368.4
|
|
|
80.6
|
|
|
(113.1
|
)
|
|
337.9
|
|
|
OPERATING (LOSS) INCOME
|
(2.0
|
)
|
|
44.3
|
|
|
(5.3
|
)
|
|
—
|
|
|
37.0
|
|
|
OTHER EXPENSE
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
9.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.7
|
|
|
Total other expense
|
9.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.7
|
|
|
(Loss) income before income taxes
|
(11.7
|
)
|
|
44.3
|
|
|
(5.3
|
)
|
|
—
|
|
|
27.3
|
|
|
Income tax benefit
|
(4.1
|
)
|
|
(7.6
|
)
|
|
—
|
|
|
—
|
|
|
(11.7
|
)
|
|
(Loss) income after income taxes
|
(7.6
|
)
|
|
51.9
|
|
|
(5.3
|
)
|
|
—
|
|
|
39.0
|
|
|
Equity income (loss) in subsidiaries
|
46.6
|
|
|
(5.3
|
)
|
|
—
|
|
|
(41.3
|
)
|
|
—
|
|
|
NET INCOME (LOSS)
|
$
|
39.0
|
|
|
$
|
46.6
|
|
|
$
|
(5.3
|
)
|
|
$
|
(41.3
|
)
|
|
$
|
39.0
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
Fee and other revenue
|
$
|
—
|
|
|
$
|
363.5
|
|
|
$
|
72.2
|
|
|
$
|
(98.0
|
)
|
|
$
|
337.7
|
|
|
Investment revenue
|
—
|
|
|
2.7
|
|
|
0.1
|
|
|
—
|
|
|
2.8
|
|
|
Total revenue
|
—
|
|
|
366.2
|
|
|
72.3
|
|
|
(98.0
|
)
|
|
340.5
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Fee and other commissions expense
|
—
|
|
|
181.0
|
|
|
38.8
|
|
|
(65.5
|
)
|
|
154.3
|
|
|
Investment commissions expense
|
—
|
|
|
0.1
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
Total commissions expense
|
—
|
|
|
181.1
|
|
|
38.8
|
|
|
(65.5
|
)
|
|
154.4
|
|
|
Compensation and benefits
|
—
|
|
|
48.7
|
|
|
16.8
|
|
|
—
|
|
|
65.5
|
|
|
Transaction and operations support
|
0.5
|
|
|
72.1
|
|
|
11.4
|
|
|
(32.5
|
)
|
|
51.5
|
|
|
Occupancy, equipment and supplies
|
—
|
|
|
9.8
|
|
|
3.2
|
|
|
—
|
|
|
13.0
|
|
|
Depreciation and amortization
|
—
|
|
|
8.4
|
|
|
3.4
|
|
|
—
|
|
|
11.8
|
|
|
Total operating expenses
|
0.5
|
|
|
320.1
|
|
|
73.6
|
|
|
(98.0
|
)
|
|
296.2
|
|
|
OPERATING (LOSS) INCOME
|
(0.5
|
)
|
|
46.1
|
|
|
(1.3
|
)
|
|
—
|
|
|
44.3
|
|
|
OTHER EXPENSE
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
0.4
|
|
|
17.0
|
|
|
—
|
|
|
—
|
|
|
17.4
|
|
|
Debt extinguishment costs
|
—
|
|
|
45.3
|
|
|
—
|
|
|
—
|
|
|
45.3
|
|
|
Total other expense
|
0.4
|
|
|
62.3
|
|
|
—
|
|
|
—
|
|
|
62.7
|
|
|
Loss before income taxes
|
(0.9
|
)
|
|
(16.2
|
)
|
|
(1.3
|
)
|
|
—
|
|
|
(18.4
|
)
|
|
Income tax (benefit) expense
|
(0.3
|
)
|
|
(6.3
|
)
|
|
0.8
|
|
|
—
|
|
|
(5.8
|
)
|
|
Loss after income taxes
|
(0.6
|
)
|
|
(9.9
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
(12.6
|
)
|
|
(Loss) equity income in subsidiaries
|
(12.0
|
)
|
|
(2.1
|
)
|
|
—
|
|
|
14.1
|
|
|
—
|
|
|
NET (LOSS) INCOME
|
$
|
(12.6
|
)
|
|
$
|
(12.0
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
14.1
|
|
|
$
|
(12.6
|
)
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED
MARCH 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
NET INCOME (LOSS)
|
$
|
39.0
|
|
|
$
|
46.6
|
|
|
$
|
(5.3
|
)
|
|
$
|
(41.3
|
)
|
|
$
|
39.0
|
|
|
OTHER COMPREHENSIVE (LOSS) INCOME
|
|
|
|
|
|
|
|
|
|
|
Net unrealized holding gains on available-for-sale securities arising during the period, net of tax benefit of $0.5
|
(4.4
|
)
|
|
(4.4
|
)
|
|
—
|
|
|
4.4
|
|
|
(4.4
|
)
|
|
Net change in pension liability, net of tax benefit of $0.6
|
1.0
|
|
|
1.0
|
|
|
—
|
|
|
(1.0
|
)
|
|
1.0
|
|
|
Unrealized foreign currency translation gains (losses), net of tax benefit of $0.6
|
(1.0
|
)
|
|
1.0
|
|
|
0.9
|
|
|
(1.9
|
)
|
|
(1.0
|
)
|
|
Other comprehensive (loss) income
|
(4.4
|
)
|
|
(2.4
|
)
|
|
0.9
|
|
|
1.5
|
|
|
(4.4
|
)
|
|
COMPREHENSIVE INCOME (LOSS)
|
$
|
34.6
|
|
|
$
|
44.2
|
|
|
$
|
(4.4
|
)
|
|
$
|
(39.8
|
)
|
|
$
|
34.6
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
FOR THE THREE MONTHS ENDED
MARCH 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
NET (LOSS) INCOME
|
$
|
(12.6
|
)
|
|
$
|
(12.0
|
)
|
|
$
|
(2.1
|
)
|
|
$
|
14.1
|
|
|
$
|
(12.6
|
)
|
|
OTHER COMPREHENSIVE (LOSS) INCOME
|
|
|
|
|
|
|
|
|
|
|
Net change in pension liability, net of tax benefit of $0.5
|
1.2
|
|
|
1.2
|
|
|
—
|
|
|
(1.2
|
)
|
|
1.2
|
|
|
Unrealized foreign currency translation gains, net of tax benefit of $1.0
|
(1.6
|
)
|
|
(1.8
|
)
|
|
(1.4
|
)
|
|
3.2
|
|
|
(1.6
|
)
|
|
Other comprehensive (loss) income
|
(0.4
|
)
|
|
(0.6
|
)
|
|
(1.4
|
)
|
|
2.0
|
|
|
(0.4
|
)
|
|
COMPREHENSIVE (LOSS) INCOME
|
$
|
(13.0
|
)
|
|
$
|
(12.6
|
)
|
|
$
|
(3.5
|
)
|
|
$
|
16.1
|
|
|
$
|
(13.0
|
)
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
NET CASH USED IN OPERATING ACTIVITIES
|
$
|
(14.5
|
)
|
|
$
|
(43.0
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(57.5
|
)
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from maturities of available-for-sale investments (substantially restricted)
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
Purchases of interest-bearing investments (substantially restricted)
|
—
|
|
|
(100.0
|
)
|
|
(35.8
|
)
|
|
—
|
|
|
(135.8
|
)
|
|
Proceeds from maturities of interest-bearing investments (substantially restricted)
|
—
|
|
|
175.0
|
|
|
35.8
|
|
|
—
|
|
|
210.8
|
|
|
Purchases of property and equipment, net of disposals
|
—
|
|
|
(17.1
|
)
|
|
—
|
|
|
—
|
|
|
(17.1
|
)
|
|
Dividend to parent
|
11.3
|
|
|
—
|
|
|
—
|
|
|
(11.3
|
)
|
|
—
|
|
|
Intercompany financing
|
4.9
|
|
|
—
|
|
|
—
|
|
|
(4.9
|
)
|
|
—
|
|
|
Net cash provided by (used in) investing activities
|
16.2
|
|
|
59.2
|
|
|
—
|
|
|
(16.2
|
)
|
|
59.2
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Payment on debt
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
Proceeds from exercise of stock options
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
Dividend to parent
|
—
|
|
|
(11.3
|
)
|
|
—
|
|
|
11.3
|
|
|
—
|
|
|
Intercompany financings
|
—
|
|
|
(4.9
|
)
|
|
—
|
|
|
4.9
|
|
|
—
|
|
|
Net cash (used in) provided by financing activities
|
(1.7
|
)
|
|
(16.2
|
)
|
|
—
|
|
|
16.2
|
|
|
(1.7
|
)
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH AND CASH EQUIVALENTS—Beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH AND CASH EQUIVALENTS—End of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED, CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
$
|
(16.7
|
)
|
|
$
|
70.3
|
|
|
$
|
4.9
|
|
|
$
|
—
|
|
|
$
|
58.5
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from maturities of available-for-sale investments (substantially restricted)
|
—
|
|
|
6.7
|
|
|
—
|
|
|
—
|
|
|
6.7
|
|
|
Purchases of interest-bearing investments (substantially restricted)
|
—
|
|
|
(250.0
|
)
|
|
(14.7
|
)
|
|
—
|
|
|
(264.7
|
)
|
|
Proceeds from maturities of interest-bearing investments (substantially restricted)
|
—
|
|
|
200.0
|
|
|
11.1
|
|
|
—
|
|
|
211.1
|
|
|
Purchases of property and equipment, net of disposals
|
—
|
|
|
(12.9
|
)
|
|
(2.3
|
)
|
|
—
|
|
|
(15.2
|
)
|
|
Capital contribution from subsidiary guarantors
|
—
|
|
|
(1.0
|
)
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
Net cash (used in) provided by investing activities
|
—
|
|
|
(57.2
|
)
|
|
(5.9
|
)
|
|
1.0
|
|
|
(62.1
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of debt
|
850.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
850.0
|
|
|
Transaction costs for issuance and amendment of debt
|
—
|
|
|
(11.8
|
)
|
|
—
|
|
|
—
|
|
|
(11.8
|
)
|
|
Prepayment penalty
|
—
|
|
|
(21.5
|
)
|
|
—
|
|
|
—
|
|
|
(21.5
|
)
|
|
Payment on debt
|
—
|
|
|
(813.1
|
)
|
|
—
|
|
|
—
|
|
|
(813.1
|
)
|
|
Intercompany financings
|
(833.3
|
)
|
|
833.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Capital contribution to non-guarantors
|
—
|
|
|
—
|
|
|
1.0
|
|
|
(1.0
|
)
|
|
—
|
|
|
Net cash provided by (used in) financing activities
|
16.7
|
|
|
(13.1
|
)
|
|
1.0
|
|
|
(1.0
|
)
|
|
3.6
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH AND CASH EQUIVALENTS—Beginning of period
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
CASH AND CASH EQUIVALENTS—End of period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The purpose of this Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is to provide an understanding of MoneyGram International, Inc.'s (“MoneyGram,” the “Company,” “we,” “us” and “our”) financial condition, results of operations and cash flows by focusing on changes in certain key measures. This MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and accompanying notes. This discussion contains forward-looking statements that involve risks and uncertainties. MoneyGram’s actual results could differ materially from those anticipated due to various factors discussed below under “Cautionary Statements Regarding Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q.
The comparisons presented in this MD&A refer to the same period in the prior year, unless otherwise noted. This MD&A is organized in the following sections:
|
|
|
|
•
|
Liquidity and Capital Resources
|
|
|
|
|
•
|
Critical Accounting Policies
|
|
|
|
|
•
|
Cautionary Statements regarding Forward-Looking Statements
|
OVERVIEW
MoneyGram is a leading global money transfer and payment services company operating in over
339,000
agent locations in more than
200
countries and territories. Our major products include global money transfers, bill payment services, money order services and official check processing. As an alternative financial services provider, our primary consumers are unbanked or underbanked consumers. Unbanked consumers do not have a relationship with a traditional financial institution. Underbanked consumers are not fully served by traditional financial institutions. Other consumers who use our services are convenience users and emergency users who may use traditional banking services, but prefer to use our services based on convenience, cost or to make emergency payments or transfers. We primarily offer services through third-party agents, including retail chains, independent retailers, post offices and other financial institutions. We continue to be an innovator in the industry by diversifying our core money transfer revenue through new channels, such as online, mobile, kiosks and other self-service channels.
Our global money transfer and bill payment services are our primary revenue drivers, accounting for
94 percent
of total revenue for the
three
months ended
March 31, 2014
. The market for money transfer and bill payment services remains very competitive, consisting of a small number of large competitors and a large number of small, niche competitors. While we are the second largest money transfer company in the world (based on total face value of remittances in 2013), we will encounter increasing competition as new technologies emerge that allow consumers to send and receive money in a variety of ways.
We manage our revenue and related commission expenses through two reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global money transfers and, in the U.S., Canada and Puerto Rico, bill payment services to consumers through a network of agents and, in select markets, company-operated locations. The Financial Paper Products segment provides money order services to consumers through our retail and financial institution locations in the U.S. and Puerto Rico, and provides official check services to financial institutions in the U.S. Businesses that are not operated within these segments are categorized as “Other,” and are primarily related to discontinued products and businesses. Other also contains corporate items. Our sales efforts are organized based on the nature of products and the services offered. Operating expenses are discussed based on the functional nature of the expense.
Business Environment and Trends
Overall, our total revenue growth for the
three
months ended
March 31, 2014
was
10 percent
which was driven by the success of the money transfer product. Our money transfer fee and other revenue growth for the
three
months ended
March 31, 2014
was
11 percent
. Our money transfer transaction growth for the
three
months ended
March 31, 2014
was
12 percent
. The World Bank, a key source of industry analysis for developing countries, has projected long term growth rates of remittances worldwide in the single digits.
We generally compete for money transfer consumers on the basis of trust, convenience, availability of outlets, price, technology and brand recognition. We are monitoring consumer behavior to ensure that we continue our transaction growth trend. Additionally, we continue to review markets where we may have an opportunity to increase prices based on brand awareness, loyalty and competitive positioning. Pricing actions from our competitors may also result in pricing changes for our products and services.
On April 17, 2014, Wal-Mart Stores, Inc. (“Walmart”) announced the launch of the Walmart-2-Walmart Money Transfer Service, a program that will allow consumers to transfer money between its U.S. store locations. This program limits consumers to transferring $900 per transaction. This service commenced on April 24, 2014. We are unable to determine the extent of the negative impact of this program to our business at this time. For the
three months ended March 31, 2014
, Walmart-to-Walmart transactions in the U.S. accounted for 12 percent of our total revenue and nine percent of our total revenue less commissions.
On an ongoing basis we see a trend among state, federal and international regulators towards enhanced scrutiny of anti-money laundering compliance programs, as well as consumer fraud prevention and education. Compliance with laws and regulations is a highly complex and integral part of our day-to-day operations, thus we have continued to increase our compliance personnel headcount and make investments in our compliance-related technology and infrastructure. In the first quarter of 2013, a compliance monitor was selected pursuant to a requirement of our settlement with the U.S. Attorney’s Office for the Middle District of Pennsylvania ("MDPA"), and the Asset Forfeiture and Money Laundering Section of the Criminal Division of the Department of Justice ("U.S. DOJ"). The first annual monitor report was provided to MoneyGram in November of 2013 and per this report MoneyGram is required to make investments ranging from enhanced systems to more resources deployed in the field. We incurred
$0.8 million
of expense related to the monitor for the
three months ended March 31, 2014
.
2014 Events
Global Transformation Program
—
In the first quarter of 2014, the Company announced the implementation of a global transformation program ("2014 Global Transformation Program"), which consists of three key components: reorganization and restructuring, compliance enhancement and a focus on self-service revenue.
Our reorganization and restructuring activities are centered around facilities and headcount rationalization, system efficiencies and headcount right-shoring and outsourcing. The Company projects that these activities will be concluded at the end of the 2015 fiscal year. The following figures are the Company’s estimates and are subject to change as the proposed global transformation program continues to be implemented. The Company is estimating to incur
$36.5 million
in cash outlays over the next two years and generate an annual estimated pre-tax savings of
$15.0 million
to
$20.0 million
exiting fiscal year 2015. For the
three months ended March 31, 2014
, the Company recorded total reorganization and restructuring expenses of
$3.1 million
and paid cash of
$0.6 million
.
Our compliance enhancement program is focused on improving our services for the consumers and completing the programs recommended in adherence with our settlement with the MDPA and U.S. DOJ. At the beginning of 2014, the Company announced that we expect to make investments totaling $80.0 to $90.0 million related to the compliance enhancement program over the next three years. For the
three months ended March 31, 2014
, we incurred
$7.1 million
of compliance enhancement program expense primarily related to contractor and consultant expense for systems and process redesign and
$0.8 million
for direct monitor costs, as discussed above.
Our increased investment in the growth of our self-service revenue channel, which includes MoneyGram Online, mobile, account deposit services, kiosk-based and money transfer options, will enable us to achieve our goal of generating 15 percent to 20 percent of money transfer revenue from the self-service channel in 2017. For the
three months ended March 31, 2014
, the self-service channel accounted for
seven percent
of money transfer fee and other revenue.
Financial Measures and Key Metrics
This Form 10-Q includes financial information prepared in accordance with accounting principles generally accepted in the U.S. ("GAAP") as well as certain non-GAAP financial measures that we use to assess our overall performance.
GAAP Measures
—
We utilize certain financial measures prepared in accordance with GAAP to assess the Company's overall performance. These measures include, but are not limited to: fee and other revenue, fee and other commission expense, fee and other revenue less commissions, operating income and operating margin. Due to our regulatory capital requirements, we deem the following payment service assets, in their entirety, to be substantially restricted: cash and cash equivalents, receivables, net, interest-bearing investments and available-for-sale investments. Assets in excess of payment service obligations is our payment service assets less our payment service obligations. We use assets in excess of payment service obligations when assessing capital resources and liquidity. See Note 1
— Description of the Business and Basis of Presentation
of the Notes to the Consolidated Financial Statements for additional disclosure.
Non-GAAP Measures
—
Generally, a non-GAAP financial measure is a numerical measure of financial performance, financial position, or cash flows that excludes (or includes) amounts that are included in (or excluded from) the most directly comparable measure calculated and presented in accordance with GAAP. The non-GAAP financial measures should be viewed as a supplement to, and not a substitute for, financial measures presented in accordance with GAAP. We strongly encourage investors and stockholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure. While we believe that these metrics enhance investors' understanding of our business, these metrics are not necessarily comparable with similarly named metrics of other companies. The following non-GAAP financial measures include:
|
|
|
|
•
|
EBITDA
(earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization)
|
|
|
|
|
•
|
Adjusted EBITDA
(EBITDA adjusted for certain significant items)
|
|
|
|
|
•
|
Adjusted Free Cash Flow
(Adjusted EBITDA less cash interest expense, cash tax expense, cash payments for capital expenditures and cash payments for agent signing bonuses)
|
We believe that EBITDA, Adjusted EBITDA and Adjusted Free Cash Flow enhance investors' understanding of our business and performance. We use EBITDA and Adjusted EBITDA to review results of operations, forecast and budget, assess cash flow and allocate capital resources. We use Adjusted Free Cash Flow to assess our cash flow and capital resources. Since these are non-GAAP measures, the Company believes it is more appropriate to disclose these metrics after discussion and analysis of the GAAP financial measures.
Non-Financial Measures
We also use certain non-financial measures to assess our overall performance. These measures include, but are not limited to, transaction growth and money transfer agent base.
The Company utilizes specific terms as related to our business throughout this document, including the following:
Corridor
—
With regard to a money transfer transaction, the originating "send" location and the designated "receive" location are referred to as a corridor. Transactions and the related fee and other revenue are viewed as originating from the "send side" of a transaction.
Corridor mix
—
The relative impact of consumers completing increased or decreased transactions in each available corridor versus the comparative prior period.
Face value
—
The principal amount of each completed transaction, excluding any fees related to the transaction.
Foreign currency
—
The impact of foreign currency exchange rate fluctuations is typically calculated as the difference between current period activity translated using the current period’s currency exchange rates and the comparable prior-year period’s currency exchange rates. We use this method to calculate the impact of changes in foreign currency exchange rates for all countries where the transactional currency is not the U.S. dollar.
RESULTS OF OPERATIONS
The following table presents the year over year results of operations for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
|
2014
|
|
2013
|
|
|
(Dollars in million)
|
(unaudited)
|
|
(unaudited)
|
|
|
|
REVENUE
|
|
|
|
|
|
|
Fee and other revenue
|
$
|
367.7
|
|
|
$
|
337.7
|
|
|
9
|
%
|
|
Investment revenue
|
7.2
|
|
|
2.8
|
|
|
157
|
%
|
|
Total revenue
|
374.9
|
|
|
340.5
|
|
|
10
|
%
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
Fee and other commissions expense
|
170.9
|
|
|
154.3
|
|
|
11
|
%
|
|
Investment commissions expense
|
0.1
|
|
|
0.1
|
|
|
—
|
%
|
|
Total commissions expense
|
171.0
|
|
|
154.4
|
|
|
11
|
%
|
|
Compensation and benefits
|
69.7
|
|
|
65.5
|
|
|
6
|
%
|
|
Transaction and operations support
|
71.3
|
|
|
51.5
|
|
|
38
|
%
|
|
Occupancy, equipment and supplies
|
12.8
|
|
|
13.0
|
|
|
(2
|
)%
|
|
Depreciation and amortization
|
13.1
|
|
|
11.8
|
|
|
11
|
%
|
|
Total operating expenses
|
337.9
|
|
|
296.2
|
|
|
14
|
%
|
|
OPERATING INCOME
|
37.0
|
|
|
44.3
|
|
|
(16
|
)%
|
|
OTHER EXPENSE
|
|
|
|
|
|
|
Interest expense
|
9.7
|
|
|
17.4
|
|
|
(44
|
)%
|
|
Debt extinguishment costs
|
—
|
|
|
45.3
|
|
|
NM
|
|
|
Total other expense
|
9.7
|
|
|
62.7
|
|
|
(85
|
)%
|
|
Income (loss) before income taxes
|
27.3
|
|
|
(18.4
|
)
|
|
NM
|
|
|
Income tax benefit
|
(11.7
|
)
|
|
(5.8
|
)
|
|
NM
|
|
|
NET INCOME (LOSS)
|
$
|
39.0
|
|
|
$
|
(12.6
|
)
|
|
NM
|
|
NM = Not meaningful
Fee and Other Revenue and Related Commission Expense
The following summary provides fee and other revenue and related commission expense results for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
(Dollars in millions)
|
2014
|
|
2013
|
|
|
Fee and other revenue
|
$
|
367.7
|
|
|
$
|
337.7
|
|
|
9
|
%
|
|
Fee and other commissions expense
|
170.9
|
|
|
154.3
|
|
|
11
|
%
|
|
Fee and other commissions expense as a percent of fee and other revenue
|
46.5
|
%
|
|
45.7
|
%
|
|
|
Fee and Other Revenue
Fee and other revenue consists of transaction fees, foreign exchange revenue and miscellaneous revenue. Transaction fees are earned on money transfer, bill payment, money order and official check transactions. The Company derives money transfer revenues primarily from consumer transaction fees and the management of currency exchange spreads involving different "send" and "receive" countries. Miscellaneous revenue primarily consists of processing fees on rebate checks and controlled disbursements, service charges on aged outstanding money orders and money order dispenser fees.
For the
three
months ended
March 31, 2014
, fee and other revenue grew
nine percent
when compared to the same periods in
2013
. Fee and other revenue growth was primarily driven by transaction growth from the money transfer product, which was partially offset by transaction declines from the money order and official check products.
Fee and Other Commissions Expense
The Company incurs fee commissions primarily on our Global Funds Transfer products. In a money transfer transaction, both the agent initiating the transaction and the receiving agent earn a commission that is generally based on a percentage of the fee charged to the consumer. In a bill payment transaction, the agent initiating the transaction receives a commission and, in limited circumstances, the biller will generally earn a commission that is based on a percentage of the fee charged to the consumer. We generally do not pay commissions to agents on the sale of money orders, except, in certain limited circumstances, for large agents where we may pay a fixed commission based on total money order transactions. Other commissions expense includes the amortization of capitalized agent signing bonus payments.
As a result of the continued growth of the money transfer offering, fee and other commissions expense grew
11 percent
for the
three
months ended
March 31, 2014
when compared to the same periods in
2013
. Our fee and other commissions expense growth rate outpaced the fee and other revenue growth rate primarily due to the transaction growth from the money transfer product, changes in the corridor and agent mix and increased signing bonus amortization from our agent expansion and retention efforts. For the
three months ended March 31, 2014
, fee and other commissions expense as a percentage of fee and other revenue grew from
45.7 percent
to
46.5 percent
, when compared to the same period in
2013
.
Global Funds Transfer Fee and Other Revenue
The following discussion provides a summary of fee and other revenue for the Global Funds Transfer segment for the
three
months ended
March 31, 2014
and
2013
. Investment revenue is not included in the analysis below. For further detail, see Investment Revenue Analysis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
(Dollars in millions)
|
2014
|
|
2013
|
|
|
Money transfer fee and other revenue
|
$
|
326.1
|
|
|
$
|
294.3
|
|
|
11
|
%
|
|
Bill payment fee and other revenue
|
25.6
|
|
|
26.0
|
|
|
(2
|
)%
|
|
Global Funds Transfer fee and other revenue
|
$
|
351.7
|
|
|
$
|
320.3
|
|
|
10
|
%
|
|
Fee and other commissions expense
|
$
|
170.7
|
|
|
$
|
153.9
|
|
|
11
|
%
|
For the
three months ended March 31, 2014
, Global Funds Transfer fee and other revenue increased
$31.4 million
, when compared to the same period in
2013
. The increase was driven by money transfer fee and other revenue growth of
11 percent
, primarily due to the
12 percent
transaction growth and movement in foreign currency exchange rates, which were slightly offset by our corridor mix and average face value per transaction. Bill payment fee and other revenue declined
two percent
, primarily due to a lower average fee per transaction as a result of industry mix.
Money Transfer Transactions
The following table displays the percentage distribution of total money transfer transactions by geographic location (the region originating the transaction) for the
three
months ended
March 31
:
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
U.S. to U.S.
|
29
|
%
|
|
30
|
%
|
|
U.S. Outbound
|
37
|
%
|
|
36
|
%
|
|
Originating outside of the U.S.
|
34
|
%
|
|
34
|
%
|
The following table displays year over year money transfer transaction growth by geographic location (the region originating the transaction) for the
three
months ended March 31:
|
|
|
|
|
|
|
2014 vs 2013
|
|
Total transactions
|
12%
|
|
U.S. to U.S.
|
7%
|
|
U.S. Outbound
|
18%
|
|
Originating outside of the U.S.
|
11%
|
For the
three
months ended
March 31, 2014
, the U.S. Outbound corridors generated
18 percent
transaction growth while accounting for
37 percent
of our total money transfer transactions. The success in the U.S. Outbound corridor was primarily driven by sends to Mexico, which had transaction growth of 31 percent. Transaction growth originating outside of the U.S. continued to grow at
a double digit rate on a year over year basis and accounted for
34 percent
of total money transfer transactions. The growth was primarily driven by the Middle East and Latin American and Caribbean regions. The U.S. to U.S. corridor grew
seven percent
and accounted for
29 percent
of total money transfer transactions.
Money Transfer Fee and Other Revenue
As detailed in the table below, for the
three months ended March 31, 2014
, money transfer fee and other revenue growth was primarily driven by transaction growth of
12 percent
. The following table details the changes in money transfer fee and other revenue from
2013
to
2014
, for the
three
months ended
March 31
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2013
|
$
|
294.3
|
|
|
Change resulting from:
|
|
|
Money transfer volume growth
|
34.8
|
|
|
Foreign currency exchange rate
|
2.1
|
|
|
Corridor mix and average face value per transaction
|
(7.9
|
)
|
|
Other
|
2.8
|
|
|
For the period ended March 31, 2014
|
$
|
326.1
|
|
Bill Payment Fee and Other Revenue
The following table details the changes in bill payment fee and other revenue from
2013
to
2014
, for the
three
months ended
March 31
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2013
|
$
|
26.0
|
|
|
Change resulting from:
|
|
|
Bill payment volume decline
|
(0.2
|
)
|
|
Industry mix
|
(0.2
|
)
|
|
For the period ended March 31, 2014
|
$
|
25.6
|
|
For the
three months ended March 31, 2014
, fee and other revenue decreased
two percent
, or
$0.4 million
, when compared to the same period in
2013
. For the
three
months ended
March 31, 2014
, bill payment fee and other revenue declines were a result of lower volumes and lower average fees due to shifts in industry mix. The impact of changes in industry mix reflects our continued growth in new emerging verticals that generate a lower fee per transaction than our traditional verticals. Our traditional consumer credit verticals, such as auto and credit card, have been negatively impacted by the economic conditions in the U.S.
Global Funds Transfer Commissions Expense
The following table details the changes in fee and other commissions for the Global Funds Transfer segment from
2013
to
2014
, for the
three
months ended
March 31
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2013
|
$
|
153.9
|
|
|
Change resulting from:
|
|
|
Money transfer volume growth
|
13.6
|
|
|
Bill payment volumes
|
(0.2
|
)
|
|
Bill payment commission rates
|
0.4
|
|
|
Signing bonuses
|
2.7
|
|
|
Foreign currency exchange rate
|
0.3
|
|
|
For the period ended March 31, 2014
|
$
|
170.7
|
|
For the
three months ended March 31, 2014
, commissions expense as a percentage of fee and other revenue grew to
48.5 percent
, from
48.0 percent
for the same period in
2013
. The increases were primarily the result of the transaction growth from the money transfer product, as well as increased signing bonus expense from our agent expansion and retention efforts.
Financial Paper Products Fee and Other Revenue
The following discussion provides a summary of fee and other revenue for the Financial Paper Product segment for the
three
months ended
March 31, 2014
and
2013
. Investment revenue is not included in the analysis below. For further detail, see Investment Revenue Analysis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
(Dollars in millions)
|
2014
|
|
2013
|
|
|
Money order fee and other revenue
|
$
|
12.3
|
|
|
$
|
13.2
|
|
|
(7
|
)%
|
|
Official check fee and other revenue
|
3.7
|
|
|
4.1
|
|
|
(10
|
)%
|
|
Financial Paper Product fee and other revenue
|
$
|
16.0
|
|
|
$
|
17.3
|
|
|
(8
|
)%
|
|
Fee and other commissions expense
|
$
|
0.2
|
|
|
$
|
0.5
|
|
|
(60
|
)%
|
For the
three months ended March 31, 2014
, money order fee and other revenue decreased
$0.9 million
, or
seven percent
, when compared to the same period in
2013
, due to volume declines attributed to the attrition of agents and the migration by consumers to other payment methods. As a result of attrition of official check financial institution customers, official check fee and other revenue decreased
$0.4 million
, or
10 percent
, when compared to the same period in
2013
. For the
three months ended March 31, 2014
and
2013
, commissions expense was
$0.2 million
and
$0.5 million
, respectively.
Investment Revenue Analysis
The following discussion provides a summary of the Company's investment revenue and investment commission expense, for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
(Dollars in millions)
|
2014
|
|
2013
|
|
|
Investment revenue
|
$
|
7.2
|
|
|
$
|
2.8
|
|
|
157
|
%
|
|
Investment commissions expense
(1)
|
0.1
|
|
|
0.1
|
|
|
—
|
%
|
(1)
Commissions are generated from the average outstanding cash balances of official checks sold.
Investment Revenue
Investment revenue consists primarily of interest income generated through the investment of cash balances received primarily from the sale of official checks, money orders and other payment instruments. These cash balances are available to us for investment until the payment instrument is presented for payment. Investment revenue varies depending on the level of investment balances and the yield on our investments.
For the
three months ended March 31, 2014
, investment revenue increased
$4.4 million
, or
157 percent
, when compared to the same period in
2013
. The growth is primarily due to an increase in income received on our cost recovery securities and a shift in investment allocation to longer term, higher yielding investments.
Investment Commissions Expense
Investment commissions expense consists of amounts paid to financial institution official check customers based on short-term interest rate indices multiplied by the average outstanding cash balances of official checks sold by that financial institution. For the
three
months ended
March 31, 2014
, investment commissions expense experienced a nominal change when compared to the same periods in
2013
.
Operating Expenses
The following table is a summary of the operating expenses for the
three months ended March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2014
|
|
(Dollars in millions)
|
Dollars
|
|
Percent of Total Revenue
|
|
Compensation and benefits
|
$
|
69.7
|
|
|
19
|
%
|
|
Transaction and operations support
|
71.3
|
|
|
19
|
%
|
|
Occupancy, equipment and supplies
|
12.8
|
|
|
3
|
%
|
|
Depreciation and amortization
|
13.1
|
|
|
4
|
%
|
|
Total operating expenses
|
$
|
166.9
|
|
|
45
|
%
|
The following table is a summary of the operating expenses for the
three months ended March 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2013
|
|
(Dollars in millions)
|
Dollars
|
|
Percent of Total Revenue
|
|
Compensation and benefits
|
$
|
65.5
|
|
|
19
|
%
|
|
Transaction and operations support
|
51.5
|
|
|
15
|
%
|
|
Occupancy, equipment and supplies
|
13.0
|
|
|
4
|
%
|
|
Depreciation and amortization
|
11.8
|
|
|
4
|
%
|
|
Total operating expenses
|
$
|
141.8
|
|
|
42
|
%
|
For the
three months ended March 31, 2014
, total operating expenses as a percentage of total revenue was
45 percent
, an increase from
42 percent
for the same period in
2013
, primarily due to the expenses incurred as a result of the 2014 Global Transformation Program.
Compensation and Benefits
Compensation and benefits include salaries and benefits, management incentive programs, related payroll taxes and other employee related costs. The following is a summary of the change in compensation and benefits from
2013
to
2014
, for the
three
months ended
March 31
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2013
|
$
|
65.5
|
|
|
Change resulting from:
|
|
|
Salaries, related payroll taxes and incentive compensation
|
1.0
|
|
|
Reorganization and restructuring costs
|
0.8
|
|
|
Compliance enhancement program
|
0.9
|
|
|
Impact of euro
|
0.4
|
|
|
Other employee benefits
|
1.1
|
|
|
For the period ended March 31, 2014
|
$
|
69.7
|
|
For the
three months ended March 31, 2014
, compensation and benefits expense increased primarily due to increased headcount, ordinary salary increases and changing employee base mix as we invest in our sales, market development and compliance functions. Other employee benefits increased due to higher insurance costs and increased benefit plan expense. We incurred increased expenses related to the compliance enhancement program. Reorganization and restructuring include costs related to the 2014 Global Transformation Program of
$2.3 million
offset by a $1.5 decrease in costs related to the Global Transformation Initiative that we began in 2010 ("2010 Global Transformation Initiative").
Transaction and Operations Support
Transaction and operations support primarily includes marketing, professional fees and other outside services, telecommunications, agent support costs, including forms related to our products, non-compensation employee costs, including training, travel and relocation costs, bank charges and the impact of foreign exchange rate movements on our monetary transactions, assets and liabilities denominated in a currency other than the U.S. dollar. The following is a summary of the change in transaction and operations support from
2013
to
2014
, for the
three
months ended
March 31
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2013
|
$
|
51.5
|
|
|
Change resulting from:
|
|
|
Legal expenses
|
1.5
|
|
|
Contractor, consultant and outsourcing
|
5.5
|
|
|
Foreign exchange gains/losses
|
0.4
|
|
|
Marketing costs
|
1.8
|
|
|
Reorganization and restructuring costs
|
0.5
|
|
|
Compliance enhancement program
|
6.2
|
|
|
Direct monitor costs
|
0.8
|
|
|
Agent support costs
|
1.3
|
|
|
Other
|
1.8
|
|
|
For the period ended March 31, 2014
|
$
|
71.3
|
|
Transaction and operations support expense primarily increased for the
three
months ended
March 31, 2014
as a result of the expenses associated with the 2014 Global Transformation Program. We incurred increased expenses for contractors and consultants as we continue to invest in enhancing our current infrastructure. Reorganization and restructuring is comprised of expenses for the 2014 Global Transformation Program of
$0.8 million
partially offset by $0.3 million in expenses associated with the 2010 Global Transformation Initiative. We also incurred increased legal fees primarily related to an underwritten secondary public offering and share repurchase which were completed on April 2, 2014. We incurred increased expenses for agent support costs and increased expenditures related to telecommunication costs as a result of continued network, product and infrastructure growth. Other expenses consist of increased travel expenses and other professional fees.
Occupancy, Equipment and Supplies
Occupancy, equipment and supplies expenses include facilities rent and maintenance costs, software and equipment maintenance costs, freight and delivery costs and supplies. The following is a summary of the change in occupancy, equipment and supplies from
2013
to
2014
, for the
three
months ended
March 31
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2013
|
$
|
13.0
|
|
|
Change resulting from:
|
|
|
Rent and building operating costs
|
0.7
|
|
|
Equipment maintenance
|
0.5
|
|
|
Reorganization and restructuring costs
|
(1.2
|
)
|
|
Other
|
(0.2
|
)
|
|
For the period ended March 31, 2014
|
$
|
12.8
|
|
For the
three months ended March 31, 2014
, occupancy, equipment and supplies expenses decreased as a result of decreased costs for reorganization and restructuring as we concluded our 2010 Global Transformation Initiative, which was partially offset by increased rent and building operation costs and equipment maintenance.
Depreciation and Amortization
Depreciation and amortization includes depreciation on point of sale equipment, agent signage, computer hardware and software, capitalized software development costs, office furniture, equipment and leasehold improvements and amortization of intangible assets.
For the
three
months ended
March 31, 2014
, depreciation and amortization increased
11 percent
, or
$1.3 million
, when compared to the same period in
2013
, primarily driven by higher amortization expense and depreciation expense for office equipment and furniture and software.
Pre-Tax Operating Income and Operating Margin
The Company's management utilizes pre-tax operating income and operating margin when assessing both consolidated and segment operating performance and allocation of resources. Excluded from the segments' operating income are interest and other expenses related to our credit agreements, operating loss from businesses categorized as “Other,” certain pension and benefit obligation expenses, director deferred compensation plan expenses, executive severance and related costs and certain legal and corporate costs not related to the performance of the segments.
The following table provides a summary overview of pre-tax operating income and operating margin for the
three
months ended
March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|
(Dollars in millions)
|
2014
|
|
2013
|
|
|
Operating income:
|
|
|
|
|
|
|
Global Funds Transfer
|
$
|
31.5
|
|
|
$
|
41.4
|
|
|
$
|
(9.9
|
)
|
|
Financial Paper Products
|
9.8
|
|
|
6.9
|
|
|
2.9
|
|
|
Total segment operating income
|
41.3
|
|
|
48.3
|
|
|
(7.0
|
)
|
|
Other
|
(4.3
|
)
|
|
(4.0
|
)
|
|
(0.3
|
)
|
|
Total operating income
|
37.0
|
|
|
44.3
|
|
|
(7.3
|
)
|
|
Interest expense
|
9.7
|
|
|
17.4
|
|
|
(7.7
|
)
|
|
Debt extinguishment costs
|
—
|
|
|
45.3
|
|
|
(45.3
|
)
|
|
Income (loss) before income taxes
|
$
|
27.3
|
|
|
$
|
(18.4
|
)
|
|
$
|
45.7
|
|
|
|
|
|
|
|
|
|
Total operating margin
|
9.9
|
%
|
|
13.0
|
%
|
|
|
|
Global Funds Transfer
|
9.0
|
%
|
|
12.9
|
%
|
|
|
|
Financial Paper Products
|
42.2
|
%
|
|
34.7
|
%
|
|
|
For the
three
months ended
March 31, 2014
, the Company experienced total operating income and operating margin decline, when compared to the same periods in
2013
, as a result of the increased expenses related to the 2014 Global Transformation Program. For the
three months ended March 31, 2014
, total operating income
de
creased to
$37.0 million
, from
$44.3 million
for the same period in
2013
. The decline was primarily driven by the
$7.1 million
increase in compliance enhancement program expenses and higher commission expense as a percentage of revenue.
Other Expenses
Interest Expense
As a result of lower interest rates from the 2013 Credit Agreement (defined below) and Note Repurchase (defined below), interest expense decreased for the
three
months ended
March 31, 2014
, when compared to the same period in
2013
. For the
three months ended March 31, 2014
, interest expense
decreased
$7.7 million
, or
44 percent
, when compared to the same period in
2013
.
Debt Extinguishment Costs
The Company did not record debt extinguishment costs for the
three months ended March 31, 2014
. In connection with the Company's entry into an Amended and Restated Credit Agreement (the "2013 Credit Agreement"), the Company repaid in full all outstanding indebtedness and terminated all of the commitments under the Credit Agreement (the "2011 Credit Agreement") with Bank of America, N.A., as administrative agent, and the lenders party thereto. The Company also purchased all of the outstanding 13.25% senior secured second lien notes due 2018 of MoneyGram Payment Systems Worldwide, Inc. (the "Note Repurchase"). In connection with the termination of the 2011 Credit Agreement and the Note Repurchase, the Company recognized debt extinguishment costs of
$45.3 million
in the first quarter of 2013.
Income Taxes
For the
three months ended March 31, 2014
, the Company had
$11.7 million
of income tax benefit on pre-tax income of
$27.3 million
, primarily due to reductions of uncertain tax positions related to prior years.
Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
We believe that EBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization) and Adjusted EBITDA (EBITDA adjusted for certain significant items) provide useful information to investors because they are indicators of the strength and performance of our ongoing business operations, including our ability to service debt and fund capital expenditures, acquisitions and operations. These calculations are commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the operating performance and value of companies within our industry. In addition, our debt agreements require compliance with financial measures similar to Adjusted EBITDA. Finally, EBITDA and Adjusted EBITDA are financial measures used by management in reviewing results of operations, forecasting, assessing cash flow and capital, allocating resources and establishing employee incentive programs.
Although we believe that EBITDA and Adjusted EBITDA enhance investors' understanding of our business and performance, these non-GAAP financial measures should not be considered an exclusive alternative to accompanying GAAP financial measures. These metrics are not necessarily comparable with similarly named metrics of other companies. The following table is a reconciliation of these non-GAAP financial measures to the related GAAP financial measures for the
three months ended March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Change
|
|
Income (loss) before income taxes
|
$
|
27.3
|
|
|
$
|
(18.4
|
)
|
|
$
|
45.7
|
|
|
Interest expense
|
9.7
|
|
|
17.4
|
|
|
(7.7
|
)
|
|
Depreciation and amortization
|
13.1
|
|
|
11.8
|
|
|
1.3
|
|
|
Amortization of agent signing bonuses
|
11.8
|
|
|
8.8
|
|
|
3.0
|
|
|
EBITDA
|
61.9
|
|
|
19.6
|
|
|
42.3
|
|
|
Significant items impacting EBITDA:
|
|
|
|
|
|
|
Compliance enhancement program
(1)
|
7.1
|
|
|
—
|
|
|
7.1
|
|
|
Stock-based and contingent performance compensation
(2)
|
3.5
|
|
|
3.1
|
|
|
0.4
|
|
|
Reorganization and restructuring costs
(3)
|
3.1
|
|
|
3.2
|
|
|
(0.1
|
)
|
|
Capital transaction costs
(4)
|
1.1
|
|
|
—
|
|
|
1.1
|
|
|
Direct monitor costs
(5)
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
Legal expenses
(6)
|
0.4
|
|
|
1.1
|
|
|
(0.7
|
)
|
|
Debt extinguishment
(7)
|
—
|
|
|
45.3
|
|
|
(45.3
|
)
|
|
Adjusted EBITDA
|
$
|
77.9
|
|
|
$
|
72.3
|
|
|
$
|
5.6
|
|
(1)
Costs related to the 2013 compliance enhancement program.
(2)
Stock-based compensation and one-time contingent performance award payable after three years based on achievement of certain performance targets.
(3)
Reorganization and restructuring costs in 2014 relate to the 2014 Global Transformation Program whereas costs in 2013 relate to the 2010 Global Transformation Initiative.
(4)
Professional and legal fees incurred for the April 2, 2014 equity transactions.
(5)
Direct compliance monitor expenses were not an adjusted item in 2013 but are adjusted in 2014 going forward.
(6)
Legal expenses are primarily in connection with the settlement related to the MDPA/U.S. DOJ, the IRS tax litigation, and legal fees and expenses related to these matters.
(7)
Debt extinguishment costs upon the completion of the Note Repurchase in connection with the 2013 Credit Agreement.
For the
three
months ended
March 31, 2014
, Adjusted EBITDA is adjusted for the 2014 Global Transformation Program, which consists of:
$7.1 million
for the compliance enhancement program,
$3.1 million
for the reorganization and restructuring costs and
$0.8 million
of direct monitor costs. For the
three
months ended
March 31, 2013
, Adjusted EBITDA was adjusted for debt extinguishment costs in connection with the 2013 Credit Agreement of
$45.3 million
.
For the
three months ended March 31, 2014
, the Company generated EBITDA of
$61.9 million
and Adjusted EBITDA of
$77.9 million
. When compared to the same period in
2013
, EBITDA
increased
$42.3 million
, or
216 percent
, primarily due to the
$45.3 million
decrease of the debt extinguishment costs and the continued growth of the money transfer product, which were partially offset by the costs incurred for the 2014 Global Transformation Program and
$1.1 million
of capital transaction costs as a result of the April 2, 2014 equity transactions. When compared to the same period in
2013
, Adjusted EBITDA
increased
$5.6 million
, or
eight percent
, as a result of continued money transfer growth.
LIQUIDITY AND CAPITAL RESOURCES
We have various resources available for purposes of managing liquidity and capital needs, including our investment portfolio, credit facilities and letters of credit. We refer to our cash and cash equivalents, interest-bearing investments and available-for-sale investments collectively as our “investment portfolio.” We utilize the assets in excess of payment service obligations measure shown below in various liquidity and capital assessments. While assets in excess of payment service obligations, as defined, is a capital measure, it also serves as the foundation for various liquidity analyses.
Assets in Excess of Payment Service Obligations
The following table shows the components of our assets in excess of payment service obligations at
March 31, 2014
and
December 31, 2013
:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2014
|
|
December 31, 2013
|
|
Cash and cash equivalents (substantially restricted)
|
$
|
2,153.9
|
|
|
$
|
2,228.5
|
|
|
Receivables, net (substantially restricted)
|
890.0
|
|
|
767.7
|
|
|
Interest-bearing investments (substantially restricted)
|
935.8
|
|
|
1,011.6
|
|
|
Available-for-sale investments (substantially restricted)
|
41.6
|
|
|
48.1
|
|
|
|
4,021.3
|
|
|
4,055.9
|
|
|
Payment service obligations
|
(3,691.7
|
)
|
|
(3,737.1
|
)
|
|
Assets in excess of payment service obligations
|
$
|
329.6
|
|
|
$
|
318.8
|
|
Our primary sources of liquidity include cash flows generated by the sale of our payment instruments, our cash and cash equivalent and interest-bearing investment balances, proceeds from our investment portfolio and credit capacity under our credit facilities. Our primary operating liquidity needs are related to the settlement of payment service obligations to our agents and financial institution customers, as well as general operating expenses.
To meet our payment service obligations at all times, we must have sufficient highly liquid assets and be able to move funds globally on a timely basis. On average, we receive in and pay out a similar amount of funds on a daily basis to collect and settle the principal amount of our payment instruments sold and related fees and commissions with our end consumers and agents. We use the incoming funds from sales of new payment instruments to settle our payment service obligations for previously sold payment instruments. This pattern of cash flows allows us to settle our payment service obligations through ongoing cash generation rather than liquidating investments or utilizing our revolving credit facility. We have historically generated, and expect to continue generating, sufficient cash flows from daily operations to fund ongoing operational needs.
We seek to maintain funding capacity beyond our daily operating needs to provide a cushion through the normal fluctuations in our payment service assets and obligations, as well as to provide working capital for the operational and growth requirements of our business. While the assets in excess of payment service obligations would be available to us for our general operating needs and investment in the Company, we consider our assets in excess of payment service obligations as assurance that regulatory and contractual requirements are maintained. We believe we have sufficient liquid assets and funding capacity to operate and grow our business for the next 12 months. Should our liquidity needs exceed our operating cash flows, we believe that external financing sources, including availability under the 2013 Credit Agreement, will be sufficient to meet our anticipated funding requirements.
Cash and Cash Equivalents and Interest-bearing Investments (substantially restricted)
To ensure we maintain adequate liquidity to meet our operating needs at all times, we keep a significant portion of our investment portfolio in cash and cash equivalents and interest-bearing investments at financial institutions rated A3 or better by Moody’s Investor Service, or Moody’s, and A- or better by Standard & Poors, or S&P, and in U.S. government money market funds rated Aaa by Moody’s and AAA by S&P. If the rating agencies have split ratings, the Company uses the highest two out of three ratings across the rating agencies for disclosure purposes. If none of the rating agencies have the same rating, the Company uses the lowest rating across the agencies for disclosure purposes. As of
March 31, 2014
, cash and cash equivalents and interest-bearing investments totaled
$3.1 billion
, representing
99 percent
of our total investment portfolio. Cash equivalents and interest-bearing investments consist of money market funds that invest in U.S. government and government agency securities, time deposits and certificates of deposit.
Available-for-sale Investments (substantially restricted)
Our investment portfolio includes
$41.6 million
of available-for-sale investments as of
March 31, 2014
. U.S. government agency residential mortgage-backed securities and U.S. government agency debentures compose
$26.0 million
of our available-for-sale investments, while other asset-backed securities compose the remaining
$15.6 million
.
Credit Facilities
Our credit facilities consist of the 2013 Credit Agreement. See Note 7
— Debt
of the Notes to Consolidated Financial Statements for additional disclosure. The following is a summary of principal payments and debt issuance from January 1, 2012 to
March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 Credit Agreement
|
|
2013 Credit Agreement
|
|
|
|
|
|
(Amounts in millions)
|
Term loan
|
|
Incremental term loan
|
|
Revolving facility
|
|
Term loan
|
|
Revolving facility
|
|
2018 Notes
|
|
Total Debt
|
|
Balance at January 1, 2012
|
$
|
340.0
|
|
|
$
|
149.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
325.0
|
|
|
$
|
814.6
|
|
|
2012 payments
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
2013 new debt issued
|
—
|
|
|
—
|
|
|
—
|
|
|
850.0
|
|
|
—
|
|
|
—
|
|
|
850.0
|
|
|
2013 payments
|
(340.0
|
)
|
|
(148.1
|
)
|
|
—
|
|
|
(6.4
|
)
|
|
—
|
|
|
(325.0
|
)
|
|
(819.5
|
)
|
|
2014 payments
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|
Balance at March 31, 2014
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
841.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
841.5
|
|
Our revolving credit facility has
$124.6 million
of borrowing capacity as of
March 31, 2014
, net of
$0.4 million
of outstanding letters of credit. See Note 7
— Debt
of the Notes to Consolidated Financial Statements for additional disclosure.
The 2013 Credit Agreement contains various financial and non-financial covenants. We continuously monitor our compliance with our debt covenants and expect to maintain compliance throughout
2014
. At
March 31, 2014
, the Company is in compliance with its financial covenants; please see Note 7
—
Debt
of the Notes to Consolidated Financial Statements for additional disclosure relating to the financial covenants.
On April 2, 2014, we entered into that certain First Incremental Amendment and Joinder Agreement ("Incremental Amendment"), with Bank of America, N.A., as administrative agent, and the financial institutions party thereto as Lenders. The Incremental Amendment provides for (a) an incremental term loan facility in an aggregate principal amount of $130 million, (b) an increase in the aggregate revolving loan commitments under the 2013 Credit Agreement from $125 million to $150 million, and (c) certain other amendments to the 2013 Credit Agreement. We do not believe the Incremental Amendment will have an impact on our ability to comply with our various financial and non-financial covenants.
Credit Ratings
As of
March 31, 2014
, our credit ratings from Moody’s and S&P were B1 and BB-, respectively, remaining unchanged from
December 31, 2013
. If changes to our credit ratings occur, our credit facilities, regulatory capital requirements and other obligations are not impacted.
Regulatory Financial Requirements
We were in compliance with all financial regulatory requirements as of
March 31, 2014
. We believe that our liquidity and capital resources will remain sufficient to ensure ongoing compliance with all financial regulatory requirements.
Other Funding Sources and Requirements
Contractual Obligations
The following table includes information about the Company's contractual obligations in connection with the 2013 Credit Agreement and obligations under agent agreements as of
March 31, 2014
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
|
|
(Amounts in millions)
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
4-5 years
|
|
More than 5 years
|
|
Debt, including interest payments
|
$
|
1,055.8
|
|
|
$
|
45.3
|
|
|
$
|
89.5
|
|
|
$
|
87.9
|
|
|
$
|
833.1
|
|
|
Signing bonuses
|
105.8
|
|
|
42.6
|
|
|
41.6
|
|
|
21.6
|
|
|
—
|
|
The Company’s consolidated income tax returns for fiscal years 2005-2009 were under examination by the the Internal Revenue Service or the IRS. The IRS issued Notices of Deficiency disallowing among other items approximately
$900.0 million
of deductions on securities losses in the 2007, 2008 and 2009 tax returns. The Company petitioned the U.S. Tax Court contesting adjustments related to the securities losses in 2007, 2008 and 2009. As of December 31, 2013, the IRS and the Company reached a partial settlement on
$186.9 million
of deductions in dispute. If the Company's position is rejected with respect to such remaining adjustments, the Company would be required to make cash payments of approximately $70.5 million based on benefits taken and taxable income earned through
March 31, 2014
.
Analysis of Cash Flows
Cash Flows from Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Net income (loss)
|
$
|
39.0
|
|
|
$
|
(12.6
|
)
|
|
Total adjustments to reconcile net income (loss)
|
(1.8
|
)
|
|
20.8
|
|
|
Net cash provided by operating activities before changes in payment service assets and obligations
|
37.2
|
|
|
8.2
|
|
|
Change in cash and cash equivalents (substantially restricted)
|
74.6
|
|
|
253.0
|
|
|
Change in receivables, net (substantially restricted)
|
(123.9
|
)
|
|
33.7
|
|
|
Change in payment service obligations
|
(45.4
|
)
|
|
(236.4
|
)
|
|
Net change in payment service assets and obligations
|
(94.7
|
)
|
|
50.3
|
|
|
Net cash (used in) provided by operating activities
|
$
|
(57.5
|
)
|
|
$
|
58.5
|
|
For the
three
months ended
March 31, 2014
, operating activities utilized net cash of
$57.5 million
, as our net cash before changes in payment service assets and obligations was
$37.2 million
. Changes in our payment service assets and obligations utilized
$94.7 million
of operating cash flows from the timing of collection and settlement of our payment service assets and obligations, as well as changes in the composition of our investment portfolio.
For the
three
months ended
March 31, 2013
, operating activities generated net cash of
$58.5 million
, as our net cash before changes in payment service assets and obligations was
$8.2 million
. Changes in our payment service assets and obligations generated
$50.3 million
of operating cash flows from the timing of collection and settlement of our payment service assets and obligations, as well as the changes in the composition of our investment portfolio.
While we consider our overall investment portfolio to be part of our operations, in accordance with GAAP, investments in cash and cash equivalents are presented as part of operating activities, while investments in interest-bearing and available-for-sale investment securities are presented as part of investing activities. To understand the cash flow activity of our core business, the cash flows from operating activities relating to the payment service assets and obligations should be reviewed in conjunction with the net cash flows from investing activities related to our interest-bearing investments and available-for-sale investments.
Cash Flows from Investing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Net investment activity
|
$
|
76.3
|
|
|
$
|
(46.9
|
)
|
|
Purchases of property and equipment
|
(17.1
|
)
|
|
(15.2
|
)
|
|
Net cash provided by (used in) investing activities
|
$
|
59.2
|
|
|
$
|
(62.1
|
)
|
For the
three
months ended
March 31, 2014
, investing activities generated cash of
$59.2 million
, primarily from the excess proceeds of
$76.3 million
from the maturity and sale of investments, net of purchases, which were reinvested. We also utilized
$17.1 million
for capital expenditures.
For the
three
months ended
March 31, 2013
, investing activities utilized cash of
$62.1 million
primarily from net investment activity of
$46.9 million
, which is related to purchases and sales of investments, net of investment maturities and settlements. We also utilized
$15.2 million
for capital expenditures.
Cash Flows from Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Proceeds from issuance of debt
|
$
|
—
|
|
|
$
|
850.0
|
|
|
Transaction costs for issuance and amendment of debt
|
—
|
|
|
(11.8
|
)
|
|
Payments on debt
|
(2.1
|
)
|
|
(813.1
|
)
|
|
Prepayment penalty
|
—
|
|
|
(21.5
|
)
|
|
Proceeds from exercise of stock options
|
0.4
|
|
|
—
|
|
|
Net cash (used in) provided by financing activities
|
$
|
(1.7
|
)
|
|
$
|
3.6
|
|
For the
three
months ended
March 31, 2014
, financing activities utilized cash of
$1.7 million
primarily associated with the quarterly debt payments under the 2013 Credit Agreement. For the
three
months ended
March 31, 2013
, financing activities generated cash of
$3.6 million
associated with the 2013 Credit Agreement.
Adjusted Free Cash Flow
We believe that Adjusted Free Cash Flow (Adjusted EBITDA less cash interest expense, cash tax expense, cash payments for capital expenditures and cash payments for agent signing bonuses) provides useful information to investors because it is an indicator of the strength and performance of ongoing business operations, including our ability to service debt and fund operations, capital expenditures and acquisitions. This calculation is commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the operating performance and value of companies within our industry. While we believe that this metric enhances investors' understanding of our business, this metric is not necessarily comparable with similarly named metrics of other companies. Adjusted Free Cash Flow is a financial measure used by management in reviewing results of operations, as well as assessing cash flow and capital resources.
Although we believe that Adjusted Free Cash Flow enhances investors' understanding of our business and performance, this non-GAAP financial measure should not be considered an exclusive alternative to accompanying GAAP financial measures. The following table is a reconciliation of this non-GAAP financial measure to the related GAAP financial measure for the
three months ended March 31, 2014
and
2013
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
(Amounts in millions)
|
2014
|
|
2013
|
|
Change
|
|
Income (loss) before income taxes
|
$
|
27.3
|
|
|
$
|
(18.4
|
)
|
|
$
|
45.7
|
|
|
Interest expense
|
9.7
|
|
|
17.4
|
|
|
(7.7
|
)
|
|
Depreciation and amortization
|
13.1
|
|
|
11.8
|
|
|
1.3
|
|
|
Amortization of agent signing bonuses
|
11.8
|
|
|
8.8
|
|
|
3.0
|
|
|
EBITDA
(1)
|
61.9
|
|
|
19.6
|
|
|
42.3
|
|
|
Significant items impacting EBITDA:
|
|
|
|
|
|
|
Compliance enhancement program
|
7.1
|
|
|
—
|
|
|
7.1
|
|
|
Stock-based and contingent performance compensation
|
3.5
|
|
|
3.1
|
|
|
0.4
|
|
|
Reorganization and restructuring costs
|
3.1
|
|
|
3.2
|
|
|
(0.1
|
)
|
|
Capital transaction costs
|
1.1
|
|
|
—
|
|
|
1.1
|
|
|
Direct monitor costs
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|
Legal expenses
|
0.4
|
|
|
1.1
|
|
|
(0.7
|
)
|
|
Debt extinguishment
|
—
|
|
|
45.3
|
|
|
(45.3
|
)
|
|
Adjusted EBITDA
(1)
|
$
|
77.9
|
|
|
$
|
72.3
|
|
|
$
|
5.6
|
|
|
|
|
|
|
|
|
|
Cash interest expense
|
(9.1
|
)
|
|
(15.6
|
)
|
|
6.5
|
|
|
Cash tax expense
|
(0.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
Cash payments for capital expenditures
|
(17.1
|
)
|
|
(15.2
|
)
|
|
(1.9
|
)
|
|
Cash payments for agent signing bonuses
|
(4.9
|
)
|
|
(8.6
|
)
|
|
3.7
|
|
|
Adjusted Free Cash Flow
|
$
|
46.7
|
|
|
$
|
32.8
|
|
|
$
|
13.9
|
|
(1)
See "EBITDA and Adjusted EBITDA" section of this MD&A for the descriptions of the adjustments to arrive at these measures.
For the
three months ended March 31, 2014
, Adjusted Free Cash Flow was
$46.7 million
, an increase of
$13.9 million
, or
42 percent
, when compared to the same period in
2013
. The increase was driven by
10 percent
growth in total revenue, a
$6.5 million
reduction of cash paid for interest as a result of the 2013 Credit Agreement and reduced agent signing bonus payments of
$3.7 million
, as a result of the timing of certain payments.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures in the consolidated financial statements. Actual results could differ from those estimates. On a regular basis, management reviews the accounting policies, assumptions and estimates to ensure that our financial statements are presented fairly and in accordance with GAAP.
Critical accounting policies are those policies that management believes are most important to the portrayal of our financial position and results of operations, and that require management to make estimates that are difficult, subjective or complex. There were no changes to our critical accounting policies during the quarter ended
March 31, 2014
. For further information regarding our critical accounting policies, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2013
.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and the documents incorporated by reference herein may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, the Act, including statements with respect to, among other things, the financial condition, results of operations, plans, objectives, future performance and business of MoneyGram and its subsidiaries. Statements preceded by, followed by or that include words such as “believes,” “estimates,” “expects,” “projects,” “plans,” “anticipates,” “continues,” “will,” “should,” “could,” “may,” “would” and other similar expressions are intended to identify some of the forward-looking statements and are included, along with this statement, for purposes of complying with the safe harbor provisions of the Act. These forward-looking statements involve risks and uncertainties. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the risks and uncertainties described in Part I, Item 1A under the caption "Risk Factors" of our Annual Report on Form 10-K for the year ended
December 31, 2013
, as well as the various factors described herein. These forward-looking statements speak only as of the date they are made, and MoneyGram undertakes no obligation to publicly update or revise any forward-looking statement for any reason, whether as a result of new information, future events or otherwise, except as required by federal securities law. These forward-looking statements are based on management's current expectations, beliefs and assumptions and are subject to certain risks, uncertainties and changes in circumstances due to a number of factors. These factors include, but are not limited to:
|
|
|
|
•
|
our ability to compete effectively;
|
|
|
|
|
•
|
our ability to maintain key agent or biller relationships, or a reduction in business or transaction volume from these relationships, including our largest agent, Walmart, through the recent introduction by Walmart of a competing "white label" branded money transfer product or otherwise;
|
|
|
|
|
•
|
our ability to manage fraud risks from consumers or agents;
|
|
|
|
|
•
|
the ability of us and our agents to comply with U.S. and international laws and regulations;
|
|
|
|
|
•
|
litigation involving us or our agents, including the outcome of ongoing investigations by several state governments, which could result in material settlements, fines or penalties;
|
|
|
|
|
•
|
possible uncertainties relating to compliance with and the impact of the DPA on our reputation and business;
|
|
|
|
|
•
|
ongoing investigations involving MoneyGram by the U.S. federal government and state governments which could result in criminal or civil penalties, revocation of required licenses or registrations, termination of contracts, other administrative actions or lawsuits and negative publicity;
|
|
|
|
|
•
|
our offering of money transfer services through agents in regions that are politically volatile or, in a limited number of cases, that are subject to certain Office of Foreign Assets Control restrictions;
|
|
|
|
|
•
|
changes in tax laws or an unfavorable outcome with respect to the audit of our tax returns or tax positions, or a failure by us to establish adequate reserves for tax events;
|
|
|
|
|
•
|
our substantial debt service obligations, significant debt covenant requirements and credit rating and our ability to maintain sufficient capital;
|
|
|
|
|
•
|
sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions;
|
|
|
|
|
•
|
our significant exposure to loss in the event of a major bank failure or a loss of liquidity in the bank deposit market;
|
|
|
|
|
•
|
the ability of us and our agents to maintain adequate banking relationships;
|
|
|
|
|
•
|
the financial health of certain European countries, and the impact that those countries may have on the sustainability of the euro;
|
|
|
|
|
•
|
a security or privacy breach in systems on which we rely;
|
|
|
|
|
•
|
disruptions to our computer systems and data centers and our ability to effectively operate and adapt our technology;
|
|
|
|
|
•
|
continued weakness in economic conditions, in both the U.S. and global markets;
|
|
|
|
|
•
|
weakened consumer confidence in our business or money transfers generally;
|
|
|
|
|
•
|
a significant change, material slow down or complete disruption of international migration patterns;
|
|
|
|
|
•
|
our ability to manage credit risks from our retail agents and official check financial institution customers;
|
|
|
|
|
•
|
our ability to retain partners to operate our official check and money order businesses;
|
|
|
|
|
•
|
our ability to successfully develop and timely introduce new and enhanced products and services and our investments in new products, services or infrastructure changes;
|
|
|
|
|
•
|
our ability to manage risks associated with our international sales and operations;
|
|
|
|
|
•
|
our ability to adequately protect our brand and intellectual property rights and to avoid infringing on the rights of others;
|
|
|
|
|
•
|
our ability to attract and retain key employees;
|
|
|
|
|
•
|
our ability to manage risks related to the operation of retail locations and the acquisition or start-up of businesses;
|
|
|
|
|
•
|
our ability to implement the 2014 Global Transformation Program as planned, whether the expected amount of costs associated with such program will exceed our forecasts and whether we will be able to realize the full amount of estimated savings from such program;
|
|
|
|
|
•
|
our ability to maintain effective internal controls;
|
|
|
|
|
•
|
our capital structure and the special voting rights provided to designees of THL on our Board of Directors; and
|
|
|
|
|
•
|
the risks and uncertainties described in the “Risk Factors” in this Quarterly Report on Form 10-Q and “Risk Factors” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company's Annual Report on Form 10-K for the year ended
December 31, 2013
, as well as any additional risk factors that may be described in our other filings with the Securities and Exchange Commission from time to time.
|
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our market risk since
December 31, 2013
. For further information on market risk, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Enterprise Risk Management” in the Company’s Annual Report on form 10-K for the year ended
December 31, 2013
.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures were effective. Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed by the Company in its reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and include, without limitation, controls and procedures designed to ensure that information that the Company is required to disclose in such reports is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures.
Changes in Internal Control over Financial Reporting
— There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended
March 31, 2014
that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The matters set forth below are subject to uncertainties and outcomes that are not predictable. The Company accrues for these matters as any resulting losses become probable and can be reasonably estimated. Further, the Company maintains insurance coverage for many claims and litigation alleged.
Litigation Commenced Against the Company
The Company is involved in various claims and litigation that arise from time to time in the ordinary course of the Company's business. Management does not believe that after final disposition any of these matters is likely to have a material adverse impact on the Company's financial condition, results of operations and cash flows.
Government Investigations
State Civil Investigative Demands
— MoneyGram has received Civil Investigative Demands from a working group of nine state attorneys general who have initiated an investigation into whether the Company took adequate steps to prevent consumer fraud during the period from 2007 to 2011. The Civil Investigative Demands seek information and documents relating to the Company’s procedures to prevent fraudulent transfers and consumer complaint information. MoneyGram continues to cooperate fully with the states in this matter. MoneyGram has submitted the information and documents requested by the states. No claims have been filed against MoneyGram in connection with this investigation. Accordingly, we are unable to estimate the potential dollar amount of any loss in connection with this investigation or whether any loss in connection with this investigation could have a material adverse effect on our results of operations, cash flows or financial position. The Company does not believe there is a basis for any claim or recovery with respect to this matter and intends to vigorously defend itself if any claim is asserted.
Other Matters
— The Company is involved in various other government inquiries and other matters that arise from time to time. Management does not believe that after final disposition any of these other matters is likely to have a material adverse impact on the Company’s financial condition, results of operations and cash flows.
Actions Commenced by the Company
CDO Litigation
— In March 2012, the Company initiated an arbitration proceeding before the Financial Industry Regulatory Authority against Goldman Sachs & Co., or Goldman Sachs. The arbitration relates to MoneyGram’s purchase of Residential Mortgage Backed Securities and Collateral Debt Obligations that Goldman Sachs sold to MoneyGram during the 2005 through 2007 timeframe. The Company alleged, among other things, that Goldman Sachs made material misrepresentations and omissions in connection with the sale of these products, ultimately causing significant losses to the Company. On April 25, 2014, MoneyGram and Goldman Sachs agreed to settle all pending and potential litigation or arbitration concerning any Residential Mortgage Backed Securities or mortgage-related Collateralized Debt Obligations that Goldman Sachs sold to MoneyGram during the 2003 through June 30, 2008 time period. In connection with this resolution, Goldman Sachs agreed to make a one-time payment, net of fees and certain expenses, to MoneyGram in the amount of
$13.0 million
, and to make a one-time payment of fees and expenses to MoneyGram’s legal counsel in the amount of
$4.35 million
. This resolution includes terminating the litigation and arbitration between MoneyGram and Goldman Sachs. As of
April 30, 2014
, Goldman Sachs owns, together with certain of its affiliates, approximately
14 percent
of the shares of the Company’s common stock on a diluted basis, assuming conversion of the D Stock currently owned by Goldman Sachs and its affiliates.
Tax Litigation
— On May 14, 2012 and December 17, 2012, the Company filed petitions in the U.S. Tax Court challenging the 2005-2007 and 2009 Notices of Deficiency, respectively, pursuant to which the IRS determined that the Company owes additional corporate income taxes because certain deductions relating to securities losses were capital in nature, rather than ordinary losses. The Company asserts that it properly deducted its securities losses and that, consequently,
no
additional corporate income taxes are owed. The IRS filed its responses to the Company’s petitions in July 2012 and February 2013 reasserting its original position relating to the years 2005-2007 and 2009. The cases have been consolidated before the U.S. Tax Court. In December 2013, the IRS filed a motion with the court for partial summary judgment in the case, and in February 2014 the Company filed its response to that motion which included the Company's request for partial summary judgment.
ITEM 1A. RISK FACTORS
Except as set forth below, there has been no material change in the Company's risk factors from those described the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.
If we lose key agents, our business with our key agents is reduced, our key agents begin offering money transfer services under their own brand or engage other money transfer service providers, or we are unable to maintain our Global Funds Transfer agent or biller networks, our business, financial condition and results of operations could be adversely affected.
Revenue from our money transfer and bill payment services is derived from transactions conducted through our retail agent and biller networks. Many of our high volume agents are in the check cashing industry. There are risks associated with the check cashing industry that could cause this agent base to decline. We may not be able to retain all of our current retail agents or billers for other reasons, as the competition for retail agents and billers is intense. If agents or billers decide to leave our agent network, or if we are unable to add new agents or billers to our network, our revenue would be adversely affected.
Larger agents and billers in our Global Funds Transfer segment are increasingly demanding financial concessions and more information technology customization. The development, equipment and capital necessary to meet these demands could require substantial expenditures and there can be no assurance that we will have the available capital after servicing our debt, or that we will be allowed to make such expenditures under the terms of our credit agreement. If we are unable to meet these demands, we could lose customers and our business, financial condition and results of operations could be adversely affected.
A substantial portion of our transaction volume is generated by a limited number of key agents. During 2013, 2012 and 2011, our ten largest agents accounted for 43 percent, 44 percent and 45 percent, respectively, of our total company fee and investment revenue and 44 percent, 46 percent and 48 percent, respectively, of the fee and investment revenue of our Global Funds Transfer segment. During 2013, 2012 and 2011, our largest agent, Walmart, accounted for 27 percent, 28 percent and 29 percent, respectively, of our total company fee and investment revenue, and 28 percent, 30 percent and 31 percent, respectively, of the fee and investment revenue of our Global Funds Transfer segment. If our contracts with Walmart or any of our other key agents are not renewed or are terminated,
or renewed but on less favorable terms,
or if such agents reduce the number of their locations or the volume of their business with us,
or begin offering a competing product or service, such as Walmart’s recent introduction of a competing “white label” branded product for Walmart-to-Walmart money transfers in the United States, or they
cease doing business, our business, financial condition and results of operations could be adversely affected.
THL owns a substantial percentage of our common stock, and its interests may differ from the interests of our other common stockholders.
As of
April 30, 2014
, THL held approximately
43 percent
of our outstanding common shares and
37 percent
of our outstanding common shares on a fully-converted basis, as if all of the outstanding shares of Series D Participating Convertible Preferred Stock, or the D Stock, were converted to common shares. Additionally, our Amended and Restated Certificate of Incorporation provides that as long as the Investors have a right to designate directors to our Board of Directors pursuant to the Amended and Restated Purchase Agreement, dated as of March 17, 2008, among the Company and the several Investor parties named therein, THL has the right to designate two to four directors (such directors, the “THL Representatives”), who each have equal votes and who together have a total number of votes equal to the number of directors as is proportionate to the common stock ownership (on an as-converted basis) of the Investors (rounded to the nearest whole number), unlike the other members of our Board of Directors who have only one vote each. THL has appointed three of the nine members of our Board of Directors, each THL Representative currently has multiple votes, and the THL Representatives together currently hold a majority of the votes of our Board of Directors.
We cannot provide assurance that the interests of THL will coincide with the interests of other holders of our common stock, and THL’s substantial control over us could result in harm to the market price of our common stock by delaying, deferring or preventing a change in control of our company; impeding a merger, consolidation, takeover or other business combination involving our company; or entrenching our management and Board of Directors.
We have significant overhang of salable common shares and D Stock held by the Investors relative to our outstanding common shares.
As of April 30, 2014,
there were
54.6 million
outstanding common shares (or
63.5 million
common shares if the outstanding D Stock were converted into common shares). In accordance with the terms of the Registration Rights Agreement, dated March 25, 2008, among the Company and the several Investor parties named therein, we have an effective Registration Statement on Form S-3, or the Registration Statement, that permits the offer and sale by the Investors of all of the common shares and D Stock currently held by the Investors, and subject to certain limitations set forth therein, we are required to refile the Registration Statement upon its expiration. The Investors have sold 20.1 million common shares pursuant to the Registration Statement, and on April 2, 2014, THL has sold another 8.2 million common shares to the Company pursuant to the Stock Repurchase Agreement, dated March 26, 2014, between the Company and THL, leaving
32.7 million
common shares (including common shares issuable upon conversion of the D Stock held by the Investors) that can still be sold pursuant to the Registration Statement. The Registration Statement also permits us to offer and sell, from time to time, up to $500 million of our common stock, preferred stock, debt securities or any combination of these securities. Sales of a substantial number of common shares, or the perception that significant sales could occur (particularly if sales are concentrated in time or amount), may depress the trading price of our common stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The Company’s Board of Directors has authorized the repurchase of a total of 12,000,000 common shares. The repurchase authorization is effective until such time as the Company has repurchased 12,000,000 common shares. Common stock tendered to the Company in connection with the exercise of stock options or vesting of restricted stock are not considered repurchased shares under the terms of the repurchase authorization. As of
March 31, 2014
, the Company had repurchased 6,795,017 common shares under this authorization and had remaining authorization to repurchase up to 5,204,983 shares. The Company did not repurchase any shares during the three months ended
March 31, 2014
. However, the Company may consider repurchasing shares from time-to-time, subject to limitations in its debt agreements.
ITEM 6. EXHIBITS
Exhibits are filed with this Quarterly Report on Form 10-Q as listed in the accompanying Exhibit Index.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
|
MoneyGram International, Inc.
|
|
|
(Registrant)
|
|
|
|
|
|
|
May 2, 2014
|
By:
|
/s/ W. ALEXANDER HOLMES
|
|
|
|
W. Alexander Holmes
|
|
|
|
Executive Vice President, Chief Financial Officer and Chief Operating Officer
|
|
|
|
(Principal Financial Officer and Duly Authorized Officer)
|
EXHIBIT INDEX
|
|
|
|
|
|
Exhibit
Number
|
Description
|
|
3.1
|
Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., as amended (Incorporated by reference from Exhibit 3.1 to Registrant's Annual Report on Form 10-K filed on March 15, 2010).
|
|
3.2
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated May 18, 2011 (Incorporated by reference from Exhibit 3.1 to Registrant's Current Report on Form 8-K filed May 23, 2011).
|
|
3.3
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., filed with the Secretary of State of the State of Delaware on November 14, 2011 (Incorporated by reference from Exhibit 3.1 to Registrant's Current Report on Form 8-K filed November 14, 2011).
|
|
3.4
|
Bylaws of MoneyGram International, Inc., as amended and restated September 10, 2009 (Incorporated by reference from Exhibit 3.01 to Registrant's Current Report on Form 8-K filed on September 16, 2009).
|
|
3.5
|
Amendment to Bylaws of MoneyGram International, Inc., dated as of January 25, 2012 (Incorporated by reference from Exhibit 3.1 to Registrant's Current Report on Form 8-K filed January 27, 2012).
|
|
3.6
|
Amended and Restated Certificate of Designations, Preferences and Rights of Series D Participating Convertible Preferred Stock of MoneyGram International, Inc., dated May 18, 2011 (Incorporated by reference from Exhibit 3.2 to Registrant's Current Report on Form 8-K filed May 23, 2011).
|
|
10.1
|
Stock Repurchase Agreement, dated March 26, 2014, by and among the Company and the THL Selling Stockholders (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed March 31, 2014).
|
|
10.2*+
|
First Incremental Amendment and Joinder Agreement, dated April 2, 2014, by and among MoneyGram International, Inc., as borrower, MoneyGram Payment Systems Worldwide, Inc., MoneyGram Payment Systems, Inc., and MoneyGram of New York LLC, Bank of America, N.A., as administrative agent, and the financial institutions party thereto as Lenders.
|
|
10.3* †
|
Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Time-Based Restricted Stock Unit Award Agreement.
|
|
10.4* †
|
Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Stock Appreciation Right Agreement.
|
|
10.5* †
|
Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Performance-Based Restricted Stock Unit Award Agreement.
|
|
10.6* †
|
Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan Global Stock Option Award Agreement.
|
|
10.7* †
|
Global Time-Based Restricted Stock Unit Award Agreement, dated February 24, 2014, between MoneyGram International, Inc. and Pamela H. Patsley.
|
|
10.8* †
|
Global Performance-Based Restricted Stock Unit Award Agreement, dated February 24, 2014, between MoneyGram International, Inc. and Pamela H. Patsley.
|
|
31.1*
|
Section 302 Certification of Chief Executive Officer
|
|
31.2*
|
Section 302 Certification of Chief Financial Officer
|
|
32.1**
|
Section 906 Certification of Chief Executive Officer
|
|
32.2**
|
Section 906 Certification of Chief Financial Officer
|
|
101*
|
The following financial statements, formatted in Extensible Business Reporting Language (“XBRL”): (i) Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013; (ii) Consolidated Statements of Operations for the three months ended March 31, 2014 and 2013; (iii) Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2014 and 2013; (iv) Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013; (v) Consolidated Statement of Stockholders' Deficit as of March 31, 2014 and 2013; and (vi) Notes to Consolidated Financial Statements.
|
|
|
|
|
*
|
Filed herewith.
|
|
**
|
Furnished herewith
|
|
+
|
Confidential information has been omitted from this Exhibit and has been filed separately with the SEC pursuant to a Confidential Treatment Application filed with the Commission under Rule 24b-2.
|
|
†
|
Indicates management contract or compensatory plan or arrangement required to be filed as an exhibit to this report.
|
FIRST INCREMENTAL AMENDMENT AND JOINDER AGREEMENT
FIRST INCREMENTAL AMENDMENT AND JOINDER AGREEMENT (this “
Agreement
”) dated as of April 2, 2014 relating to the Amended and Restated Credit Agreement dated as of March 28, 2013 (the “
Credit Agreement
”) among MoneyGram International, Inc., a Delaware corporation (the “
Borrower
”), the Lenders from time to time party thereto and Bank of America, N.A., a national banking association, as LC Issuer, as the Swing Line Lender, as Administrative Agent (in such capacity, the “
Administrative Agent
”) and as Collateral Agent.
RECITALS:
The Borrower has requested Incremental Term Loans in an aggregate principal amount of up to $130,000,000. Each financial institution identified on the signature pages hereto (or that becomes party hereto prior to the Tranche B-1 Funding Date (as defined below) through a joinder to this Agreement in the form of Exhibit A hereto (an “
Additional Joinder
”)) as a “Tranche B-1 Lender” (each, a “
Tranche B-1 Lender
”) agrees severally, on the terms and conditions set forth herein and in the Credit Agreement, to provide an Incremental Term Loan (each, a “
Tranche B-1 Loan
”) and to become, if not already, a Lender for all purposes under the Credit Agreement.
The Borrower has also requested an Additional Revolving Facility in order to increase the amount of the Aggregate Revolving Credit Commitment from $125,000,000 to $150,000,000. Each financial institution identified on the signature pages hereto as a “New Revolving Lender” (each, a “
New Revolving Lender
”) agrees severally, on the terms and conditions set forth herein and in the Credit Agreement, to provide a Revolving Credit Commitment (each, a “
New Revolving Commitment
”) in the amount set forth on the Commitment Schedule (as amended hereby) opposite its name and to become, if not already, a Lender for all purposes under the Credit Agreement.
Without limitation of the foregoing, each Lender on the signature page hereto, which together comprise the Required Lenders (determined immediately prior to the effectiveness of any Additional Joinder and any Tranche B-1 Loan, Tranche B-1 Commitment or New Revolving Commitment), is willing to consent to the amendments to the Credit Agreement contained in Section 2 and Section 3 herein, effective immediately prior to the effectiveness of any Additional Joinder and the making of the Tranche B-1 Loans and the effectiveness of the New Revolving Commitments.
The parties hereto therefore agree as follows:
Section 1
. Defined Terms.
Unless otherwise specifically defined herein, each term used herein that is defined in the Credit Agreement has the meaning assigned to such term in the Credit Agreement.
SECTION 2
.
Making the Incremental Loans
. (a) Each Tranche B-1 Lender severally (and not jointly) agrees, on the terms and subject to the conditions set forth in this Agreement, to make an Incremental Term Loan, as a Tranche B-1 Loan, to the Borrower on the Tranche B-1 Funding Date in the amount set forth opposite such Incremental Term Lender’s name in Schedule 1 to this Agreement under the caption “Tranche B-1 Commitment” (or, in the case of any Tranche B-1 Lender that becomes party hereto through an Additional Joinder, as set forth in its Additional Joinder) (its “
Tranche B-1 Commitment
”). The Tranche B-1 Loans shall constitute the same Class of Term Loans under the Credit Agreement as the Class of Term Loans made by the Lenders on the Amendment Effective Date. No
The appearance of [++] denotes confidential information that has been omitted from this Exhibit 10.2 and filed separately with the Securities and Exchange Commission pursuant to a confidential treatment request under Rule 24b-2 of the Securities Exchange Act of 1934.
amount of any Tranche B-1 Loan which is repaid or prepaid by the Borrower may be reborrowed hereunder. Not later than 1:00 p.m., New York City time, on the Tranche B-1 Funding Date, each Tranche B-1 Lender shall make available funds equal to its Tranche B-1 Commitment in immediately available funds to the Administrative Agent at its address specified pursuant to Article 13 of the Credit Agreement. Gross proceeds required to be funded by each Tranche B-1 Lender with respect to its Tranche B-1 Loan shall be equal to 99.875% of the principal amount of such Tranche B-1 Loan.
(b) Each Tranche B-1 Lender hereby consents to an Interest Period beginning on the Tranche B-1 Funding Date and ending on the last days of the Interest Periods then in effect with respect to any Term Loans outstanding immediately prior to the Tranche B-1 Funding Date, in amounts pro rata across such Interest Periods with such Term Loans outstanding immediately prior to the Tranche B-1 Funding Date, in respect of the Tranche B-1 Loans that are Eurodollar Loans incurred on the Tranche B-1 Funding Date.
(c) Each New Revolving Lender severally (and not jointly) shall, with effect from the Tranche B-1 Funding Date, become a Revolving Lender with a Revolving Credit Commitment in an amount equal to its New Revolving Commitment. Such New Revolving Commitment shall be a Revolving Credit Commitment.
(d) The following amendments are made to Sections 1.01 and 2.01 of the Credit Agreement to reflect the foregoing:
(i)
Section 1.01:
The following new defined terms are added to Section 1.01 in appropriate alphabetical order:
“
First
Incremental Agreement
” means the First Incremental Amendment and Joinder Agreement dated as of April 2, 2014 among the Borrower, the Tranche B-1 Lenders identified therein, the other Lenders identified therein and the Administrative Agent.
“
First Incremental Revolving Commitment
” means the New Revolving Commitments as defined in the First Incremental Agreement.
“
Tranche B-1 Commitment
” means, for each Tranche B-1 Lender, the amount as defined therefor in the First Incremental Agreement.
“
Tranche B-1 Funding Date
” means the date on which the Tranche B-1 Loans are made (if at all) pursuant to the First Incremental Agreement.
“
Tranche B-1 Lender
” means the “Tranche B-1 Lenders” identified in and party to the First Incremental Agreement.
“
Tranche B-1 Loan
” has the meaning set forth in Section 2.01.
For the avoidance of doubt, the “Applicable Margin” and “Maturity Date” for each Tranche B-1 Loan shall be as provided for all Term Loans in the Credit Agreement as in effect on the date hereof.
(ii)
Section 2.01:
The existing text of Section 2.01 of the Credit Agreement is designated to be clause “(a)” thereof, and the following new clause (b) is added to read in full as follows:
(b) Each Tranche B-1 Lender severally (and not jointly) agreed, on the terms and subject to the conditions set forth in the First Incremental Agreement, to make an Incremental Term Loan (each, a “
Tranche B-1 Loan
”) to the Borrower on the Tranche B-1 Funding Date in the amount of such Tranche B-1 Lender’s Tranche B-1 Commitment. The Tranche B-1 Loans shall constitute the same Class of Term Loans under the Credit Agreement as the Class of Term Loans made by the Lenders on the Amendment Effective Date. No amount of any Tranche B-1 Loan which is repaid or prepaid by the Borrower may be reborrowed hereunder. Not later than 1:00 p.m., New York City time, on the Tranche B-1 Funding Date, each Tranche B-1 Lender shall make available funds equal to its Tranche B-1 Commitment in immediately available funds to the Administrative Agent at its address specified pursuant to Article 13 of the Credit Agreement. Gross proceeds required to be funded by each Tranche B-1 Lender with respect to its Tranche B-1 Loan shall be equal to 99.875% of the principal amount of such Tranche B-1 Loan.
SECTION 3
.
Additional Amendments to the Credit Agreement.
(a)
The definition of “Aggregate Revolving Credit Commitments” contained in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follow:
“
Aggregate Revolving Credit Commitment
” means the aggregate of the Revolving Credit Commitments of all the Revolving Lenders, as reduced or increased from time to time pursuant to the terms hereof. The Aggregate Revolving Credit Commitment as of the Tranche B-1 Funding Date is $150,000,000.
(b)
The definition of “Cash and Cash Equivalents” contained in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“
Cash and Cash Equivalents
” means:
(a) U.S. dollars, Canadian dollars, Australian dollars or Pounds Sterling;
(b) (x) euros or any national currency of any participating member state of the EMU or (y) such local currencies held from time to time in the ordinary course of business;
(c) Government Securities;
(d) securities issued by any agency of the United States or U.S. government-sponsored enterprise, which may or may not be backed by the full faith and credit of the United States, in each case maturing within 24 months or less
and, in the case of securities issued by a government-sponsored enterprise that is not backed by the full faith and credit of the United States, with a rating, or guaranteed on a senior basis by an entity with a rating of its senior unsecured debt, of A3/A- or better from two of the following three rating agencies: (i) Moody’s, (ii) S&P or (iii) Fitch Ratings, Inc.
;
(e) certificates of deposit, time deposits and eurodollar time deposits with maturities of 24 months or less from the date of acquisition, banker’s acceptances with maturities not exceeding 24 months and overnight bank deposits, in each case with any commercial bank having capital and surplus in excess of $500,000,000 in the case of a
domestic bank and $250,000,000 (or the U.S. dollar equivalent as of the date of determination) in the case of a foreign bank;
(f) commercial paper rated at least P-2 by Moody’s or at least A-2 by S&P and in each case maturing within 13 months after the date of creation thereof;
(g) investment funds investing not less than 95% of their assets in securities of the types described in clauses (a) through (f) above or clause (i) below;
(h) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P with maturities of 24 months or less from the date of acquisition;
(i) overnight repurchase obligations for underlying securities or other investments of the types described in clauses (a) through (h) above with any bank or trust company organized under the laws of any state of the United States or any national banking association or any government securities dealer which is listed as reporting to the market statistics division of the Federal Reserve Bank of New York, in each case with such entity having capital and surplus in excess of $500,000,000 in the case of a domestic entity and $250,000,000 (or the U.S. dollar equivalent as of the date of determination) in the case of a foreign entity; and
(j) Scheduled Restricted Investments.
(c)
The definition of “ECF Percentage” contained in Section 1.01 of the Credit Agreement is hereby amended and restated in its entirety as follows:
“
ECF Percentage
” means, for any fiscal year of the Borrower, (i) if the Secured Leverage Ratio determined on the last day of such fiscal year is greater than 3.750 to 1.000, 50% and (ii) if such Secured Leverage Ratio so determined is less than or equal to 3.750 to 1.000, 0%.
(d)
Section 2.02(a) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(a) From and after the Tranche B-1 Funding Date, the Borrower shall repay to the Administrative Agent for the ratable account of the applicable Term Lenders (including the Tranche B-1 Lenders) (i) on the last Business Day of each March, June, September and December, commencing with the last Business Day of June 2014, an amount equal to $2,453,282.83 (which payments shall be reduced as a result of the application of prepayments in accordance with the order of priority set forth in Section 2.10(a)) and (ii) on the Term Loan Maturity Date, the aggregate principal amount of such Term Loans outstanding on such date (or, in the case of Incremental Term Loans other than the Tranche B-1 Loans, as provided in the applicable Incremental Amendment), together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.
(e)
Section 2.10(b) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(b) In the event that, on or prior to the date that is six months after the Tranche B-1 Funding Date, the Borrower (x) prepays, refinances, substitutes or replaces any Term Loans (including Tranche B-1 Loans) in connection with a Repricing Transaction (including, for avoidance of doubt, any prepayment made pursuant to Section 2.10(c) that constitutes a Repricing Transaction), or (y) effects any amendment of this Agreement resulting in a Repricing Transaction, the Borrower shall pay to the Administrative Agent, for the ratable account of each of the applicable Term Lenders, (I) in the case of clause (x), a prepayment premium of 1.00% of the aggregate principal amount of the Term Loans (including Tranche B-1 Loans) so prepaid, refinanced, substituted or replaced and (II) in the case of clause (y), a fee equal to 1.00% of the aggregate principal amount of the applicable Term Loans (including Tranche B-1 Loans) outstanding immediately prior to such amendment. Such amounts shall be due and payable on the date of effectiveness of such Repricing Transaction.
(f)
Section 2.25(a) of the Credit Agreement is hereby amended as follows:
|
|
|
|
(i)
|
clauses (B) and (C) of the first proviso of the first sentence are hereby deleted and replaced with the words,
|
“(B) if such Incremental Facility is to become effective prior to the Revolver Termination Date, the Borrower shall be in compliance with the covenants set forth in clauses (a), (c) and (d) of Section 6.22 determined on a pro forma basis as of the last day of the date of the most-recently ended fiscal quarter, in each case, as if such Incremental Term Loans or any borrowings under any such Additional Revolving Facility, as applicable, had been outstanding on the last day of such fiscal quarter of the Borrower for testing compliance therewith; provided that any Additional Revolving Facility shall be tested as fully drawn, (C) the First Lien Leverage Ratio calculated on a pro forma basis shall not exceed 4.0 to 1.0, in the case of the first $170,000,000 of Indebtedness incurred pursuant to this Section 2.25(a) after the Tranche B-1 Funding Date and 3.5 to 1.0 for all other Indebtedness incurred pursuant to this Section 2.25(a) (other than the Tranche B-1 Loans and other than in connection with the First Incremental Revolving Commitment), in each case tested as of the last day of the most-recently ended period of four consecutive fiscal quarters of the Borrower for which financial statements are internally available (calculated as if such Incremental Term Loans or borrowings under any such Additional Revolving Facilities (in an amount equal to the full amount of such Additional Revolving Facilities), as applicable, had been outstanding on such last day;
provided
that any Additional Revolving Facility shall be tested as fully drawn) and”;
|
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(ii)
|
the third sentence is hereby deleted and replaced with the words,
|
Notwithstanding anything to the contrary herein, the aggregate amount of the Incremental Term Loans and the Additional Revolving Facilities incurred after the Tranche B-1 Funding Date shall not exceed $370,000,000;
provided
that the aggregate amount of Additional Revolving Facilities incurred after the Tranche B-1 Funding Date shall not exceed $75,000,000.”; and
|
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(iii)
|
the proviso to the last sentence is hereby deleted and replaced with the words,
|
“
provided
that in no event will the aggregate amount of Incremental Term Loans, Additional Revolving Facilities, Pari Passu First Lien Notes, Incremental Second Lien Notes and Incremental Unsecured Notes incurred after the Tranche B-1 Funding Date exceed $370,000,000.”.
(g)
Section 2.25(c) of the Credit Agreement is hereby amended to add the following language immediately prior to the period at the end of the first sentence thereof:
;
provided
,
however
, that notwithstanding anything to the contrary contained in this Agreement, no notice shall be required from the Borrower pursuant to Section 2.25 with respect to the Borrower’s request for the Tranche B-1 Loans and the First Incremental Revolving Commitment.
(h)
Section 6.02 of the Credit Agreement is hereby amended and restated in its entirety as follows:
Section 6.02
Use of Proceeds
. The Borrower will, and will cause each Subsidiary to, use the proceeds of the Credit Extensions for general corporate purposes, including the repayment or refinancing of the Existing Debt (including the Second Lien Redemption), making Restricted Payments (including, without limitation, the repurchase of Capital Stock of the Borrower) and the payment of the costs, fees and expenses of the Transactions and acquisitions permitted hereunder. Neither the Borrower, nor any of its Subsidiaries will use any of the proceeds of the Advances to purchase or carry any “margin stock” (as defined in Regulation U) in violation of Regulation U.
(i)
Section 6.13(i) of the Credit Agreement is hereby amended and restated in its entirety as follows:
(i) Restricted Payments constituting the repurchase, retirement or other acquisition or retirement for value of Capital Stock of the Borrower held by the Sponsors, in an amount not to exceed $300,000,000 during the term of this Agreement; and
(j)
Section 6.22(b) of the Credit Agreement is hereby amended to replace the table therein with the table below:
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Fiscal Quarter Ending
|
Secured Leverage Ratio
|
|
June 30, 2013
|
4.625:1.000
|
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September 30, 2013
|
|
December 31, 2013
March 31, 2014
|
4.375:1.000
|
|
June 30, 2014
September 30, 2014
December 31, 2014
|
5.000:1.000
|
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March 31, 2015
|
4.750:1.000
|
|
June 30, 2015
|
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September 30, 2015
|
|
December 31, 2015
|
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March 31, 2016
|
4.250:1.000
|
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June 30, 2016
|
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September 30, 2016
|
|
December 31, 2016
|
|
March 31, 2017
|
3.750:1.000
|
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June 30, 2017
|
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September 30, 2017
|
|
December 31, 2017
|
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March 31, 2018 (and each fiscal quarter end thereafter)
|
3.50:1.000
|
(k)
The table on the Commitment Schedule setting forth the Revolving Credit Commitments is hereby amended and restated and replaced in its entirety with the following table:
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Revolving Loan Lender
|
Revolving Credit Commitment
|
|
[++]
|
$29,000,000.00
|
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[++]
|
$27,000,000.00
|
|
[++]
|
$27,000,000.00
|
|
[++]
|
$27,000,000.00
|
|
[++]
|
$20,000,000.00
|
|
[++]
|
$20,000,000.00
|
|
Total Revolving Credit Commitment
|
$150,000,000.00
|
SECTION 4
. Representations and Warranties of the Borrower.
The Borrower represents and warrants that as of the date hereof and as of the Tranche B-1 Funding Date:
(a)
Each of the representations and warranties contained in Article 5 of the Credit Agreement are true and correct as of the Tranche B-1 Funding Date in all material respects except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on and as of such earlier date.
(b)
Each of the Loan Parties has the power and authority and legal right to execute and deliver this Agreement and to perform its obligations under the Loan Documents to which it is a party (in each case in this Section 4, as amended by this Agreement). The execution and delivery by each of the Loan Parties of this Agreement and the performance of its obligations under the Loan Documents to which it is a party have been duly authorized by proper corporate or other organizational proceedings, and the Loan Documents to which each such Loan Party is a party constitute legal, valid and binding obligations of such Loan Party enforceable against such Loan Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles.
(c)
Neither the execution and delivery by any Loan Party of this Agreement, nor the consummation of the transactions contemplated by the Loan Documents, nor compliance with the provisions thereof will violate (x) any applicable law, rule, regulation, ruling, order, writ, judgment, injunction, decree or award binding on the Borrower or any of its Subsidiaries or any Property of such Person or (y) the Borrower’s or any Material Domestic Subsidiary’s articles or certificate of incorporation, partnership agreement, certificate of partnership, articles or certificate of organization, by laws, or operating or other management agreement, or substantially equivalent governing document, as the case may be, or (z) the provisions of any note, bond, mortgage, deed of trust, license, lease indenture, instrument, agreement or other obligation (each a “
Contract
”) to which the Borrower or any Subsidiary is a party or is subject, or by which it, or its Property, is bound, or conflict with, result in a breach of any provision thereof or constitute a default thereunder (or result in an event which, with notice or lapse of time or both, would constitute a default thereunder), or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or (except for the Liens created by the Loan Documents and Permitted Liens) result in, or require, the creation or imposition of any Lien in, of or on the Property of the Borrower or any of its Subsidiaries pursuant to the terms of any such note, bond, mortgage, deed of trust, license, lease indenture, instrument, agreement or other obligation, except with respect to clauses (x) or (z), to the extent, individually or in the aggregate, that such violation, conflict, breach, default or creation or imposition of any lien could not reasonably be expected to result in a Material Adverse Effect. No order, consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or authority, or any subdivision thereof, which has not been obtained by the Borrower or any of its Material Domestic Subsidiaries, is required to be obtained by the Borrower or any of its Material Domestic Subsidiaries in connection with the execution and delivery of the Loan Documents, the borrowings under this Agreement, the payment and performance by the Borrower of the Obligations or the legality, validity, binding effect or enforceability of any of the Loan Documents.
SECTION 5
. Conditions to Effectiveness of this Agreement
. This Agreement shall become effective as of the date first written above when the Administrative Agent shall have received from the Borrower, each Guarantor, each Tranche B-1 Lender, each New Revolving Lender, the Lenders constituting the Required Lenders (determined solely for these purposes immediately prior to the making of the Tranche B-1 Loans) and the Administrative Agent an executed counterpart hereof or other written
confirmation (in form satisfactory to the Administrative Agent) that such party has signed a counterpart hereof (and, with respect to any Tranche B-1 Lender that becomes party hereto through an Additional Joinder, upon receipt by the Administrative Agent of an executed counterpart thereof by such additional Tranche B-1 Lender, the Borrower, each Guarantor and the Administrative Agent).
SECTION 6
. Conditions to Funding of Tranche B-1 Loans and the New Revolving Commitments.
The obligation of each Tranche B-1 Lender to fund its Tranche B-1 Loan and the New Revolving Commitments of the New Revolving Lenders shall be effective as of the first date (the “
Tranche B-1 Funding Date
”) subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 6:
(a)
Upon the effectiveness of this Agreement, no Default or Unmatured Default shall exist and on the Tranche B-1 Funding Date (and after giving effect to the funding of the Tranche B-1 Loans on the Tranche B-1 Funding Date) no Default or Unmatured Default shall exist;
(b)
the Borrower shall be in compliance with the covenants set forth in clauses (a), (c) and (d) of Section 6.22 of the Credit Agreement (as amended hereby) determined on a pro forma basis as of the last day of the date of the most-recently ended fiscal quarter for which financial statements are internally available, in each case, as if such Tranche B-1 Loans had been outstanding on the last day of such fiscal quarter of the Borrower for testing compliance therewith;
(c)
The Administrative Agent shall have received for further distribution to the Tranche B-1 Lenders and the New Revolving Lenders a certificate, dated as of the Tranche B-1 Funding Date and signed by a Financial Officer of the Borrower, certifying as to the conditions set forth in clauses (a) and (b) of this Section 6, together with reasonably detailed calculations demonstrating compliance with clause (b) of this Section 6.
(d)
The Tranche B-1 Lenders, the Administrative Agent and the Engagement Parties (as defined in that certain engagement letter dated (the “
Engagement Letter
”) as of March 26, 2014 among the Borrower, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC, J.P. Morgan Securities LLC, Deutsche Bank Securities Inc., Credit Agricole Corporate and Investment Bank and Barclays Bank PLC) shall have received all fees and expenses (including the reasonable fees and expenses of counsel to the Administrative Agent) required to be paid, and all expenses for which invoices have been presented, on or before the Tranche B-1 Funding Date.
(e)
The Borrower shall have paid to the Administrative Agent, for the account of each Lender that consented to this Agreement prior to 12:00 noon New York City time on March 27, 2014, a fee equal to 0.25% of such consenting Lender’s Commitments and Loans held on the Tranche B-1 Funding Date (without giving effect to the Incremental Term Loans (or commitments in respect thereof) or the New Revolving Commitments (or loans in respect thereof) incurred on the Tranche B-1 Funding Date).
(f)
The Administrative Agent shall have received such certificates, resolutions or other documents of the Loan Parties as the Administrative Agent may reasonably require in connection herewith, including all documents and certificates it may reasonably request relating to (i) the organization, existence and good standing of each Loan Party, (ii) the corporate or other authority for and validity of this Agreement and (iii) the incumbency of the officers of each Loan Party
executing this Agreement, and other matters relevant hereto, all in form and substance reasonably satisfactory to the Administrative Agent.
(g)
Any Term Note or Revolving Credit Note requested by a Lender pursuant to Section 2.16 of the Credit Agreement to evidence such Tranche B-1 Lender’s Tranche B-1 Loan or such New Revolving Lender’s New Revolving Commitment shall have been issued by the Borrower payable to the order of each such requesting Lender.
(h)
The Administrative Agent shall have received an opinion of counsel to the Loan Parties in form and substance reasonably satisfactory to the Administrative Agent and dated the Tranche B-1 Funding Date.
(i)
Since December 31, 2013, no change or event shall have occurred and no circumstances shall exist which have had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(j)
Each Tranche B-1 Lender and each New Revolving Lender that is not a Lender under the Credit Agreement before giving effect to this Agreement shall have received, sufficiently in advance of the Tranche B-1 Funding Date, all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the United States PATRIOT Act that has been reasonably requested by such Tranche B-1 Lender or New Revolving Lender at least 5 Business Days prior to the Tranche B-1 Funding Date.
SECTION 7
. Consent of Required Lenders.
Each Lender that has signed this Agreement consents to the amendments contained in Section 2 and Section 3 hereof in accordance with Section 14.03 of the Credit Agreement.
SECTION 8
Acknowledgment of Tranche B-1 Lenders and New Revolving Lenders.
Each Tranche B-1 Lender and each New Revolving Lender expressly acknowledges that neither the Administrative Agent nor any other Lender nor any of their Related Parties has made any representations or warranties to it and that no act by the Administrative Agent, any other Lender or any of their Related Parties hereafter taken, including any review of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any representation or warranty by the Administrative Agent, any other Lender or any of their Related Parties. Each Tranche B-1 Lender and each New Revolving Lender represents that it has, independently and without reliance upon the Administrative Agent, the other Lenders or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates and made its own decision to provide its Incremental Term Loans or New Revolving Commitment, respectively, hereunder and enter into this Agreement. Each Tranche B-1 Lender and each New Revolving Lender also represents that it will, independently and without reliance upon the Administrative Agent, any other Lender or any of their Related Parties, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under the Credit Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Loan Parties and their affiliates. Each Tranche B-1 Lender and each New Revolving Lender hereby (a) confirms that it has received a copy of the Credit Agreement and each other Loan Document and such other documents and information as it deems appropriate to make its decision to enter into this Agreement and (b) agrees that it shall be bound by the terms of the Credit Agreement as a Lender thereunder and that
it will perform in accordance with their terms all of the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender.
SECTION 9
Appointment and Authority
. Each Tranche B-1 Lender and each New Revolving Lender hereby irrevocably appoints Bank of America to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Tranche B-1 Lenders and the New Revolving Lenders, and neither the Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such provisions. The Administrative Agent shall also act as the Collateral Agent under the Loan Documents, and each of the Tranche B-1 Lenders and each of the New Revolving Lenders (including, in each case, in its capacities as a potential Hedge Bank and a potential Cash Management Bank) hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Tranche B-1 Lender or of such New Revolving Lender, as applicable, for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as Collateral Agent, and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 10.05 of the Credit Agreement for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of Article 8, Article 9 and Article 10 of the Credit Agreement (including Section 9.06 of the Credit Agreement, as though such co-agents, sub-agents and attorneys-in-fact were the Collateral Agent under the Loan Documents) as if set forth in full herein with respect thereto.
SECTION 10
.
Governing Law.
This Agreement shall be construed in accordance with the internal laws of the State of New York but giving effect to federal laws applicable to national banks.
SECTION 11
. Confirmation of Guarantees and Security Interests.
By signing this Agreement, each Loan Party hereby confirms that (i) the obligations of the Loan Parties under the Credit Agreement as modified hereby (including with respect to the Tranche B-1 Loans and New Revolving Commitments contemplated by this Agreement) and the other Loan Documents (x) are entitled to the benefits of the guarantees and the security interests set forth or created in the Guaranty, the Collateral Documents and the other Loan Documents, (y) constitute Obligations for purposes of the Credit Agreement, the Guaranty and all other Collateral Documents, (ii) notwithstanding the effectiveness of the terms hereof, the Guaranty, the Collateral Documents and the other Loan Documents are, and shall continue to be, in full force and effect and are hereby ratified and confirmed in all respects and (iii) each Tranche B-1 Lender and each New Revolving Lender shall be a “Secured Party” and a “Lender” (including, in each case, without limitation for purposes of the definitions of “Cash Management Bank”, “Hedge Bank” and “Required Lenders” contained in Section 1.01 of the Credit Agreement) for all purposes of the Credit Agreement and the other Loan Documents. Each Loan Party ratifies and confirms that all Liens granted, conveyed, or assigned to the Collateral Agent by such Person pursuant to each Loan Document to which it is a party remain in full force and effect, are not released or reduced, and continue to secure full payment and performance of the Obligations as increased hereby.
SECTION 12
. Credit Agreement Governs
. Except as set forth in this Agreement, (x) the Tranche B-1 Loans shall be subject to the provisions of the Credit Agreement and the other Loan Documents that apply to “Loans”, “Term Loans” and “Incremental Term Loans” thereunder and (y) the New Revolving Commitments shall be subject to the provisions of the Credit Agreement and the other
Loan Documents that apply to “Loans”, “Revolving Loans” and “Revolving Credit Commitments” thereunder.
SECTION 13
. Counterparts.
This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile or electronic (i.e., “pdf” or “tif”) transmission shall be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 14
. Miscellaneous.
This Agreement shall constitute a Loan Document for all purposes of the Credit Agreement and the other Loan Documents. The Borrower shall pay all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent incurred in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby (including reasonable fees and expenses of Davis Polk & Wardwell LLP). The provisions of this Agreement are deemed incorporated into the Credit Agreement as if fully set forth therein. To the extent required by the Credit Agreement, the Borrower and the Administrative Agent hereby consent to each Tranche B-1 Lender and each New Revolving Lender that is not a Lender as of the date hereof becoming a Lender under the Credit Agreement on the Tranche B-1 Funding Date.
SECTION 15
.
Termination
. Notwithstanding anything in this Agreement or any other Loan Document to the contrary, the Tranche B-1 Lenders’ respective Tranche B-1 Commitments hereunder and the New Revolving Lenders’ New Revolving Commitments shall terminate if the Tranche B-1 Funding Date has not occurred on or prior to July 24, 2014.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written.
MONEYGRAM INTERNATIONAL, INC.
By:
/s/ Lawrence Angelilli __
Name: Lawrence Angelilli
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Title:
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Senior Vice President, Corporate Finance and Treasurer
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MONEYGRAM PAYMENT SYSTEMS WORLDWIDE, INC.
MONEYGRAM PAYMENT SYSTEMS, INC.
By:
/s/ Lawrence Angelilli __
Name: Lawrence Angelilli
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Title:
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Senior Vice President, Corporate Finance and Treasurer
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MONEYGRAM OF NEW YORK LLC
By: MoneyGram Payment Systems, Inc., its sole member
By:
/s/ Lawrence Angelilli __
Name: Lawrence Angelilli
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Title:
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Senior Vice President, Corporate Finance and Treasurer
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BANK OF AMERICA, N.A., as Administrative Agent
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By:
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/s/ Christopher Joseph
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Name: Christopher Joseph
Title: Vice President
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SCHEDULE 1
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Tranche B-1 Lender
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Tranche B-1 Commitment
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[++]
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$130,000,000
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Total: $130,000,000
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MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
GLOBAL Time-Based RESTRICTED STOCK UNIT
AWARD AGREEMENT
This
GLOBAL Time-Based RESTRICTED STOCK UNIT AWARD AGREEMENT
(the “
Agreement
”) is made by and between
MoneyGram International, Inc.
, a Delaware corporation (the “
Company
”), and _______________ (the “
Participant
”). The grant date of this award is __________ (the “
Grant Date
”).
The Company hereby grants to the Participant a time-based Restricted Stock Unit (an “
RSU
”) award covering _____ shares (the “
Shares
”) of Common Stock, $.01 par value per share, of the Company according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “
Appendix
”), and in the Company’s 2005 Omnibus Incentive Plan (the “
Plan
”). Each RSU represents the right to receive one Share, subject to the vesting requirements of this Agreement and the terms of the Plan. The RSUs are granted under Section 6(c) and 6(d) of the Plan. The RSUs are subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(c) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
(a)
Unless otherwise provided in this Agreement, the RSUs granted under this Agreement shall vest as follows, provided the Participant remains continuously employed by the Company or a Subsidiary from the Grant Date through each anniversary (each a “Vesting Date”):
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Vesting Date
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Aggregate Percentage Vested
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1st Anniversary of Grant Date
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33.3
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%
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2nd Anniversary of Grant Date
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33.3
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%
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3rd Anniversary of Grant Date
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33.4
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%
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(b)
The Participant shall have no rights to the Shares until the RSUs have vested. Prior to settlement, the RSUs represent an unfunded and unsecured obligation of the Company.
(c)
For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
3.
Settlement of RSUs
. Any RSUs that vest shall be paid to the Participant solely in whole Shares on, or as soon as practicable after, the date the RSUs vest in accordance with Section 2 above (or, if sooner, Sections 5 or 6 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting.
4.
Restrictions on Transfer
.
(a)
Except as otherwise provided by the Plan or by the Committee, the RSUs shall not be transferable other than by will or by the laws of descent and distribution. The RSUs may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the RSUs shall be void and unenforceable against the Company or any Subsidiaries.
(b)
None of the Shares acquired pursuant to the RSU award shall be assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
5.
Effect of Involuntary Termination Following Change in Control
. Notwithstanding the vesting provisions contained in Section 2 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined below) the following provisions shall apply:
(a)
Notwithstanding the other provisions of this Section 5, if the RSUs are assumed or otherwise replaced in connection with a Change in Control and the Participant’s continuous employment is terminated by the Company or any of its Subsidiaries without Cause (as defined in Section 5(d) below) or the Participant terminates his or her employment for “Good Reason” (as such term is defined below) in each case within 12 months following the
occurrence of such Change in Control but prior to a Vesting Date, then the unvested RSUs will automatically accelerate and become vested.
(b)
“Good Reason” for purposes of this Agreement shall mean following a Change in Control: (A) a material reduction in the Participant’s position or responsibilities from the Participant’s position or responsibilities in effect immediately prior to such Change in Control, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith; (B) a material reduction in the Participant’s base salary or target bonus opportunity, if any, as in effect immediately prior to such Change in Control, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company, or (C) the reassignment, without the Participant’s consent, of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work immediately prior to the Change in Control; provided that none of the events described in clauses (A), (B) and (C) shall constitute Good Reason hereunder unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate his employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice.
(c)
For purposes of this Agreement, notwithstanding the definition of Change in Control in any other agreement or plan that may be applicable to the Participant, “Change in Control” shall mean (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets, (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Exchange Act of 1934 (the “
Exchange Act
”)), or (iii) the merger, consolidation reorganization, recapitalization or share exchange of the Company with another entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders of the voting power of the outstanding securities of the Company, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold less than 50% in voting power of the outstanding securities of the Company or the surviving entity or resulting entity, as the case may be, immediately following such transaction;
provided
,
however
, that the issuance of securities by the Company shall not, in any event, constitute a Change in Control, and for the avoidance of doubt a sale or other transfer or series of transfers of all or any portion of the securities of the Company held by the Investors and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in an entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting power of the outstanding securities of the Company.
For purposes hereof, “Investors” shall mean the “Investors” as defined in that certain Amended and Restated Purchase Agreement, dated March 17, 2008, by and between the Company and the other parties thereto, and their respective affiliates (not including the Company).
(d)
For purposes of this Agreement, “Cause” shall mean (A) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the person or persons to whom the Participant reports or the Board that are within the Participant’s control and consistent with the Participant’s status with the Company or its Subsidiary and his or her duties and responsibilities hereunder (except for a failure that is attributable to the Participant’s illness, injury or Disability) for a period of 10 days following written notice by the Company or its Subsidiary to the Participant of such failure, (B) fraud or material dishonesty in the performance of the Participant’s duties hereunder, (C) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof or similar act under foreign law for the non-U.S. Participants, (y) a misdemeanor involving moral turpitude or (z) a material violation of the securities laws of the United States or any state thereof or similar act under foreign law for the non-U.S. Participants, (D) an indictment of the Participant for a felony under the laws of the United States or any state thereof or similar act under foreign law for the non-U.S. Participants, (E) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as determined in good faith by the Board, (F) the Participant’s material breach of the Company’s Code of Conduct or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach could reasonably be expected to have a material adverse effect on the Company as determined in good faith by the Board, or (G) the Participant’s breach of the Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement (or any similar agreement the Participant received from the Company) (the “
Post-Employment Restriction Agreement
”) which breach has an adverse effect on the Company or its Subsidiaries.
6.
Effect of Termination of Employment
. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Board, if the Participant ceases to be an employee of the Company or any of its Subsidiaries, the following actions shall occur:
(a)
Termination for Cause; Resignation
. If the Participant’s employment with the Company or any of its Subsidiaries is terminated for Cause (as defined below) or the Participant resigns for any reason, including as a result of the Participant’s retirement, any RSUs that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b)
Involuntary Termination/Disability/Death
. If the Participant’s employment with the Company or any of its Subsidiaries is terminated without Cause or is terminated due to death or Disability (as defined below), then that portion of the unvested RSUs that would vest during the 12-month period following the date of such termination shall vest on the date of termination.
(c)
For purposes of this Agreement, “
Disability
” shall mean that the Participant becomes physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform his or her duties. Any question as to the existence of the Disability of the Participant for purposes of this Agreement shall be determined in writing by a qualified independent physician selected by the Company. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement.
(d)
For purposes of this Agreement, the Participant shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any) as of the date that the Participant is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits (
e.g.
, continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the RSU award, and if the Participant is a U.S. taxpayer, such determination shall be made in accordance with Code Section 409A.
7.
Forfeiture and Repayment Provisions
.
(a)
Failure to properly execute the Agreement (and each other document required to be executed by the Participant in connection with the Participant’s receipt of the RSUs) in a timely manner following the Grant Date may result in the forfeiture of the RSUs, as determined in the sole discretion of the Company.
(b)
The right to vest in the RSUs shall be conditional upon the fact that the Participant has read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c)
The Company is authorized to suspend or terminate this RSU award prior to or after termination of employment if the Participant engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement. If, at any time during the applicable restriction period described in the Post-Employment Restriction Agreement, the Participant engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement, then any gain (without regard to tax effects) realized by the Participant from the vesting of the RSUs, in whole or in part, shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company hereunder.
(d)
Misconduct
(i)
The Company is authorized to suspend or terminate this RSU award prior to or after termination of employment if the Company reasonably determines that during the Participant’s employment with the Company or any of its Subsidiaries:
(1)
The Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(2)
The Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company.
(ii)
If, at any time after the Participant vests in the RSUs, in whole or in part, the Company reasonably determines that the provisions of Section 7(c) apply to the Participant, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7.
8.
Miscellaneous
.
(a)
Issuance of Shares.
Upon any vesting of the RSUs, and subject to the payment of any Tax-Related Items (as defined under Section 8(d) below), the Company shall deliver the Shares in book entry form at the times specified in Section 3 above. The Shares acquired shall be registered in the name of the Participant, the Participant’s transferee, or if the Participant so requests, in writing at the time of vesting, jointly in the name of the Participant and
another person with rights of survivorship. If the Participant dies, the Shares acquired shall be registered in the name of the person entitled to receive the Shares in accordance with the Plan.
(b)
Rights as Shareholder.
RSUs are not actual Shares, but rather, represent a right to receive Shares according to the terms and conditions set forth herein and the terms of the Plan. Accordingly, the issuance of an RSU shall not entitle the Participant to any of the rights or benefits generally accorded to stockholders unless and until a Share is actually issued under Section 8(a) hereof.
(c)
Adjustments to Award
.
(i)
In the event that the Company engages in a transaction such that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the shares covered by the RSU award, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this RSU award (including, without limitation, the number and kind of Shares subject to this RSU award) shall be adjusted as set forth in Section 4(c) of the Plan.
(ii)
Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of this RSU award (including, without limitation, the number and kind of Shares subject to this RSU award) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
(d)
Responsibility for Taxes
.
(i)
Regardless of any action the Company or the Participant’s employer (the “
Employer
”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“
Tax-Related Items
”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the issuance of Shares upon settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii)
In this regard, the Participant authorizes the Company or its agent to satisfy the obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon vesting/settlement of the RSUs. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the RSUs, the Participant authorizes and directs the Company and/or its agent to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant at vesting/settlement of the RSUs as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.
(iii)
To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
(iv)
Finally, the Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e)
Interpretations
. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(f)
Nature of Grant
. In accepting the grant, the Participant acknowledges, understands and agrees that:
(i)
the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
(ii)
the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units, even if restricted stock units have been granted repeatedly in the past;
(iii)
all decisions with respect to future RSU grants, if any, will be at the sole discretion of the Company;
(iv)
the Participant’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;
(v)
the Participant is voluntarily participating in the Plan;
(vi)
the RSUs and the Shares subject to the RSUs are not intended to replace any pension rights or compensation;
(vii)
the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(viii)
the future value of the underlying Shares is unknown and cannot be predicted with certainty;
(ix)
no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the Participant’s termination of continuous employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the Participant’s employment or service agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even it otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the RSUs to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(x)
the following provisions apply only to the Participants providing services outside the United States, as determined by the Company:
(A) the RSUs and the Shares subject to the RSUs are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Participant’s employment or service contract, if any;
(B) the RSUs and the Shares subject to the RSUs are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary; and
(C) the RSU grant and the Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary.
(g)
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
(h)
Data Privacy
.
(i)
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
(ii)
The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”).
(iii)
The Participant understands that Data will be transferred to E*Trade Financial Services, or such other stock plan service provider as may be selected by the Company in the future or other stock plan service provider that is
selected by the Participant to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. If the Participant resides outside the United States, the Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Participant authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. If the Participant resides outside the United States, the Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent or if the Participant later seeks to revoke his or her consent, his or her status as an employee and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing his or her consent is that the Company would not be able to grant RSUs or other equity awards or administer or maintain such Awards. Therefore, the Participant understands that refusing or withdrawing his or her consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
(i)
Reservation of Shares
. The Company shall at all times during the term of the RSU award reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement.
(j)
Securities Matters
. The Company shall not be required to deliver any Shares until the requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(k)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(l)
Successors and Assigns; No Third Party Beneficiaries
. This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(m)
Headings
. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(n)
Governing Law; Arbitration
. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “
AAA
”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect of any thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any
such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(o)
Notices
. The Participant should send all written notices regarding this Agreement or the Plan to the Company at the following address:
MoneyGram International, Inc.
EVP, General Counsel & Secretary
2828 North Harwood Street, 15
th
Floor
Dallas, TX 75201
(p)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 8(p) hereof and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. The Company reserves the right to impose other requirements on the RSUs and the Shares acquired upon vesting of the RSUs, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan.
(q)
Entire Agreement
. This Agreement, including the Appendix, and the Plan and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(r)
Severability
. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(s)
Participant Undertaking
. The Participant agrees to take such additional action and execute such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this RSU award pursuant to the provisions of this Agreement.
(t)
Counterparts
. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(u)
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(v)
Language
. If the Participant has received this Agreement, or any other document related to the RSU award and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(w)
Appendix
. The RSU award shall be subject to any special provisions set forth in the Appendix for the Participant’s country of residence, if any. If the Participant relocates to one of the countries included in the Appendix during the life of the RSU award, the special provisions for such country shall apply to the Participant, to the extent the Company determines that the application of such provisions is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(x)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other Participant.
(y)
Insider Trading Restrictions/Market Abuse Laws
. Depending upon his or her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect the Participant’s ability to acquire or sell Shares or rights to Shares (
e.g
., RSUs) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for complying with any applicable restrictions and is advised to speak with his or her personal legal advisor on this matter.
(z)
No Trust or Fund Created
. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(aa)
Section 409A Provisions
. The payment of Shares under this Agreement are intended to be exempt from the application of Section 409A of the Code, as amended (“
Section 409A
”) by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit hereunder that constitutes “deferred compensation” to the Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to the Participant under the Plan or this Agreement solely by reason of the occurrence of a Change in Control or due to the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such Change in Control, Disability or separation from service meet the definition of a change in ownership or control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise (including, but not limited to, a payment made pursuant to an involuntary separation arrangement that is exempt from Section 409A under the “short-term deferral” exception). Any payment or distribution that constitutes deferred compensation subject to Code Section 409A and that otherwise would be made to a Participant who is a specified employee as defined in Section 409A(a)(2)(B) of the Code on account of separation from service instead shall be made on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
IN WITNESS WHEREOF
, the Company and the Participant have executed this Agreement on the date set forth in the first paragraph.
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MONEYGRAM INTERNATIONAL, INC.
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By:
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PARTICIPANT
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Print Name:
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MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
APPENDIX To The
GLOBAL Time-Based RESTRICTED STOCK UNIT AGREEMENT
for PARTICIPANTS Outside the U.S.
Terms and Conditions
.
This Appendix includes additional terms and conditions that govern the RSUs granted to the Participant under the Plan if he/she resides in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Agreement.
If the Participant is a citizen or resident of a country other than the one in which he/she is currently working, transfers employment to another country after the Grant Date, or is considered a resident of another country for tax or exchange control purposes, the Company shall, at its discretion, determine the extent to which the terms and conditions contained herein shall apply to the Participant.
Notifications
.
This Appendix also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2014. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the Participant vests in the RSUs or sells the Shares issued upon settlement of the RSUs.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of any particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to his/her situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which he/she is currently working, transfers employment to another country after the Grant Date, or is considered a resident of another country for tax or exchange control purposes, the information contained herein may not be applicable to the Participant.
Australia
Notifications.
Securities Law Notice.
If the Participant acquires Shares under the Plan and offers such Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. The Participant should obtain legal advice on disclosure obligations prior to making any such offer.
Belgium
Notifications
.
Tax Reporting Notification.
The Participant is required to report any taxable income attributable to the RSUs on his or her annual tax return. In addition, the Participant is required to report any bank accounts opened and maintained outside Belgium on his or her annual tax return.
France
Terms and Conditions
.
Consent to Receive Information in English.
By accepting the grant of the RSUs, the Participant confirms having read and understood the Plan and the Agreement, which were provided in the English language. The Participant accepts the terms of those documents accordingly.
En acceptant cette attribution gratuite d’actions, le Participant confirme avoir lu et compris le Plan et ce Contrat, incluant tous leurs termes et conditions, qui ont été transmis en langue anglaise. Le Participant accepte les dispositions de ces documents en connaissance de cause.
Notifications
.
Tax Notification.
The RSUs are not intended to be French-qualified for tax purposes.
Exchange Control Notification.
The Participant
acknowledges and understands that he or she may hold Shares acquired under the Plan outside of France, provided that he or she declares all foreign accounts, whether open, current, or closed, in the his or her income tax return.
Germany
Notifications
.
Exchange Control Notification.
Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank (
Bundesbank
).
Effective from September 2013, the report must be filed electronically. The form of report (
Allgemeine Meldeportal Statistik
) can be accessed via the
Bundesbank’s
website (
www.bundesbank.de
) and is available in both German and English. The Participant is responsible for satisfying the reporting obligation.
In addition, in the unlikely event the Participant holds Shares whose value exceeds 10% of the total capital of the Company, the Participant must report these holdings to the Company on an annual basis.
Greece
There are no country specific provisions.
Hong Kong
Terms and Conditions
.
Sale of Shares.
In the event the RSUs vest within six months of the Grant Date, the Participant agrees that he or she will not dispose of the Shares acquired prior to the six-month anniversary of the Grant Date.
Award Payable Only in Shares.
The RSUs granted to the Participant in Hong Kong shall be paid in Shares only and do not provide any right for the Participant to receive a cash payment, notwithstanding any discretion contained in the Plan, or any provision in the Agreement to the contrary.
Notifications
.
Securities Law Notification.
Warning: The RSUs and the Shares issued pursuant to the RSUs do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company or one of its Subsidiaries participating in the Plan. The Agreement, including this Appendix, and the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable legislation in Hong Kong. These documents have not been reviewed by any regulatory authority in Hong Kong. The RSUs are intended only for the personal use of the Participant to whom they are granted and who meets the eligibility requirements under the Plan. The Participant is advised to exercise caution in relation to this grant of the RSUs. If the Participant has any doubts as to the contents of this Appendix, the Agreement or the Plan, the Participant should obtain independent professional advice.
Nature of Scheme.
The Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
India
Terms and Conditions
.
Settlement of RSUs.
The following provision replaces Section 3 of the Agreement:
As provided in Section 2(y) of the Plan, any RSUs that vest shall be paid to the Participant solely by means of a cash payment equal in value to the Fair Market Value of the underlying Shares on, or as soon as practicable after, the date the RSUs vest in accordance with Section 2 above (or, if sooner, Section 5 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting. The cash payment shall be paid to the Participant in local currency through his or her payroll in India. The Participant has no right to receive Shares.
Notifications
.
Exchange Control Notification.
The Participant understands that he or she must repatriate any proceeds received under the Plan to India and convert the proceeds into local currency within 90 days of receipt. The Participant will receive a foreign inward remittance certificate (“
FIRC
”) from the bank where he or she deposits the foreign currency. The Participant should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or his or her actual employer requests proof of repatriation.
Foreign Assets Reporting Requirement.
The Participant is required to declare his or her foreign bank accounts and any foreign financial assets in his or her annual tax return. It is the Participant’s responsibility to comply with this reporting obligation and the Participant should consult his or her personal tax advisor in this regard.
Ireland
Notifications
.
Director Notification Obligation.
If the Participant is a director, shadow director or secretary of the Company’s Irish Subsidiary, the Participant must notify the Irish Subsidiary in writing within five business days of receiving or disposing of an interest in the Company (
e.g
., RSUs, Shares, etc.), or within five business days of becoming aware of the event giving rise to the notification requirement or within five business days of becoming a director or secretary if such an interest exists at the time. This notification requirement also applies with respect to the interests of a spouse or children under the age of 18 (whose interests will be attributed to the director, shadow director or secretary).
Italy
Terms and Conditions
.
Data Privacy Notice
. The following replaces Section 8(h) of the Agreement:
The Participant understands that the Employer, the Company and any Subsidiary hold certain personal information about him or her, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or any Subsidiary, details of all RSUs or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, managing and administering the Plan.
The Participant also understands that providing the Company with Data is necessary for the performance of the Plan and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect the Participant’s ability to participate in the Plan. The Controller of personal data processing is Moneygram International, Inc., with registered offices at North 2828 Harwood Street, Floor 15, Dallas, Texas, 75201, United States of America, and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is MoneyGram Payment Systems Italy srl and MoneyGram International Limited, with registered offices at Via Bombay, 5, 00144 Roma.
The Participant understands that Data will not be publicized, but it may be transferred to banks, other financial institutions, or brokers involved in the management and administration of the Plan. The Participant further understands that the Company and/or any Subsidiary will transfer Data among themselves as necessary for the purpose of implementing,
administering or managing the Participant’s participation in the Plan, and that the Company and/or any Subsidiary may each further transfer Data to third parties assisting the Company in the implementation, administration and management of the Plan, including any requisite transfer of Data to a broker or other third party with whom the Participant may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing the Participant’s participation in the Plan. The Participant understands that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.
The Participant understands that data-processing relating to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.
The processing activity, including communication, the transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require the Participant’s consent thereto as the processing is necessary to performance of contractual obligations related to implementation, administration, and management of the Plan. The Participant understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003, he or she has the right to, including but not limited to, access, delete, update, correct, or terminate, for legitimate reason, the Data processing. Furthermore, the Participant is aware that Data will not be used for direct marketing purposes. In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting the Participant’s local human resources representative.
Plan Document Acknowledgment
. By accepting the grant of the RSUs, the Participant acknowledges that he or she has received a copy of the Plan and the Agreement and has reviewed the Plan and the Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Plan and the Agreement, including this Appendix.
The Participant further acknowledges that he or she has read and specifically and expressly approves the following sections of the Agreement and this Appendix: “Vesting;” “Restrictions on Transfer;” “Effect of Involuntary Termination Following Change in Control;” “Effect of Termination of Employment;” “Forfeiture and Prepayment Provisions;” “Responsibility for Taxes;” “Nature of Grant;” “Governing Law; Arbitration;” “Participant Undertaking;” “Language;” “Waiver;” “Insider Trading Restrictions/Market Abuse Laws;” and “Data Privacy” section above.
Exchange Control Notification.
Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and Shares) which may generate income taxable in Italy are required to report these assets on their annual tax returns for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.
Mexico
Terms and Conditions
.
Acknowledgement of the Grant Agreement.
By accepting the RSUs, the Participant acknowledges that he or she has received a copy of the Plan and the Agreement, including this Appendix, which he or she has reviewed. The Participant further acknowledges that he or she accepts all the provisions of the Plan and the Agreement, including this Appendix. The Participant also acknowledges that he or she has read and specifically and expressly approves the terms and conditions set forth in the “Nature of Grant” section of the Agreement, which clearly provide as follows:
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(1)
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The Participant's participation in the Plan does not constitute an acquired right;
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(2)
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The Plan and the Participant's participation in it are offered by the Company on a wholly discretionary basis;
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(3)
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The Participant's participation in the Plan is voluntary; and
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(4)
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The Company and its Subsidiaries or Affiliates are not responsible for any decrease in the value of any Shares acquired under the Plan.
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Labor Law Acknowledgement and Policy Statement.
By accepting the RSUs, the Participant acknowledges that the Company, with registered offices at 2828 North Harwood Street, 15
th
Floor, Dallas, TX 75201, U.S.A., is solely responsible for the administration of the Plan. The Participant further acknowledges that his or her participation in the Plan, the grant of RSUs and any acquisition of Shares under the Plan do not constitute an employment relationship between the Participant and the Company because the Participant is participating in the Plan on a wholly commercial basis. Based on the foregoing, the Participant expressly acknowledges that the Plan and the benefits that he or she may derive from participation in the Plan do not establish any rights between the Participant and his or her Employer and do not form part of the employment conditions and/or benefits provided by his or her Employer, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of the Participant's employment.
The Participant further understands that his or her participation in the Plan is the result of a unilateral and discretionary decision of the Company and, therefore, the Company reserves the absolute right to amend and/or discontinue the Participant's participation in the Plan at any time, without any liability to the Participant.
Finally, the Participant hereby declares that he or she does not reserve to him- or herself any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and that he or she therefore grants a full and broad release to the Company, its Subsidiaries, Affiliates, branches, representation offices, shareholders, officers, agents or legal representatives, with respect to any claim that may arise.
Spanish Translation
Reconocimiento del Convenio de Concesión. Al aceptar las Unidades de Acciones Restringidas ("Unidades"), el Beneficiario reconoce que ha recibido y revisado una copia del Plan y del Convenio de Concesión, incluyendo este Apéndice. El Beneficiario reconoce y acepta todas las disposiciones del Plan y del Convenio de Concesión, incluyendo el apéndice. El Beneficiario también reconoce que ha leído y aprobado de forma expresa los términos y condiciones establecidos en la sección: “Nature of Grant” del Convenio de Concesión, que claramente establece lo siguiente:
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(1)
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La participación del Beneficiario en el Plan no constituye un derecho adquirido;
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(2)
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El Plan y la participación del Beneficiario en él es ofrecido por la Compañía de manera completamente discrecional;
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(3)
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La participación del Beneficiario en el Plan es voluntaria; y
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(4)
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La Compañía y sus Subsidiarias o afiliadas no son responsables por ninguna disminución en el valor de las Acciones adquiridas en virtud del Plan.
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Reconocimiento del Derecho Laboral y Declaración de la Política. Al aceptar el otorgamiento de las Unidades, el Beneficiario reconoce que la Compañía, con domicilio social en North Harwood Street, 15th Floor, Dallas, TX 75201, E.U.A., es la única responsable de la administración del Plan. Además, el Beneficiario reconoce que su participación en el Plan, la concesión de las Unidades y cualquier adquisición de Acciones en virtud del Plan no constituyen una relación laboral entre el Beneficiario y la Compañía, en virtud de que el Beneficiario está participando en el Plan sobre una base totalmente comercial. Por lo anterior, el Beneficiario expresamente reconoce que el Plan y los beneficios que puedan derivarse de su participación no establecen ningún derecho entre el Beneficiario y su empleador y que no forman parte de las condiciones de trabajo y/o beneficios otorgados por su empleador, y cualquier modificación del Plan o la terminación no constituirá un cambio o modificación de los términos y condiciones en el empleo del Beneficiario.
Además, el Beneficiario comprende que su participación en el Plan es el resultado de una decisión discrecional y unilateral de la Compañía, por lo que la misma se reserva el derecho absoluto de modificar y/o suspender la participación del Beneficiario en el Plan en cualquier momento, sin responsabilidad alguna del Beneficiario.
Finalmente, el Beneficiario manifiesta que no se reserva acción o derecho alguno que origine una demanda en contra de la Compañía, por cualquier indemnización o daño relacionado con las disposiciones del Plan o de los beneficios otorgados en el mismo, y en consecuencia el Beneficiario libera de la manera más amplia y total de responsabilidad a la Compañía, sus subsidiarias, afiliadas, sucursales, oficinas de representación, sus accionistas, directores, agentes y representantes legales con respecto a cualquier demanda que pudiera surgir.
Morocco
Terms and Conditions
.
Settlement of RSUs.
The following provision replaces Section 3 of the Agreement:
As provided in Section 2(y) of the Plan, any RSUs that vest shall be paid to the Participant solely by means of a cash payment equal in value to the Fair Market Value of the underlying Shares on, or as soon as practicable after, the date the RSUs vest in accordance with Section 2 above (or, if sooner, Section 5 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting. The cash payment shall be paid to the Participant in local currency through his or her payroll in India. The Participant has no right to receive Shares.
Netherlands
There are no country-specific provisions.
Peru
Notifications
.
Securities Law Notification.
The offer of the RSUs is considered a private offering in Peru and is therefore not subject to registration in Peru.
Russia
Terms and Conditions
.
Termination of Employment.
If the Participant continues to hold Shares acquired at vesting of RSUs after an involuntary termination of employment, the Participant will not be eligible to receive unemployment benefits in Russia.
Data Privacy.
The following provisions supplement the Data Privacy provision in Section 8(h) of the Agreement and to the extent inconsistent, the below language for Russia supersedes Section 8(h) of the Agreement:
The Participants understands and agrees that the Company may require the Participant to complete and return a Consent to Processing of Personal Data form (the “Consent”) to the Company. If a Consent is required by the Company but the Participant fails to provide such Consent to the Company, the Participant understands and agrees that the Company will not be able to administer or maintain the RSUs or any other awards. Therefore, the Participant understands that refusing to complete any required Consent or withdrawing his or her consent may affect the Participant’s ability to participate in the Plan. For more information on any required Consent or withdrawal of consent, the Participant understands he or she may contact the U.S. human resources representative.
Securities Law Confirmation.
By accepting the RSUs, the Participant acknowledges that he or she understands and agrees that any Shares to be issued upon vesting of the RSUs shall be delivered to the Participant through a brokerage account in the United States. The Participant may hold the Shares in his or her brokerage account in the United States; however, in no event will Shares issued to the Participant under the Plan be delivered to the Participant in Russia. The Participant acknowledges that he or she is not aware of any material nonpublic information with respect to the Company or any securities of the Company as of the date of this Appendix.
Unit Sale Restriction.
The Participant agrees that the Company is authorized, at its discretion, to instruct its designated U.S. broker to assist with the sale of the Participant’s Shares issued upon the vesting of the RSUs (on the Participant’s behalf pursuant to this authorization) should the Company determine that such sale is necessary or advisable under local law. The Participant expressly authorizes the Company’s designated U.S. broker to complete the sale of such Shares and acknowledges that the Company’s designated U.S. broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay the Participant the cash proceeds from the sale of the Shares, less any brokerage fees, commissions or Tax-Related Items.
U.S. Transaction.
The Participant understands that his or her acceptance of the grant of RSUs results in a contract between the Participant and the Company completed in the United States and that the Agreement is governed by the laws of the State of Texas, without giving effect to the conflict of law principles thereof.
Notifications
.
Securities Law Notification.
The Participant acknowledges that the RSUs, the Agreement (including this Appendix), the Plan and all other materials the Participant may receive regarding the RSUs and participation in the Plan do not constitute advertising or an offering of securities in Russia. Absent any requirement under local law, the issuance of Shares under the Plan has not and will not be registered in Russia and, therefore, the Shares described in any Plan documents may not be offered or placed in public circulation in Russia. The Participant acknowledges that he or she may hold Shares issued upon vesting of the RSUs in the Participant’s account with the Company’s third party stock administrator in the United States. However, in no event with the Shares issued to the Participant be delivered to the Participant in Russia. Further, the Participant is not permitted to sell Shares directly to a Russian legal entity or resident.
Exchange Control Notification.
Under current exchange control regulations, within a reasonably short time after sale of the Shares acquired under the Plan, the Participant must repatriate the sale proceeds to Russia. Such sale proceeds must be credited initially to the Participant through a foreign currency account at an authorized bank in Russia. After the sale proceeds are initially received in Russia, the funds may be further remitted to foreign banks, subject to the following limitations: (i) the foreign account may be opened only for individuals; (ii) the foreign account may not be used for business activities; (iii) the Russian tax authorities must be given notice about the opening/closing of each foreign account within one month of the account opening/closing; and (iv) the Russian tax authorities must be given notice of the account balances of such foreign accounts as of the beginning of each calendar year.
The Participant should consult his or her personal advisor before remitting any sale proceeds to Russia, as significant penalties may apply in the case of non-compliance with exchange control requirement and exchange control requirements are subject to change at any time, often without notice.
South Africa
Terms and Conditions
.
Responsibility for Taxes.
The following provision supplements Section 8(d) of the Agreement:
By accepting the RSUs, the Participant agrees to immediately notify the Employer of the amount of any gain realized upon vesting of the RSUs. If the Participant fails to advise the Employer of the gain realized upon vesting of the RSUs, then he or she may be liable for a fine. The Participant will be responsible for paying the difference between the actual Tax-Related Items liability and the amount withheld.
Notifications
.
Exchange Control Notification.
The Participant should consult his or her personal advisor to ensure compliance with applicable exchange control regulations in South Africa, as such regulations are subject to frequent change. The Participant is solely responsible for complying with all exchange control laws in South Africa, and neither the Company nor the Employer will be liable for any fines or penalties resulting from the Participant’s failure to comply with South African exchange control laws.
Spain
Terms and Conditions
.
Nature of Grant.
The following section supplements Section 8(f) of the Agreement:
In accepting the grant of the RSUs, the Participant acknowledges that he or she consents to participation in the Plan and has received a copy of the Plan.
The Participant understands that the Company, in its sole discretion, has unilaterally and gratuitously decided to grant the RSUs under the Plan to individuals who may be employees of the Company or a Subsidiary throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or a Subsidiary on an ongoing basis except to the extent provided in the Plan and Agreement. Consequently, the Participant understands that the RSUs are granted on the assumption and condition that the RSUs and the Shares issued upon settlement shall not become a part of any employment contract (either with the Company or a Subsidiary) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, the Participant understands that the grant of the RSUs would not be made to the Participant but for the
assumptions and conditions referred to above; thus, the Participant acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of the RSUs shall be null and void.
The Participant understands and agrees that, as a condition of the grant of the RSUs, the termination of the Participant’s continuous employment for any reason (including the reasons listed below) will cause the RSUs to cease vesting immediately as of the date the Participant is no longer actively providing services as explained in Section 6(d) of the Agreement. In particular, the Participant understands and agrees that any unvested portion of the RSUs as of the date the Participant is no longer actively providing services will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of termination of the Participant’s employment by reason of, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with Cause, disciplinary dismissal adjudged or recognized to be without Cause, individual or collective dismissal adjudged or recognized to be without Cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without Cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. The Participant acknowledges that he or she has read and specifically accepts the conditions referred to in Sections 2 and 6 of the Agreement.
The Participant understands that this grant would not be made but for the assumptions and conditions referred to above; thus, the Participant understands, acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then this RSU award shall be null and void.
Notifications
.
Exchange Control Notification.
The acquisition, ownership and sale of Shares under the Plan must be declared for statistical purposes to the Spanish Dirección General de Comercio e Inversiones (the “
DGCI
”), the Bureau for Commerce and Investments, which is a department of the Ministry of Economy and Competitiveness. Generally, the declaration must be made each January for Shares owned as of December 31 of the prior year; however, if the amount of Shares acquired or sold exceeds €1,502,530 (or if the Participant holds 10% or more of the share capital of the Company or such other amount that would entitle the Participant to join the Company’s board of directors), the declaration must be filed also within one month of the acquisition or sale, as applicable.
Foreign Asset Reporting Notification.
The Participant is required to declare electronically the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the Shares held in such accounts if the value of the transactions during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €100,000,000.
Further, to the extent that the Participant holds Shares and/or has bank accounts outside Spain with a value in excess of €50,000 (for each type of asset) as of December 31, the Participant will be required to report information on such assets on his or her tax return for such year. After such Shares and/or accounts are initially reported, the reporting obligation will apply for subsequent years only if the value of any previously-reported Shares or accounts increases by more than €20,000.
Securities Law Notification
. No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory with respect to the RSU. No public offering prospectus has been, nor will it be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission) (“
CNMV
”). Neither the Plan nor the Agreement constitute a public offering prospectus and they have not been, nor will they be, registered with the CNMV.
Sweden
There are no country-specific provisions.
Ukraine
Terms and Conditions
.
Settlement of RSUs.
The following provision replaces Section 3 of the Agreement:
As provided in Section 2(y) of the Plan, any RSUs that vest shall be paid to the Participant solely by means of a cash payment equal in value to the Fair Market Value of the underlying Shares on, or as soon as practicable after, the date the RSUs vest in accordance with Section 2 above (or, if sooner, Section 5 below), but in any event, no later than March 15 of the calendar year
following the calendar year of vesting. The cash payment shall be paid to the Participant in local currency through his or her payroll in the Ukraine. The Participant has no right to receive Shares.
United Arab Emirates
Notifications
.
Securities Law Notification.
The Agreement, including this Appendix, the Plan, and other incidental communication materials are intended for distribution only to employees of the Company and its Subsidiaries for the purposes of an employee compensation or reward scheme. The Dubai Airport Free Zone, Emirates Securities and Commodities Authority and/or the Central Bank has no responsibility for reviewing or verifying any documents in connection with the Award. Neither the Ministry of Economy nor the Dubai Department of Economic Development have approved this statement nor taken steps to verify the information set out in it, and have no responsibility for it.
Further, the Shares underlying the RSUs may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If the Participant is in any doubt about any of the contents of the Agreement, including this Appendix, or the Plan, the Participant should obtain independent professional advice.
United Kingdom
Terms and Conditions
.
Responsibility for Taxes.
This section supplements Section 8(d) of the Agreement:
If payment or withholding of the income tax liability is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “
Due Date
”), the amount of any uncollected Tax-Related Items shall constitute a loan owed by the Participant to the Employer, effective as of the Due Date. The Participant agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“
HMRC
”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 8(d) of the Agreement.
Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the Participant shall not be eligible for a loan from the Company to cover the income tax due. In the event that the Participant is a director or executive officer of the Company and income tax is not collected from or paid by the Participant by the Due Date, the amount of any uncollected Tax-Related Items may constitute a benefit to him/her on which additional income tax and national insurance contributions (“
NICs
”) may be payable. The Participant will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit, which the Company or the Employer may recover at any time thereafter by any of the means referred to in Section 8(d) of the Agreement
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
GLOBAL STOCK APPRECIATION RIGHT AGREEMENT
This Global Stock Appreciation Right Agreement (this “
Agreement
”) is made effective as of [_______ __], 20[__] (the “
Grant Date
”) between MoneyGram International, Inc., a Delaware corporation (the “
Company
”), and [_________________] (the “
Holder
”). Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Company’s 2005 Omnibus Incentive Plan (the “
Plan
”).
WHEREAS, in connection with the Holder’s employment with the Company, the Company desires to grant to the Holder Stock Appreciation Rights (“
SARs
”), which entitle the Holder to any per share appreciation between the higher of $12.00 or the fair market value of the Company’s Common Stock (the “
Common Stock
”) on the Grant Date (the “
SARs Price
”), subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 9 of this Agreement and the closing sale price of the Company’s Common Stock on the exercise date of the SAR on the NASDAQ Global Select Market, subject to the terms and conditions of this Agreement, including any country-specific appendix thereto (the “
Appendix
”), and the Plan;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Grant of SARs.
Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants to the Holder on the Grant Date, SARs equivalent to [__________]
shares of Common Stock.
2.
Term of SARs and Exercisability.
(a)
The term of the SARs shall be for a period of ten years from the Grant Date, terminating at the close of business on [_______ __], 20[__] (the “
Expiration Date
”) or such shorter period as is prescribed in Sections 4 and 5 of this Agreement.
(b)
Subject to the provisions of Sections 3, 4 and 5 of this Agreement, the SARs shall vest and become exercisable as follows, provided the Holder remains continuously employed by the Company or a Subsidiary from the Grant Date through each anniversary (each a “Vesting Date”):
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|
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|
|
Vesting Date
|
|
Aggregate Percentage Vested
|
|
1st Anniversary of Grant Date
|
|
33.3
|
%
|
|
2nd Anniversary of Grant Date
|
|
33.3
|
%
|
|
3rd Anniversary of Grant Date
|
|
33.4
|
%
|
There shall be no partial vesting during any period. Except as set forth in Section 4 hereof, if the Holder’s employment with the Company or any of its Subsidiaries is terminated on or prior to the third anniversary of the Grant Date, the unvested portion of the SARs shall be forfeited as described in Section 4 hereof.
(c)
For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
3.
Effect of Change in Control.
Notwithstanding the vesting provisions contained in Section 2 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined below) the following provisions shall apply:
(a)
If at the time of the Change in Control, the per share Fair Market Value of the Common Stock does not exceed the per share SARs Price, then the SARs, whether vested or unvested, shall immediately terminate in full and be of no further force or effect; and
(b)
If at the time of the Change in Control, the per share Fair Market Value of the Common Stock exceeds the SARs Price, then the Committee, in its sole discretion, may:
(i)
provide the Holder a reasonable amount of time (such period of time to be determined by the Committee in its sole discretion) to exercise the vested and unexercised portion of the SARs that is outstanding at the time
of the Change in Control and, if not exercised within such period, have the SARs terminate in full and be of no further force or effect with respect to any unexercised portion of such SARs (and the unvested portion of the SARs shall be forfeited);
(ii)
provide for the termination of the SARs in exchange for payment to the Holder of the excess of (x) the aggregate Fair Market Value of the Common Stock issuable pursuant to the vested portion of the SARs that is outstanding and unexercised at the time of the Change in Control over (y) the aggregate SARs Price for such vested portion of the SARs (and the unvested portion of the appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 9 shall be forfeited); or
(iii)
if the Change in Control involves the merger or consolidation of the Company with or into another entity, provide for the substitution by the surviving entity or its direct or indirect parent of awards with substantially the same terms as the SARs in accordance with Section 409A of the United States Internal Revenue Code of 1986, as amended, and Section 4(c) of the Plan.
(c)
Notwithstanding the other provisions of this Section 3, if a Change in Control occurs, and after giving effect thereto the Holder’s employment is terminated by the Company or any of its Subsidiaries without Cause (as defined in Section 4 below) or the Holder terminates his or her employment with “Good Reason” (as such term is defined below) in each case within twelve (12) months following the occurrence of such Change in Control, then any portion of the SARs outstanding as of the termination of employment but not previously vested shall automatically accelerate and become vested.
“
Good Reason
” with respect to the Holder shall mean following a Change in Control: (A) a material reduction in the Holder’s position or responsibilities from the Holder’s position or responsibilities in effect immediately prior to such Change in Control, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith; (B) a material reduction in the Holder’s base salary or target bonus opportunity, if any, as in effect immediately prior to such Change in Control, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company, or (C) the reassignment, without the Holder’s consent, of the Holder’s place of work to a location more than 50 miles from the Holder’s place of work immediately prior to the Change in Control; provided that none of the events described in clauses (A), (B) and (C) shall constitute Good Reason hereunder unless (x) the Holder shall have given written notice to the Company of the Holder’s intent to terminate his or her employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice.
(d)
For purposes of this Agreement, notwithstanding the definition of Change in Control in any other agreement or plan that may be applicable to the Holder, “
Change in Control
” shall mean (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets, (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934 (the “
Exchange Act
”)), or (iii) the merger, consolidation, reorganization, recapitalization or share exchange of the Company with another entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders of the voting power of the outstanding securities of the Company, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold less than 50% in voting power of the outstanding securities of the Company or the surviving entity or resulting entity, as the case may be, immediately following such transaction;
provided
,
however
, that the issuance of securities by the Company shall not, in any event, constitute a Change in Control, and for the avoidance of doubt a sale or other transfer or series of transfers of all or any portion of the securities of the Company held by the Investors and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in a entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting power of the outstanding securities of the Company.
For purposes hereof, “
Investors
” shall mean the “Investors” as defined in that certain Amended and Restated Purchase Agreement, dated March 17, 2008, by and between the Company and the other parties thereto, and their respective affiliates (not including the Company).
4.
Effect of Termination of Employment.
If the Holder’s employment is terminated, the following shall apply:
(a)
if the Holder’s employment with the Company or any of its Subsidiaries is terminated for Cause (as defined below), any portion of the SARs that has not been exercised on the date of the Holder’s termination of employment, whether vested or unvested, shall be immediately forfeited;
(b)
if the Holder’s employment with the Company or any of its Subsidiaries is terminated by the Company without Cause or the Holder terminates his employment with Good Reason, any portion of the SARs that has not vested on the date of the Holder’s termination of employment shall be forfeited, and any portion of the SARs that has vested
may be exercised until the earlier of (i) the Expiration Date and (ii) the date that is one hundred eighty (180) days after the date of the Holder’s termination of employment;
(c)
if the Holder resigns without Good Reason or for any reason other than death or Disability (as defined below), any portion of the SARs that has not vested on the date of the Holder’s termination of employment shall be immediately forfeited, and any portion of the SARs that has vested may be exercised until the earlier of (i) the Expiration Date, or (ii) the date that is thirty (30) days after the date of the Holder’s termination of employment;
(d)
if the Holder’s employment with the Company or any of its Subsidiaries is terminated due to a Disability, any portion of the SARs that has not vested on the date of the Holder’s termination of employment and that does not vest pursuant to Section 4(f) shall be forfeited, and any portion of the SARs that has vested, or that vests pursuant to Section 4(f) below, may be exercised until the earlier of (i) the Expiration Date and (ii) the date that is twelve (12) months after the later of the date of the Holder’s termination due to Disability or the date of any subsequent vesting pursuant to Section 4(f) below;
(e)
if the Holder’s employment with the Company or any of its Subsidiaries is terminated due to death, any portion of the SARs that has not vested on the date of the Holder’s termination of employment and that does not vest pursuant to Section 4(f) shall be forfeited, and any portion of the SARs that has vested, or that vests pursuant to Section 4(f) below, may be exercised by the Holder’s personal representative or the administrators of the Holder’s estate or by any Person or Persons to whom the SARs have been transferred by will or the applicable laws of descent and distribution until the earlier of (i) the Expiration Date and (ii) the date that is twelve (12) months after the later of the date of the Holder’s death or the date of any subsequent vesting pursuant to Section 4(f) below; and
(f)
if the Holder’s employment with the Company or any of its Subsidiaries is terminated due to a Disability (as defined below) or death, then (x) upon such termination, the portion of such SARs that otherwise, absent such termination, would vest during the 12-month period following the date of such termination shall vest on the date of termination. The number of SARs deemed exercisable upon termination shall be calculated after giving effect to the acceleration of vesting specified in this clause (f).
For purposes of this Agreement, the Holder shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Holder resides and/or is employed or the terms of the Holder’s employment or service agreement, and whether or not later found to be invalid) as of the date that the Holder is no longer actively providing services and will not be extended by any notice period mandated under an employment law or practice in the country where the Holder resides and/or is employed, even if otherwise applicable to the Holder’s employment benefits (
e.g.
, continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Holder resides and/or is employed or the terms of the Holder’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Holder is no longer continuously employed for purposes of the SARs. Furthermore, in the event of termination of the Holder’s continuous employment, the Holder’s right to vest in or exercise the SARs after termination of employment will be measured by the date the Holder is no longer continuously employed.
For purposes of this Agreement, “
Cause
” shall mean (A) the Holder’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the person or persons to whom the Holder reports or the Board that are within the Holder’s control and consistent with the Holder’s status with the Company or its Subsidiary and his or her duties and responsibilities hereunder (except for a failure that is attributable to the Holder’s illness, injury or Disability) for a period of ten (10) days following written notice by the Company or its Subsidiary to the Holder of such failure, (B) fraud or material dishonesty in the performance of the Holder’s duties hereunder, (C) an act or acts on the Holder’s part constituting (x) a felony under the laws of the United States or any state thereof, (y) a misdemeanor involving moral turpitude or (z) a material violation of the securities laws of the United States or any state thereof, (D) an indictment of the Holder for a felony under the laws of the United States or any state thereof, (E) the Holder’s willful misconduct or gross negligence in connection with the Holder’s duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as determined in good faith by the Board, (F) the Holder’s material breach of the Company’s Code of Conduct policy or any other code of conduct in effect from time to time to the extent applicable to the Holder, and which breach could reasonably be expected to have a material adverse effect on the Company as determined in good faith by the Board, or (G) the Holder’s breach of the Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement (or any similar agreement the Holder received from the Company) (the “
Post-Employment Restriction Agreement
”) which breach has an adverse effect on the Company or its Subsidiaries.
For purposes of this Agreement, “
Disability
” shall mean that the Holder becomes physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform his or her duties. Any question as to the existence of the Disability of the Holder for purposes of this Agreement as to which the Holder and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Holder and the Company. If the Holder and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third
who shall make such determination in writing. The determination of Disability made in writing to the Company and the Holder shall be final and conclusive for all purposes of the Agreement
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5.
|
Forfeiture and Repayment Provisions.
|
(a)
Failure to properly execute the Agreement (and each other document required to be executed by the Holder in connection with the Holder’s receipt of the SARs) in a timely manner following the Grant Date may result in the forfeiture of the SARs, as determined in the sole discretion of the Company.
(b)
The right to exercise the SARs shall be conditional upon the fact that the Holder has read and understood the forfeiture and repayment provisions set forth in this Section 5, that the Holder has not engaged in any misconduct or acts contrary to the Company as described below, and that the Holder has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c)
The Company is authorized to suspend or terminate the SARs held by the Holder prior to or after termination of employment if the Holder engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement. If, at any time during the applicable restriction period described in the Post-Employment Restriction Agreement, the Holder engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement, then any gain (without regard to tax effects) realized by the Holder from the exercise of the SARs, in whole or in part, shall be paid by the Holder to the Company. The Holder consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Holder to the extent of the amounts the Holder owes the Company hereunder.
(d)
Misconduct.
(i)
The Company is authorized to suspend or terminate the SARs held by the Holder prior to or after termination of employment if the Company reasonably determines that during the Holder’s employment with the Company or any of its Subsidiaries:
(1)
The Holder knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Holder or of the Code of Conduct program or similar program of the Company; or
(2)
The Holder was aware of and failed to report, as required by any code of ethics of the Company applicable to the Holder or by the Code of Conduct program or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Holder or of Code of Conduct program or similar program of the Company.
(ii)
If, at any time after the Holder exercises the SARs, in whole or in part, the Company reasonably determines that the provisions of Section 5(c) apply to the Holder, then any gain (without regard to tax effects) realized by the Holder from such exercise shall be paid by the Holder to the Company. The Holder consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Holder to the extent of the amounts the Holder owes the Company under this Section 5.
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6.
|
Method of Exercising SARs; Settlement of SARs.
|
(a)
Subject to the terms and conditions of this Agreement, the Holder may exercise the SARs by following the procedures established by the Company from time to time. In addition, the Holder may exercise the SARs by written notice to the Company as provided in Section 9(k) of this Agreement that states (i) the Holder’s election to exercise the SARs, (ii) the Grant Date of the SARs, (iii) the SARs equivalent to the number of shares as to which the SARs are being exercised, and (iv) the manner of payment for any Tax-Related Items (as defined in Section 8 below) withholding amount. The notice shall be signed by the Holder or the Person or Persons exercising the SARs. The notice shall be accompanied by payment in full of the Tax-Related Items withholding for the SARs equivalent to the number of shares designated in the notice. To the extent that the SARs are exercised after the Holder’s death, the notice of exercise shall also be accompanied by appropriate proof of the right of such Person or Persons to exercise the SARs.
(b)
Upon any exercise of the SARs with respect to one share, the Holder shall receive from the Company an amount which is equal to the excess of the closing sale price of the Company’s Common Stock at the time of exercise on the NASDAQ Global Select Market as reported in the consolidated transaction reporting system on such date, or if such Market is not open for trading on such date, on the most recent preceding date when such Market is open for trading, over the SARs price. Such amount will be paid to the Holder, in cash, subject to satisfaction of all Tax-Related Items (as defined in Section 8 hereto).
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7.
|
Forfeiture and Repayment Provisions.
|
(a)
Failure to properly execute the Agreement (and each other document required to be executed by the Holder in connection with the Holder’s receipt of the SARs) in a timely manner following the Grant Date may result in the forfeiture of the SARs, as determined in the sole discretion of the Company.
(b)
The right to exercise the SARs shall be conditional upon the fact that the Holder has read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Holder has not engaged in any
misconduct or acts contrary to the Company as described below, and that the Holder has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c)
The Company is authorized to suspend or terminate the SARs and any other outstanding awards held by the Holder prior to or after termination of employment if the Holder engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement. If, at any time during the applicable restriction period described in the Post-Employment Restriction Agreement, the Holder engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement, then any gain (without regard to tax effects) realized by the Holder from the exercise of the SARs, in whole or in part, shall be paid by the Holder to the Company. The Holder consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Holder to the extent of the amounts the Holder owes the Company hereunder.
(d)
Misconduct.
(i)
The Company is authorized to suspend or terminate the SARs and any other outstanding awards held by the Holder prior to or after termination of employment if the Company reasonably determines that during the Holder’s employment with the Company or any of its Subsidiaries:
(1)
The Holder knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Holder or of the Code of Conduct program or similar program of the Company; or
(2)
The Optionee was aware of and failed to report, as required by any code of ethics of the Company applicable to the Holder or by the Code of Conduct program or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Holder or of the Code of Conduct program or similar program of the Company.
(ii)
If, at any time after the Holder exercises the SARs, in whole or in part, the Company reasonably determines that the provisions of Section 7(c) applies to the holder, then any gain (without regard to tax effects) realized by the Holder from such exercise shall be paid by the Holder to the Company. The Holder consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Holder to the extent of the amounts the Holder owes the Company under this Section 7.
8.
Responsibility for Taxes
.
(a)
Regardless of any action the Company or the Holder’s employer (the “
Employer
”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax‑related items related to the Holder’s participation in the Plan and legally applicable to the Holder (“
Tax-Related Items
”), the Holder acknowledges that the ultimate liability for all Tax-Related Items is and remains the Holder’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Holder further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the SARs, including, but not limited to, the grant, vesting or exercise of the SARs; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the SARs to reduce or eliminate the Holder’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Holder has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Holder acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b)
Prior to the relevant taxable or tax withholding event, as applicable, the Holder will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Holder authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Holder’s wages or other cash compensation paid to the Holder by the Company and/or the Employer; or (ii) withholding from proceeds of the cash acquired at exercise of the SARs.
9.
Adjustments.
In the event that the Company engages in a transaction such that any dividend or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares or other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company or other similar corporate transaction or event affects the shares covered by the SARs, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of the SARs (including, without limitation, the number and kind of shares underlying the SARs and the SARs Price) shall be adjusted as set forth in Section 4(c) of the Plan.
Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of the SARs (including, without limitation, the number and kind of shares underlying the SARs and the SARs Price) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
10.
General Provisions.
(a)
Interpretations
. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon the Holder’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(b)
No Rights as a Shareholder
. Neither the Holder nor the Holder’s legal representatives shall have any of the rights and privileges of a shareholder of the Company with respect to the shares of Common Stock subject to the SARs.
(c)
Nature of Grant
. In accepting the SARs, the Holder acknowledges, understands and agrees that:
(i)
the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time;
(ii)
the grant of the SARs is voluntary and occasional and does not create any contractual or other right to receive future grants of SARs, or benefits in lieu of SARs, even if SARs have been granted repeatedly in the past;
(iii)
all decisions with respect to future SARs grants, if any, will be at the sole discretion of the Company;
(iv)
the Holder’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Holder’s employment or service relationship (if any) at any time;
(v)
the Holder is voluntarily participating in the Plan;
(vi)
the SARs acquired under the Plan are not intended to replace any pension rights or compensation;
(vii)
the SARs are not part of normal or expected compensation or salary for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(viii)
the future value of the shares of Common Stock underlying the SARs is unknown, indeterminable and cannot be predicted with certainty;
(ix)
if the underlying shares of Common Stock do not increase in value, the SARs will have no value;
(x)
no claim or entitlement to compensation or damages shall arise from forfeiture of the SARs resulting from the Holder’s termination of employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the terms of the Holder’s employment or service agreement, if any, or of any employment law in the country where the Holder resides and/or is employed, even if otherwise applicable to the Holder’s employment benefits from the Employer) and in consideration of the grant of the SARs to which the Holder is otherwise not entitled, the Holder irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Holder shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(xi)
the following provisions apply only to the Holders providing services outside the United States, as determined by the Company:
(A)
the SARs are extraordinary items that are outside the scope of the Holder’s employment or service contract, if any;
(B)
the SARs are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company
,
the Employer, or any Subsidiary; and
(C)
the SARs grant and the Holder’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary.
(d)
No Advice Regarding Grant.
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Holder’s participation in the Plan. The
Holder is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
(e)
Data Privacy
.
(i)
The Holder hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Holder’s personal data as described in this Agreement and any other SARs grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Holder’s participation in the Plan.
(ii)
The Holder understands that the Company and the Employer may hold certain personal information about the Holder, including, but not limited to, the Holder’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all SARs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Holder’s favor, for the exclusive purpose of implementing, administering and managing the Plan (“
Data
”).
(iii)
The Holder understands that Data will be transferred to E*Trade Financial Services, or such other stock plan service provider as may be selected by the Company in the future or other stock plan service provider that is selected by the Holder to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Holder understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than the Holder’s country. If the Holder resides outside the United States, the Holder understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Holder’s local human resources representative. The Holder authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purpose of implementing, administering and managing his or her participation in the Plan. If the Holder resides outside the United States, the Holder understands that Data will be held only as long as is necessary to implement, administer and manage the Holder’s participation in the Plan. The Holder understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Holder understands that he or she is providing the consents herein on a purely voluntary basis. If the Holder does not consent or if the Holder later seeks to revoke his or her consent, his or her status as an employee and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing his or her consent is that the Company would not be able to grant SARs or other equity awards or administer or maintain such Awards. Therefore, the Holder understands that refusing or withdrawing his or her consent may affect the Holder’s ability to participate in the Plan. For more information on the consequences of the Holder’s refusal to consent or withdrawal of consent, the Holder understands that he or she may contact his or her local human resources representative.
(f)
SARs Not Transferable
. Except as otherwise provided by the Plan or by the Committee, the SARs shall not be transferable other than by will or by the laws of descent and distribution and the SARs shall be exercisable during the Holder’s lifetime only by the Holder or by the Holder’s guardian or legal representative. The SARs may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the SARs shall be void and unenforceable against the Company or any Subsidiaries.
(g)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Holder.
(h)
Successors and Assigns; No Third Party Beneficiaries
. This Agreement shall inure to the benefit of and be binding upon the Company and the Holder and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Holder, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(i)
Headings
. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(j)
Governing Law; Arbitration
. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “
AAA
”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and
desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect of any thereof may be brought in any federal or state court of competent jurisdiction location within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(k)
Notices
. The Holder should send all written notices regarding this Agreement or the Plan to the Company at the following address:
MoneyGram International, Inc.
EVP, General Counsel & Secretary
2828 North Harwood Street, 15
th
Floor
Dallas, TX 75201
(l)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 9 hereof and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Holder’s consent, if such action would materially diminish any of the Holder’s rights under this Agreement. The Company reserves the right to impose other requirements on the SARs, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Holder resides pertaining to the grant or exercise of the SARs, or to facilitate the administration of the Plan.
(m)
Entire Agreement
. This Agreement, including the Appendix, and the Plan and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(n)
Severability
. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(o)
Holder Undertaking
. The Holder agrees to take such additional action and execute such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Holder or upon the SARs pursuant to the provisions of this Agreement.
(p)
Counterparts
. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(q)
Confidentiality
. The Holder agrees to maintain the confidentiality of the existence and terms of the SARs;
provided
,
however
, that the Holder may disclose, on a confidential basis, the existence and terms of the SARs to his or her spouse, accountant and legal counsel and to the extent required by law or legal process.
(r)
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Holder hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(s)
Language
. If the Holder has received this Agreement, or any other document related to the SARs and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(t)
Appendix
. The SARs shall be subject to any special provisions set forth in the Appendix for the Holder’s country of residence, if any. If the Holder relocates to one of the countries included in the Appendix during the life of the SARs, the special provisions for such country shall apply to the Holder, to the extent the Company determines that the application of such provisions is necessary or under the laws of the country in which the Holder resides pertaining to the grant or exercise of the SARs, or to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(u)
Waiver
. The Holder acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent by the Holder of any other Participant in the Plan.
* * * * * * * *
By signing below, the Holder accepts the SARs and the terms and conditions in this Agreement and the Plan.
MONEYGRAM INTERNATIONAL, INC.
By:
Title:
HOLDER
Signature:
Print Name: [____________________]
[THIS IS THE SIGNATURE PAGE TO THE GLOBAL STOCK APPRECIATION RIGHT AGREEMENT BETWEEN THE ABOVE-REFERENCED PARTIES]
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
APPENDIX To The
GLOBAL STOCK APPRECIATION RIGHT AGREEMENT
for HOLDERS Outside the U.S.
Terms and Conditions
.
This Appendix includes additional terms and conditions that govern the SARs granted to the Holder under the Plan if he/she resides in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Agreement.
If the Holder is a citizen or resident of a country other than the one in which he/she is currently working, transfers employment to another country after the Grant Date, or is considered a resident of another country for tax or exchange control purposes, the Company shall, at its discretion, determine the extent to which the terms and conditions contained herein shall apply to the Holder.
Notifications
.
This Appendix also includes information regarding exchange controls and certain other issues of which the Holder should be aware with respect to the Holder’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2014. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Holder not rely on the information in this Appendix as the only source of information relating to the consequences of the Holder’s participation in the Plan because the information may be out of date at the time that the Holder exercises the SARs.
In addition, the information contained herein is general in nature and may not apply to the Holder’s particular situation and the Company is not in a position to assure the Holder of any particular result. Accordingly, the Holder is advised to seek appropriate professional advice as to how the relevant laws in the Holder’s country may apply to his/her situation.
Finally, if the Holder is a citizen or resident of a country other than the one in which he/she is currently working, transfers employment to another country after the Grant Date, or is considered a resident of another country for tax or exchange control purposes, the information contained herein may not be applicable to the Holder. The Company reserves the right to settle the SARs in a different manner should the exchange control laws in the jurisdiction contained herein change in the future.
India
Terms and Conditions
.
Method of Exercising SARs; Settlement of SARs.
This provision supplements Section 6(b) of the Agreement:
The Holder understands and agrees that he or she shall receive the amounts equal to the excess of the closing price of the Company’s Common Stock on the NASDAQ Global Select Market at the time of exercise over the SARs Price and that such amounts shall be paid to him or her in local currency through his or her payroll in the India The Holder has no right to receive shares of the Company's Common Stock and no right to receive payment upon exercise of the SARs in U.S. dollars.
Morocco
Terms and Conditions
.
Method of Exercising SARs; Settlement of SARs.
This provision supplements Section 6(b) of the Agreement:
The Holder understands and agrees that he or she shall receive the amounts equal to the excess of the closing price of the Company’s Common Stock on the NASDAQ Global Select Market at the time of exercise over the SARs Price and that such
amounts shall be paid to him or her in local currency through his or her payroll in Morocco. The Holder has no right to receive shares of the Company's Common Stock and no right to receive payment upon exercise of the SARs in U.S. dollars.
Ukraine
Terms and Conditions
.
Method of Exercising SARs; Settlement of SARs.
This provision supplements Section 6(b) of the Agreement:
The Holder understands and agrees that he or she shall receive the amounts equal to the excess of the closing price of the Company’s Common Stock on the NASDAQ Global Select Market at the time of exercise over the SARs Price and that such amounts shall be paid to him or her in local currency through his or her payroll in the Ukraine. The Holder has no right to receive shares of the Company's Common Stock and no right to receive payment upon exercise of the SARs in U.S. dollars.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
GLOBAL performance-BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT
This
GLOBAL PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT
(the “
Agreement
”) is made by and between
MoneyGram International, Inc.
, a Delaware corporation (the “
Company
”), and _______________ (the “
Participant
”). The grant date of this award is __________ (the “
Grant Date
”).
The Company hereby grants to the Participant a performance-based Restricted Stock Unit (a “
Unit
”) award covering _____ shares (the “
Shares
”) of Common Stock, $.01 par value per share, of the Company according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “
Appendix
”), and in the Company’s 2005 Omnibus Incentive Plan (the “
Plan
”). Each Unit represents the right to receive one Share, subject to the vesting requirements of this Agreement and the terms of the Plan. The Units are granted under Section 6(c) and 6(d) of the Plan. The Units are subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(c) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
The Units granted under this Agreement to “covered employees” (within the meaning of Code Section 162(m) of the United States Internal Revenue Code of 1986, as amended (the “
Code
”), and the regulations promulgated thereunder) are intended to qualify as “qualified performance-based compensation” as described in Code Section 162(m)(4)(C) (“
Qualified Performance-Based Compensation
”).
(a)
Unless otherwise provided in this Agreement, the Units granted under this Agreement shall vest and become payable in Shares as of the Vesting Date (specified in the attached Schedule A, Section 6), (i) to the extent the performance goals (the “
Performance Goals
”) applicable to the performance period (the “
Performance Period
”) (specified in the attached Schedule A, Section 3) are attained, as determined accordance with Section 2(b) below and (ii) as long as the Participant remains continuously employed by the Company or a Subsidiary from the Grant Date through the Vesting Date (specified in the attached Schedule A, Section 6).
(b)
As soon as reasonably practicable after the completion of the Performance Period, the Committee shall determine the actual level of attainment of the Performance Goals;
provided
,
however
, that in the case of Units intended to constitute Qualified Performance-Based Compensation, the determination of the level of attainment of Performance Goals shall be certified in writing in accordance with the requirements of Code Section 162(m) by the Committee, which shall be comprised of “outside directors” within the meaning of Code Section 162(m). On the basis of the determination or certified level of attainment of the Performance Goal, the number of Units that are eligible to vest shall be calculated. In the case of Units that are intended to constitute Qualified Performance-Based Compensation, the Committee may not increase the number of Units that may be eligible to vest to a number that is greater than the number of Units determined in accordance with the foregoing sentence, but it retains the sole discretion to reduce the number of Units that would otherwise be eligible to vest based on the attainment level of the Performance Goals. For Units that are intended to constitute Qualified Performance-Based Compensation, the Performance Goal may not be adjusted except as specified in the attached Schedule A, Section 4 in accordance with the requirements of Code Section 162(m). For Units that are not intended to constitute Qualified Performance-Based Compensation, the Committee may make such adjustment to the Performance Goal as the Committee in its sole discretion deems appropriate.
(c)
The Participant shall have no rights to the Shares until the Units have vested. Prior to settlement, the Units represent an unfunded and unsecured obligation of the Company.
(d)
For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
3.
Settlement of Units
. Any Units that vest shall be paid to the Participant solely in whole Shares on, or as soon as practicable after, the date the Units vest in accordance with Section 2 above (or, if sooner, Section 5 or 6 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting.
4.
Restrictions on Transfer
.
(a)
Except as otherwise provided by the Plan or by the Committee, the Units shall not be transferable other than by will or by the laws of descent and distribution. The Units may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Units shall be void and unenforceable against the Company or any Subsidiaries.
(b)
None of the Shares acquired pursuant to the Unit award shall be assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
5.
Effect of Involuntary Termination Following Change in Control
. Notwithstanding the vesting provisions contained in Section 2 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined below) the following provisions shall apply:
(a)
Notwithstanding the other provisions of this Section 5, if the Units are assumed or otherwise replaced in connection with a Change in Control and the Participant’s employment is terminated by the Company or any of its Subsidiaries without Cause (as defined in Section 5(d) below) or the Participant terminates his or her employment for “Good Reason” (as such term is defined below) in each case within 12 months following the occurrence of such Change in Control but prior to the last day of the Vesting Date, then the Units will immediately vest with respect to a number of Units that is the number of Target Units specified in the attached Schedule A, Section 1.
(b)
“Good Reason” for purposes of this Agreement shall mean following a Change in Control: (A) a material reduction in the Participant’s position or responsibilities from the Participant’s position or responsibilities in effect immediately prior to such Change in Control, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith; (B) a material reduction in the Participant’s base salary or target bonus opportunity, if any, as in effect immediately prior to such Change in Control, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company, or (C) the reassignment, without the Participant’s consent, of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work immediately prior to the Change in Control; provided that none of the events described in clauses (A), (B) and (C) shall constitute Good Reason hereunder unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate his employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice.
(c)
For purposes of this Agreement, notwithstanding the definition of Change in Control in any other agreement or plan that may be applicable to the Participant, “Change in Control” shall mean (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets, (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Exchange Act of 1934 (the “
Exchange Act
”)), or (iii) the merger, consolidation reorganization, recapitalization or share exchange of the Company with another entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders of the voting power of the outstanding securities of the Company, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold less than 50% in voting power of the outstanding securities of the Company or the surviving entity or resulting entity, as the case may be, immediately following such transaction;
provided
,
however
, that the issuance of securities by the Company shall not, in any event, constitute a Change in Control, and for the avoidance of doubt a sale or other transfer or series of transfers of all or any portion of the securities of the Company held by the Investors and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in an entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting power of the outstanding securities of the Company.
For purposes hereof, “Investors” shall mean the “Investors” as defined in that certain Amended and Restated Purchase Agreement, dated March 17, 2008, by and between the Company and the other parties thereto, and their respective affiliates (not including the Company).
(d)
For purposes of this Agreement, “Cause” shall mean (A) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the person or persons to whom the Participant reports or the Board that are within the Participant’s control and consistent with the Participant’s status with the Company or its Subsidiary and his or her duties and responsibilities hereunder (except for a failure that is attributable to the Participant’s illness, injury or Disability) for a period of 10 days following written notice by the Company or its Subsidiary to the Participant of such failure, (B) fraud or material dishonesty in the performance of the Participant’s duties hereunder, (C) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof or similar act under foreign law for the non-U.S. Participants, (y) a misdemeanor involving moral turpitude or (z) a material violation of the securities laws of the United States or any state thereof or similar act
under foreign law for the non-U.S. Participants, (D) an indictment of the Participant for a felony under the laws of the United States or any state thereof or similar act under foreign law for the non-U.S. Participants, (E) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as determined in good faith by the Board, (F) the Participant’s material breach of the Company’s Code of Conduct or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach could reasonably be expected to have a material adverse effect on the Company as determined in good faith by the Board, or (G) the Participant’s breach of the Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement (or any similar agreement the Participant received from the Company) (the “
Post-Employment Restriction Agreement
”) which breach has an adverse effect on the Company or its Subsidiaries.
6.
Effect of Termination of Employment
. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Board, if the Participant ceases to be an employee of the Company or any of its Subsidiaries, the following actions shall occur:
(a)
Termination for Cause; Resignation
. If the Participant’s employment with the Company or any of its Subsidiaries is terminated for Cause (as defined above) or the Participant resigns for any reason, including as a result of the Participant’s retirement, any Units that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b)
Involuntary Termination/ Disability/Death Prior to Second Year of Performance Period
. If the Participant’s employment with the Company or any of its Subsidiaries is terminated without Cause or due to death or Disability (as defined below) prior to the completion of the second year of the Performance Period, the Units that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall immediately be forfeited.
(c)
Involuntary Termination/ Disability/Death Following Second Year of the Performance Period
. If the Participant’s employment with the Company or any of its Subsidiaries is terminated without Cause or due to death or Disability after the completion of the second year of the Performance Period, the Units that are not vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall vest with respect to a number of Units equal to the product of (x) the number of Units that would be eligible for vesting based on the actual level attainment of the Performance Goal with respect to the entire Performance Period, multiplied by (y) a fraction, the numerator of which is the number of days the Participant was employed during the Performance Period as of the date of the employment termination and the denominator of which is the number of days contained in the Performance Period.
(d)
For purposes of this Agreement, “
Disability
” shall mean that the Participant becomes physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform his or her duties. Any question as to the existence of the Disability of the Participant for purposes of this Agreement shall be determined in writing by a qualified independent physician selected by the Company. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement.
(e)
For purposes of this Agreement, the Participant shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any) as of the date that the Participant is no longer actively providing services and will not be employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits (
e.g.
, continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Unit award, and if the Participant is a U.S. taxpayer, such determination shall be made in accordance with Code Section 409A.
7.
Forfeiture and Repayment Provisions
.
(a)
Failure to properly execute the Agreement (and each other document required to be executed by the Participant in connection with the Participant’s receipt of the Units) in a timely manner following the Grant Date may result in the forfeiture of the Units, as determined in the sole discretion of the Company.
(b)
The right to vest in the Units shall be conditional upon the fact that the Participant has read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c)
The Company is authorized to suspend or terminate this Unit award prior to or after termination of employment if the Participant engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement. If, at any time during the applicable restriction period described in the Post-Employment Restriction Agreement, the Participant engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement, then any gain (without regard to tax effects) realized by the Participant from the vesting of the Units, in whole or in part, shall be paid by
the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company hereunder.
(d)
Misconduct
(i)
The Company is authorized to suspend or terminate this Unit award prior to or after termination of employment if the Company reasonably determines that during the Participant’s employment with the Company or any of its Subsidiaries:
(1)
The Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(2)
The Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company.
(ii)
If, at any time after the Participant vests in the Units, in whole or in part, the Company reasonably determines that the provisions of Section 7(c) apply to the Participant, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7.
8.
Miscellaneous
.
(a)
Issuance of Shares.
Upon any vesting of the Units, and subject to the payment of any Tax-Related Items (as defined under Section 8(d) below), the Company shall deliver the Shares in book entry form at the times specified in Section 3 above. The Shares acquired shall be registered in the name of the Participant, the Participant’s transferee, or if the Participant so requests, in writing at the time of vesting, jointly in the name of the Participant and another person with rights of survivorship. If the Participant dies, the Shares acquired shall be registered in the name of the person entitled to receive the Shares in accordance with the Plan.
(b)
Rights as Shareholder.
Units are not actual Shares, but rather, represent a right to receive Shares according to the terms and conditions set forth herein and the terms of the Plan. Accordingly, the issuance of a Unit shall not entitle the Participant to any of the rights or benefits generally accorded to stockholders unless and until a Share is actually issued under Section 8(a) hereof.
(c)
Adjustments to Award
.
(i)
In the event that the Company engages in a transaction such that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the shares covered by the Unit award, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this Unit award (including, without limitation, the number and kind of Shares subject to this Unit award) shall be adjusted as set forth in Section 4(c) of the Plan.
(ii)
Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of this Unit award (including, without limitation, the number and kind of Shares subject to this Unit award) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
(d)
Responsibility for Taxes
.
(i)
Regardless of any action the Company or the Participant’s employer (the “
Employer
”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“
Tax-Related Items
”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, vesting or settlement of the Units, the issuance of Shares upon settlement of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii)
In this regard, the Participant authorizes the Company or its agent to satisfy the obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon vesting/settlement of the Units. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the Units, the Participant authorizes and directs the Company and/or its agent to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant at vesting/settlement of the Units as the Company determines to be appropriate, to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.
(iii)
To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
(iv)
Finally, the Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e)
Interpretations
. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(f)
Nature of Grant
. In accepting the grant, the Participant acknowledges, understands and agrees that:
(i)
the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
(ii)
the grant of the Units is voluntary and occasional and does not create any contractual or other right to receive future grants of units, or benefits in lieu of units, even if units have been granted repeatedly in the past;
(iii)
all decisions with respect to future Unit grants, if any, will be at the sole discretion of the Company;
(iv)
the Participant’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;
(v)
the Participant is voluntarily participating in the Plan;
(vi)
the Units and the Shares subject to the Units are not intended to replace any pension rights or compensation;
(vii)
the Units and the Shares subject to the Units, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(viii)
the future value of the underlying Shares is unknown and cannot be predicted with certainty;
(ix)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Units resulting from the Participant’s termination of employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the Participant’s employment or service agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even it otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the Units to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(x)
the following provisions apply only to the Participants providing services outside the United States, as determined by the Company:
(A) the Units and the Shares subject to the Units are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Participant’s employment or service contract, if any;
(B) the Units and the Shares subject to the Units are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination,
redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary; and
(C) the Unit grant and the Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary.
(g)
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
(h)
Data Privacy
.
(i)
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Unit grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
(ii)
The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”).
(iii)
The Participant understands that Data will be transferred to E*Trade Financial Services, or such other stock plan service provider as may be selected by the Company in the future or other stock plan service provider that is selected by the Participant to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. If the Participant resides outside the United States, the Participant understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting his or her local human resources representative. The Participant authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing his or her participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. If the Participant resides outside the United States, the Participant understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Participant understands that he or she is providing the consents herein on a purely voluntary basis. If the Participant does not consent or if the Participant later seeks to revoke his or her consent, his or her status as an employee and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing his or her consent is that the Company would not be able to grant Units or other equity awards or administer or maintain such Awards. Therefore, the Participant understands that refusing or withdrawing his or her consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that he or she may contact his or her local human resources representative.
(i)
Reservation of Shares
. The Company shall at all times during the term of the Unit award reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement.
(j)
Securities Matters
. The Company shall not be required to deliver any Shares until the requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(k)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(l)
Successors and Assigns; No Third Party Beneficiaries
. This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(m)
Headings
. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(n)
Governing Law; Arbitration
. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “
AAA
”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect of any thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(o)
Notices
. The Participant should send all written notices regarding this Agreement or the Plan to the Company at the following address:
MoneyGram International, Inc.
EVP, General Counsel & Secretary
2828 North Harwood Street, 15
th
Floor
Dallas, TX 75201
(p)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 8(p) hereof and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. The Company reserves the right to impose other requirements on the Units and the Shares acquired upon vesting of the Units, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan.
(q)
Entire Agreement
. This Agreement, including the Appendix, and the Plan and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(r)
Severability
. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(s)
Participant Undertaking
. The Participant agrees to take such additional action and execute such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this Unit award pursuant to the provisions of this Agreement.
(t)
Counterparts
. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(u)
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(v)
Language
. If the Participant has received this Agreement, or any other document related to the Unit award and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(w)
Appendix
. The Unit award shall be subject to any special provisions set forth in the Appendix for the Participant’s country of residence, if any. If the Participant relocates to one of the countries included in the Appendix during the life of the Unit award, the special provisions for such country shall apply to the Participant, to the extent the Company determines that the application of such provisions is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(x)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other Participant.
(y)
Insider Trading Restrictions/Market Abuse Laws
. Depending upon his or her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect the Participant’s ability to acquire or sell Shares or rights to Shares (
e.g
., Units) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for complying with any applicable restrictions and is advised to speak with his or her personal legal advisor on this matter.
(z)
No Trust or Fund Created
. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(aa)
Section 409A Provisions
. The payment of Shares under this Agreement are intended to be exempt from the application of Section 409A of the Code, as amended (“
Section 409A
”) by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit hereunder that constitutes “deferred compensation” to the Participant under Section 409A and applicable guidance thereunder is otherwise payable or distributable to the Participant under the Plan or this Agreement solely by reason of the occurrence of a Change in Control or due to the Participant’s Disability or separation from service, such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that (i) the circumstances giving rise to such Change in Control, Disability or separation from service meet the definition of a change in ownership or control, disability, or separation from service, as the case may be, in Section 409A(a)(2)(A) of the Code and applicable final regulations, or (ii) the payment or distribution of such amount or benefit would be exempt from the application of Section 409A by reason of the short-term deferral exemption or otherwise (including, but not limited to, a payment made pursuant to an involuntary separation arrangement that is exempt from Section 409A under the “short-term deferral” exception). Any payment or distribution that constitutes deferred compensation subject to Code Section 409A and that otherwise would be made to a Participant who is a specified employee as defined in Section 409A(a)(2)(B) of the Code on account of separation from service instead shall be made on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
IN WITNESS WHEREOF
, the Company and the Participant have executed this Agreement on the date set forth in the first paragraph.
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MONEYGRAM INTERNATIONAL, INC.
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By:
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PARTICIPANT
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Print Name:
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SCHEDULE A
1.
Target Number of Restricted Stock Units (“
Target Units
”)
:
The actual number of Units that are eligible to vest in accordance with Section 2 of the Agreement shall be based on the attainment level of the Performance Goals, in accordance with the following formula:
The sum of (a) the Target Units x 50% x Self-Service Revenue Attainment Factor (as set forth below),
plus
(b) the Target Units x 50% x Adjusted EBITDA Attainment Factor (as set forth below).
2.
Performance Period
: January 1, 2014 - December 31, 2016.
3.
Performance Goals
:
The two Performance Goals applicable to the Units shall consist of (A) Self-Service Revenue generated during fiscal year ending December 31, 2016 as set forth in the table below and (B) the percentage increase of Adjusted EBITDA over the Performance Period as set forth in the table below.
If 50% of the Target Adjusted EBITDA Performance Goal is not attained, all Units shall be forfeited (including, for the avoidance of any doubt, the percentage of the Units allocated to the attainment of the Self-Service Revenue Performance Goal).
Self-Service Revenue Performance Goal
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Self-Service Revenue Performance Goal
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Self-Service Revenue Attainment Factor
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Threshold Self-Service Revenue Performance Goal: $
165M
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50%
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Target Self-Service Revenue Performance Goal:
$200M
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100%
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Adjusted EBITDA Performance Goal
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Adjusted EBITDA Performance Goal
|
Adjusted EBITDA Attainment Factor
|
|
Threshold Adjusted EBITDA Performance Goal = simple
average annual Adjusted EBITDA increase of 5 percent over the Performance Period
|
50%
|
|
Target Adjusted EBITDA Performance Goal = simple
average annual Adjusted EBITDA increase of 7 percent or greater over the Performance Period
|
100%
|
Attainment between the Threshold and Target Performance Goals (for each Performance Goal) shall be subject to straight-line interpolation.
4.
Performance Goal Adjustments
: None anticipated.
5.
Performance Criteria
:
“
Self-Service Revenue
” shall mean revenue from “Self-Service” transactions. “Self-Service” transactions means transactions either initiated or received using a method that is directed by the consumer simplifying the transaction process. With Self-Service transactions, a consumer or technology replaces activities normally conducted by an agent in-person or on a phone. “Self-Service Revenue” includes revenue from those transactions initiated or received online via Moneygram mobile or online, a third-party website or mobile device, via a staging or full service kiosk or ATM, received directly into a customer account (bank, card, or mobile including, but not limited to, PayPal and Visa), MoneyGram xpress, or other transactions initiated or received through Self-Service.
“
Adjusted EBITDA
” shall mean, Adjusted EBITDA as reported in the Company’s annual financial statements on the Company’s Form 10-K.
6.
Vesting Date (assuming Performance Goals are attained)
: The date, following the end of the Performance Period, on which the Committee determines or certifies, as applicable, the level of attainment of the Performance Goals achieved during the Performance Period.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
APPENDIX To The
GLOBAL Performance-BASED RESTRICTED STOCK UNIT AGREEMENT for PARTICIPANTS Outside the U.S.
Terms and Conditions
.
This Appendix includes additional terms and conditions that govern the Units granted to the Participant under the Plan if he/she resides in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Agreement.
If the Participant is a citizen or resident of a country other than the one in which he/she is currently working, transfers employment to another country after the Grant Date, or is considered a resident of another country for tax or exchange control purposes, the Company shall, at its discretion, determine the extent to which the terms and conditions contained herein shall apply to the Participant.
Notifications
.
This Appendix also includes information regarding exchange controls and certain other issues of which the Participant should be aware with respect to the Participant’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2014. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Participant not rely on the information in this Appendix as the only source of information relating to the consequences of the Participant’s participation in the Plan because the information may be out of date at the time that the Participant vests in the Units or sells the Shares issued upon settlement of the Units.
In addition, the information contained herein is general in nature and may not apply to the Participant’s particular situation and the Company is not in a position to assure the Participant of any particular result. Accordingly, the Participant is advised to seek appropriate professional advice as to how the relevant laws in the Participant’s country may apply to his/her situation.
Finally, if the Participant is a citizen or resident of a country other than the one in which he/she is currently working, transfers employment to another country after the Grant Date, or is considered a resident of another country for tax or exchange control purposes, the information contained herein may not be applicable to the Participant.
Australia
Notifications.
Securities Law Notice.
If the Participant acquires Shares under the Plan and offers such Shares for sale to a person or entity resident in Australia, the offer may be subject to disclosure requirements under Australian law. The Participant should obtain legal advice on disclosure obligations prior to making any such offer.
Belgium
Notifications
.
Tax Reporting Notification.
The Participant is required to report any taxable income attributable to the Units on his or her annual tax return. In addition, the Participant is required to report any bank accounts opened and maintained outside Belgium on his or her annual tax return.
France
Terms and Conditions
.
Consent to Receive Information in English.
By accepting the grant of the Units, the Participant confirms having read and understood the Plan and the Agreement, which were provided in the English language. The Participant accepts the terms of those documents accordingly.
En acceptant cette attribution gratuite d’actions, le Participant confirme avoir lu et compris le Plan et ce Contrat, incluant tous leurs termes et conditions, qui ont été transmis en langue anglaise. Le Participant accepte les dispositions de ces documents en connaissance de cause.
Notifications
.
Tax Notification.
The Units are not intended to be French-qualified for tax purposes.
Exchange Control Notification.
The Participant
acknowledges and understands that he or she may hold Shares acquired under the Plan outside of France, provided that he or she declares all foreign accounts, whether open, current, or closed, in the his or her income tax return.
Germany
Notifications
.
Exchange Control Notification.
Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank (
Bundesbank
).
Effective from September 2013, the report must be filed electronically. The form of report (
Allgemeine Meldeportal Statistik
) can be accessed via the
Bundesbank’s
website (
www.bundesbank.de
) and is available in both German and English. The Participant is responsible for satisfying the reporting obligation.
In addition, in the unlikely event the Participant holds Shares whose value exceeds 10% of the total capital of the Company, the Participant must report these holdings to the Company on an annual basis.
Greece
There are no country specific provisions.
Hong Kong
Terms and Conditions
.
Sale of Shares.
In the event the Units vest within six months of the Grant Date, the Participant agrees that he or she will not dispose of the Shares acquired prior to the six-month anniversary of the Grant Date.
Award Payable Only in Shares.
The Units granted to the Participant in Hong Kong shall be paid in Shares only and do not provide any right for the Participant to receive a cash payment, notwithstanding any discretion contained in the Plan, or any provision in the Agreement to the contrary.
Notifications
.
Securities Law Notification.
Warning: The Units and the Shares issued pursuant to the Units do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company or one of its Subsidiaries participating in the Plan. The Agreement, including this Appendix, and the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable legislation in Hong Kong. These documents have not been reviewed by any regulatory authority in Hong Kong. The Units are intended only for the personal use of the Participant to whom they are granted and who meets the eligibility requirements under the Plan. The Participant is advised to exercise caution in relation to this grant of the Units. If the Participant has any doubts as to the contents of this Appendix, the Agreement or the Plan, the Participant should obtain independent professional advice.
Nature of Scheme.
The Company specifically intends that the Plan will not be an occupational retirement scheme for purposes of the Occupational Retirement Schemes Ordinance.
India
Terms and Conditions
.
Settlement of Units.
The following provision replaces Section 3 of the Agreement:
As provided in Section 2(y) of the Plan, any Units that vest shall be paid to the Participant solely by means of a cash payment equal in value to the Fair Market Value of the underlying Shares on, or as soon as practicable after, the date the Units vest in accordance with Section 2 above (or, if sooner, Section 5 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting. The cash payment shall be paid to the Participant in local currency through his or her payroll in India. The Participant has no right to receive Shares.
Notifications
.
Exchange Control Notification.
The Participant understands that he or she must repatriate any proceeds received under the Plan to India and convert the proceeds into local currency within 90 days of receipt. The Participant will receive a foreign inward remittance certificate (“
FIRC
”) from the bank where he or she deposits the foreign currency. The Participant should maintain the FIRC as evidence of the repatriation of funds in the event the Reserve Bank of India or his or her actual employer requests proof of repatriation.
Foreign Assets Reporting Requirement.
The Participant is required to declare his or her foreign bank accounts and any foreign financial assets in his or her annual tax return. It is the Participant’s responsibility to comply with this reporting obligation and the Participant should consult his or her personal tax advisor in this regard.
Ireland
Notifications
.
Director Notification Obligation.
If the Participant is a director, shadow director or secretary of the Company’s Irish Subsidiary, the Participant must notify the Irish Subsidiary in writing within five business days of receiving or disposing of an interest in the Company (
e.g
., Units, Shares, etc.), or within five business days of becoming aware of the event giving rise to the notification requirement or within five business days of becoming a director or secretary if such an interest exists at the time. This notification requirement also applies with respect to the interests of a spouse or children under the age of 18 (whose interests will be attributed to the director, shadow director or secretary).
Italy
Terms and Conditions
.
Data Privacy Notice
. The following replaces Section 8(h) of the Agreement:
The Participant understands that the Employer, the Company and any Subsidiary hold certain personal information about him or her, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Shares or directorships held in the Company or any Subsidiary, details of all Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, managing and administering the Plan.
The Participant also understands that providing the Company with Data is necessary for the performance of the Plan and that his or her refusal to provide such Data would make it impossible for the Company to perform its contractual obligations and may affect the Participant’s ability to participate in the Plan. The Controller of personal data processing is Moneygram International, Inc., with registered offices at North 2828 Harwood Street, Floor 15, Dallas, Texas, 75201, United States of America, and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is MoneyGram Payment Systems Italy srl and MoneyGram International Limited, with registered offices at Via Bombay, 5, 00144 Roma.
The Participant understands that Data will not be publicized, but it may be transferred to banks, other financial institutions, or brokers involved in the management and administration of the Plan. The Participant further understands that the Company and/or any Subsidiary will transfer Data among themselves as necessary for the purpose of implementing, administering or managing the Participant’s participation in the Plan, and that the Company and/or any Subsidiary may
each further transfer Data to third parties assisting the Company in the implementation, administration and management of the Plan, including any requisite transfer of Data to a broker or other third party with whom the Participant may elect to deposit any Shares acquired under the Plan. Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing the Participant’s participation in the Plan. The Participant understands that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere. Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.
The Participant understands that data-processing relating to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.
The processing activity, including communication, the transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require the Participant’s consent thereto as the processing is necessary to performance of contractual obligations related to implementation, administration, and management of the Plan. The Participant understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003, he or she has the right to, including but not limited to, access, delete, update, correct, or terminate, for legitimate reason, the Data processing. Furthermore, the Participant is aware that Data will not be used for direct marketing purposes. In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting the Participant’s local human resources representative.
Plan Document Acknowledgment
. By accepting the grant of the Units, the Participant acknowledges that he or she has received a copy of the Plan and the Agreement and has reviewed the Plan and the Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Plan and the Agreement, including this Appendix.
The Participant further acknowledges that he or she has read and specifically and expressly approves the following sections of the Agreement and this Appendix: “Vesting;” “Restrictions on Transfer;” “Effect of Involuntary Termination Following Change in Control;” “Effect of Termination of Employment;” “Forfeiture and Prepayment Provisions;” “Responsibility for Taxes;” “Nature of Grant;” “Governing Law; Arbitration;” “Participant Undertaking;” “Language;” “Waiver;” “Insider Trading Restrictions/Market Abuse Laws;” and “Data Privacy” section above.
Exchange Control Notification.
Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and Shares) which may generate income taxable in Italy are required to report these assets on their annual tax returns for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.
Mexico
Terms and Conditions
.
Acknowledgement of the Grant Agreement.
By accepting the Units, the Participant acknowledges that he or she has received a copy of the Plan and the Agreement, including this Appendix, which he or she has reviewed. The Participant further acknowledges that he or she accepts all the provisions of the Plan and the Agreement, including this Appendix. The Participant also acknowledges that he or she has read and specifically and expressly approves the terms and conditions set forth in the “Nature of Grant” section of the Agreement, which clearly provide as follows:
|
|
|
|
(1)
|
The Participant's participation in the Plan does not constitute an acquired right;
|
|
|
|
|
(2)
|
The Plan and the Participant's participation in it are offered by the Company on a wholly discretionary basis;
|
|
|
|
|
(3)
|
The Participant's participation in the Plan is voluntary; and
|
|
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|
|
(4)
|
The Company and its Subsidiaries or Affiliates are not responsible for any decrease in the value of any Shares acquired under the Plan.
|
Labor Law Acknowledgement and Policy Statement.
By accepting the Units, the Participant acknowledges that the
Company, with registered offices at 2828 North Harwood Street, 15
th
Floor, Dallas, TX 75201, U.S.A., is solely responsible for the administration of the Plan. The Participant further acknowledges that his or her participation in the Plan, the grant of Units and any acquisition of Shares under the Plan do not constitute an employment relationship between the Participant and the Company because the Participant is participating in the Plan on a wholly commercial basis. Based on the foregoing, the Participant expressly acknowledges that the Plan and the benefits that he or she may derive from participation in the Plan do not establish any rights between the Participant and his or her Employer and do not form part of the employment conditions and/or benefits provided by his or her Employer, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of the Participant's employment.
The Participant further understands that his or her participation in the Plan is the result of a unilateral and discretionary decision of the Company and, therefore, the Company reserves the absolute right to amend and/or discontinue the Participant's participation in the Plan at any time, without any liability to the Participant.
Finally, the Participant hereby declares that he or she does not reserve to him- or herself any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and that he or she therefore grants a full and broad release to the Company, its Subsidiaries, Affiliates, branches, representation offices, shareholders, officers, agents or legal representatives, with respect to any claim that may arise.
Spanish Translation
Reconocimiento del Convenio de Concesión. Al aceptar las Unidades de Acciones Restringidas ("Unidades"), el Beneficiario reconoce que ha recibido y revisado una copia del Plan y del Convenio de Concesión, incluyendo este Apéndice. El Beneficiario reconoce y acepta todas las disposiciones del Plan y del Convenio de Concesión, incluyendo el apéndice. El Beneficiario también reconoce que ha leído y aprobado de forma expresa los términos y condiciones establecidos en la sección: “Nature of Grant” del Convenio de Concesión, que claramente establece lo siguiente:
|
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|
(1)
|
La participación del Beneficiario en el Plan no constituye un derecho adquirido;
|
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|
(2)
|
El Plan y la participación del Beneficiario en él es ofrecido por la Compañía de manera completamente discrecional;
|
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|
(3)
|
La participación del Beneficiario en el Plan es voluntaria; y
|
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(4)
|
La Compañía y sus Subsidiarias o afiliadas no son responsables por ninguna disminución en el valor de las Acciones adquiridas en virtud del Plan.
|
Reconocimiento del Derecho Laboral y Declaración de la Política. Al aceptar el otorgamiento de las Unidades, el Beneficiario reconoce que la Compañía, con domicilio social en North Harwood Street, 15th Floor, Dallas, TX 75201, E.U.A., es la única responsable de la administración del Plan. Además, el Beneficiario reconoce que su participación en el Plan, la concesión de las Unidades y cualquier adquisición de Acciones en virtud del Plan no constituyen una relación laboral entre el Beneficiario y la Compañía, en virtud de que el Beneficiario está participando en el Plan sobre una base totalmente comercial. Por lo anterior, el Beneficiario expresamente reconoce que el Plan y los beneficios que puedan derivarse de su participación no establecen ningún derecho entre el Beneficiario y su empleador y que no forman parte de las condiciones de trabajo y/o beneficios otorgados por su empleador, y cualquier modificación del Plan o la terminación no constituirá un cambio o modificación de los términos y condiciones en el empleo del Beneficiario.
Además, el Beneficiario comprende que su participación en el Plan es el resultado de una decisión discrecional y unilateral de la Compañía, por lo que la misma se reserva el derecho absoluto de modificar y/o suspender la participación del Beneficiario en el Plan en cualquier momento, sin responsabilidad alguna del Beneficiario.
Finalmente, el Beneficiario manifiesta que no se reserva acción o derecho alguno que origine una demanda en contra de la Compañía, por cualquier indemnización o daño relacionado con las disposiciones del Plan o de los beneficios otorgados en el mismo, y en consecuencia el Beneficiario libera de la manera más amplia y total de responsabilidad a la Compañía, sus subsidiarias, afiliadas, sucursales, oficinas de representación, sus accionistas, directores, agentes y representantes legales con respecto a cualquier demanda que pudiera surgir.
Morocco
Terms and Conditions
.
Settlement of Units.
The following provision replaces Section 3 of the Agreement:
As provided in Section 2(y) of the Plan, any Units that vest shall be paid to the Participant solely by means of a cash payment equal in value to the Fair Market Value of the underlying Shares on, or as soon as practicable after, the date the Units vest in accordance with Section 2 above (or, if sooner, Section 5 below), but in any event, no later than March 15 of the calendar year following the calendar year of vesting. The cash payment shall be paid to the Participant in local currency through his or her payroll in India. The Participant has no right to receive Shares.
Netherlands
There are no country-specific provisions.
Peru
Notifications
.
Securities Law Notification.
The offer of the Units is considered a private offering in Peru and is therefore not subject to registration in Peru.
Russia
Terms and Conditions
.
Termination of Employment.
If the Participant continues to hold Shares acquired at vesting of Units after an involuntary termination of employment, the Participant will not be eligible to receive unemployment benefits in Russia.
Data Privacy.
The following provisions supplement the Data Privacy provision in Section 8(h) of the Agreement and to the extent inconsistent, the below language for Russia supersedes Section 8(h) of the Agreement:
The Participants understands and agrees that the Company may require the Participant to complete and return a Consent to Processing of Personal Data form (the “Consent”) to the Company. If a Consent is required by the Company but the Participant fails to provide such Consent to the Company, the Participant understands and agrees that the Company will not be able to administer or maintain the Units or any other awards. Therefore, the Participant understands that refusing to complete any required Consent or withdrawing his or her consent may affect the Participant’s ability to participate in the Plan. For more information on any required Consent or withdrawal of consent, the Participant understands he or she may contact the U.S. human resources representative.
Securities Law Confirmation.
By accepting the Units, the Participant acknowledges that he or she understands and agrees that any Shares to be issued upon vesting of the Units shall be delivered to the Participant through a brokerage account in the United States. The Participant may hold the Shares in his or her brokerage account in the United States; however, in no event will Shares issued to the Participant under the Plan be delivered to the Participant in Russia. The Participant acknowledges that he or she is not aware of any material nonpublic information with respect to the Company or any securities of the Company as of the date of this Appendix.
Unit Sale Restriction.
The Participant agrees that the Company is authorized, at its discretion, to instruct its designated U.S. broker to assist with the sale of the Participant’s Shares issued upon the vesting of the Units (on the Participant’s behalf pursuant to this authorization) should the Company determine that such sale is necessary or advisable under local law. The Participant expressly authorizes the Company’s designated U.S. broker to complete the sale of such Shares and acknowledges that the Company’s designated U.S. broker is under no obligation to arrange for the sale of the Shares at any particular price. Upon the sale of the Shares, the Company agrees to pay the Participant the cash proceeds from the sale of the Shares, less any brokerage fees, commissions or Tax-Related Items.
U.S. Transaction.
The Participant understands that his or her acceptance of the grant of Units results in a contract between the Participant and the Company completed in the United States and that the Agreement is governed by the laws of the State of Texas, without giving effect to the conflict of law principles thereof.
Notifications
.
Securities Law Notification.
The Participant acknowledges that the Units, the Agreement (including this Appendix), the Plan and all other materials the Participant may receive regarding the Units and participation in the Plan do not constitute advertising or an offering of securities in Russia. Absent any requirement under local law, the issuance of Shares under the Plan has not and will not be registered in Russia and, therefore, the Shares described in any Plan documents may not be offered or placed in public circulation in Russia. The Participant acknowledges that he or she may hold Shares issued upon vesting of the Units in the Participant’s account with the Company’s third party stock administrator in the United States. However, in no event with the Shares issued to the Participant be delivered to the Participant in Russia. Further, the Participant is not permitted to sell Shares directly to a Russian legal entity or resident.
Exchange Control Notification.
Under current exchange control regulations, within a reasonably short time after sale of the Shares acquired under the Plan, the Participant must repatriate the sale proceeds to Russia. Such sale proceeds must be credited initially to the Participant through a foreign currency account at an authorized bank in Russia. After the sale proceeds are initially received in Russia, the funds may be further remitted to foreign banks, subject to the following limitations: (i) the foreign account may be opened only for individuals; (ii) the foreign account may not be used for business activities; (iii) the Russian tax authorities must be given notice about the opening/closing of each foreign account within one month of the account opening/closing; and (iv) the Russian tax authorities must be given notice of the account balances of such foreign accounts as of the beginning of each calendar year.
The Participant should consult his or her personal advisor before remitting any sale proceeds to Russia, as significant penalties may apply in the case of non-compliance with exchange control requirement and exchange control requirements are subject to change at any time, often without notice.
South Africa
Terms and Conditions
.
Responsibility for Taxes.
The following provision supplements Section 8(d) of the Agreement:
By accepting the Units, the Participant agrees to immediately notify the Employer of the amount of any gain realized upon vesting of the Units. If the Participant fails to advise the Employer of the gain realized upon vesting of the Units, then he or she may be liable for a fine. The Participant will be responsible for paying the difference between the actual Tax-Related Items liability and the amount withheld.
Notifications
.
Exchange Control Notification.
The Participant should consult his or her personal advisor to ensure compliance with applicable exchange control regulations in South Africa, as such regulations are subject to frequent change. The Participant is solely responsible for complying with all exchange control laws in South Africa, and neither the Company nor the Employer will be liable for any fines or penalties resulting from the Participant’s failure to comply with South African exchange control laws.
Spain
Terms and Conditions
.
Nature of Grant.
The following section supplements Section 8(f) of the Agreement:
In accepting the grant of the Units, the Participant acknowledges that he or she consents to participation in the Plan and has received a copy of the Plan.
The Participant understands that the Company, in its sole discretion, has unilaterally and gratuitously decided to grant the Units under the Plan to individuals who may be employees of the Company or a Subsidiary throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or a Subsidiary on an ongoing basis except to the extent provided in the Plan and Agreement. Consequently, the Participant understands that the Units are granted on the assumption and condition that the Units and the Shares issued upon settlement shall not become a part of any employment contract (either with the Company or a Subsidiary) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, the Participant understands that the grant of the Units would not be made to the Participant but for the assumptions and conditions referred to above; thus, the Participant acknowledges and freely accepts that should any or all of
the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of the Units shall be null and void.
The Participant understands and agrees that, for purpose of the Agreement, the Participant shall cease to be continuously employed as of the date the Participant is no longer actively providing services as explained in Section 6(e) of the Agreement. Unless otherwise provided in the Agreement, if the Participant is not continuously employed through the vesting period set forth in Section 2(a) of the Agreement, the unvested Units will be forfeited without entitlement to the underlying Shares or to any amount of indemnification in the event of termination of the Participant’s employment by reason of, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with Cause, disciplinary dismissal adjudged or recognized to be without Cause, individual or collective dismissal adjudged or recognized to be without Cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without Cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. The Participant acknowledges that he or she has read and specifically accepts the conditions referred to in Sections 2 and 6 of the Agreement.
The Participant understands that this grant would not be made but for the assumptions and conditions referred to above; thus, the Participant understands, acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then this Unit award shall be null and void.
Notifications
.
Exchange Control Notification.
The acquisition, ownership and sale of Shares under the Plan must be declared for statistical purposes to the Spanish Dirección General de Comercio e Inversiones (the “
DGCI
”), the Bureau for Commerce and Investments, which is a department of the Ministry of Economy and Competitiveness. Generally, the declaration must be made each January for Shares owned as of December 31 of the prior year; however, if the amount of Shares acquired or sold exceeds €1,502,530 (or if the Participant holds 10% or more of the share capital of the Company or such other amount that would entitle the Participant to join the Company’s board of directors), the declaration must be filed also within one month of the acquisition or sale, as applicable.
Foreign Asset Reporting Notification.
The Participant is required to declare electronically the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the Shares held in such accounts if the value of the transactions during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €100,000,000.
Further, to the extent that the Participant holds Shares and/or has bank accounts outside Spain with a value in excess of €50,000 (for each type of asset) as of December 31, the Participant will be required to report information on such assets on his or her tax return for such year. After such Shares and/or accounts are initially reported, the reporting obligation will apply for subsequent years only if the value of any previously-reported Shares or accounts increases by more than €20,000.
Securities Law Notification
. No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory with respect to the Unit. No public offering prospectus has been, nor will it be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission) (“
CNMV
”). Neither the Plan nor the Agreement constitute a public offering prospectus and they have not been, nor will they be, registered with the CNMV.
Sweden
There are no country-specific provisions.
Ukraine
Terms and Conditions
.
Settlement of Units.
The following provision replaces Section 3 of the Agreement:
As provided in Section 2(y) of the Plan, any Units that vest shall be paid to the Participant solely by means of a cash payment equal in value to the Fair Market Value of the underlying Shares on, or as soon as practicable after, the date the Units vest in accordance with Section 2 above (or, if sooner, Section 5 below), but in any event, no later than March 15 of the calendar year
following the calendar year of vesting. The cash payment shall be paid to the Participant in local currency through his or her payroll in the Ukraine. The Participant has no right to receive Shares.
United Arab Emirates
Notifications
.
Securities Law Notification.
The Agreement, including this Appendix, the Plan, and other incidental communication materials are intended for distribution only to employees of the Company and its Subsidiaries for the purposes of an employee compensation or reward scheme. The Dubai Airport Free Zone, Emirates Securities and Commodities Authority and/or the Central Bank has no responsibility for reviewing or verifying any documents in connection with the Award. Neither the Ministry of Economy nor the Dubai Department of Economic Development have approved this statement nor taken steps to verify the information set out in it, and have no responsibility for it.
Further, the Shares underlying the Units may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If the Participant is in any doubt about any of the contents of the Agreement, including this Appendix, or the Plan, the Participant should obtain independent professional advice.
United Kingdom
Terms and Conditions
.
Responsibility for Taxes.
This section supplements Section 8(d) of the Agreement:
If payment or withholding of the income tax liability is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “
Due Date
”), the amount of any uncollected Tax-Related Items shall constitute a loan owed by the Participant to the Employer, effective as of the Due Date. The Participant agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“
HMRC
”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 8(d) of the Agreement.
Notwithstanding the foregoing, if the Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the Participant shall not be eligible for a loan from the Company to cover the income tax due. In the event that the Participant is a director or executive officer of the Company and income tax is not collected from or paid by the Participant by the Due Date, the amount of any uncollected Tax-Related Items may constitute a benefit to him/her on which additional income tax and national insurance contributions (“
NICs
”) may be payable. The Participant will be responsible for paying and reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit, which the Company or the Employer may recover at any time thereafter by any of the means referred to in Section 8(d) of the Agreement
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
GLOBAL STOCK OPTION AGREEMENT
This Global Stock Option Agreement (this “
Agreement
”) is made effective as of [_______ __], 20[__] (the “
Grant Date
”) between MoneyGram International, Inc., a Delaware corporation (the “
Company
”), and [_________________] (the “
Optionee
”). Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Company’s 2005 Omnibus Incentive Plan (the “
Plan
”).
WHEREAS, in connection with the Optionee’s employment with the Company, the Company desires to grant to the Optionee an option to purchase shares of the Company’s Common Stock, par value $0.01 per share (the “
Common Stock
”) on the date hereof pursuant to the terms and conditions of this Agreement, including any country-specific appendix thereto (the “Appendix”), and the Plan;
NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.
Grant of Option.
Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants to the Optionee on the Grant Date, an option to purchase up to [__________]
shares of Common Stock at the option price set forth in Section 2 (the “
Option
”).
The foregoing award is a U.S. Non-qualified Stock Option granted under the Plan, which is incorporated herein by this reference and made part of this Agreement. The Option is not an incentive stock option within the meaning of Section 422 of the United States Internal Revenue Code of 1986, as amended (the “
Code
”).
2.
Option Price.
The per share purchase price of the shares subject to the Option shall be the higher of $12.00 or the Fair Market Value of the Common Stock as of the Grant Date (the “
Option Price
”), subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 9.
3.
Term of Option and Exercisability.
(a)
The term of the Option shall be for a period of ten years from the Grant Date, terminating at the close of business on [_______ __], 20[__] (the “
Expiration Date
”) or such shorter period as is prescribed in Sections 5 and 6 of this Agreement.
(b)
Subject to the provisions of Sections 4, 5 and 6 of this Agreement, the Option shall vest and become exercisable as follows, provided the Optionee remains continuously employed by the Company or a Subsidiary from the Grant Date through each anniversary (each a “Vesting Date”):
|
|
|
|
|
|
|
|
Vesting Date
|
|
Aggregate Percentage Vested
|
|
1st Anniversary of Grant Date
|
|
33.3
|
%
|
|
2nd Anniversary of Grant Date
|
|
33.3
|
%
|
|
3rd Anniversary of Grant Date
|
|
33.4
|
%
|
There shall be no partial vesting during any period. Except as set forth in Section 5 hereof, if the Optionee’s employment with the Company or any of its Subsidiaries is terminated on or prior to the third anniversary of the Grant Date, the unvested portion of the Option shall be forfeited as described in Section 5 hereof.
(c)
For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
4.
Effect of Change in Control.
Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined below) the following provisions shall apply:
(a)
If at the time of the Change in Control, the per share Fair Market Value of the Common Stock does not exceed the per share Option Price, then this Option, whether vested or unvested, shall immediately terminate in full and be of no further force or effect; and
(b)
If at the time of the Change in Control, the per share Fair Market Value of the Common Stock exceeds the Option Price, then the Committee, in its sole discretion, may:
(i)
provide the Optionee a reasonable amount of time (such period of time to be determined by the Committee in its sole discretion) to exercise the vested and unexercised portion of this Option that is outstanding at the time of the Change in Control and, if not exercised within such period, have this Option terminate in full and be of no further force or effect with respect to any unexercised portion of such Option (and the unvested portion of this Option shall be forfeited);
(ii)
provide for the termination of this Option in exchange for payment to the Optionee of the excess of (x) the aggregate Fair Market Value of the Common Stock issuable pursuant to the vested portion of the Option that is outstanding and unexercised at the time of the Change in Control over (y) the aggregate Option Price for such vested portion of the Option (and the unvested portion of this Option shall be forfeited); or
(iii)
if the Change in Control involves the merger or consolidation of the Company with or into another entity, provide for the substitution by the surviving entity or its direct or indirect parent of awards with substantially the same terms as this Option in accordance with Section 409A of the Code and Section 4(c) of the Plan.
(c)
Notwithstanding the other provisions of this Section 4, if a Change in Control occurs, and after giving effect thereto the Optionee’s employment is terminated by the Company or any of its Subsidiaries without Cause (as defined in Section 5 below) or the Optionee terminates his or her employment with “Good Reason” (as such term is defined below) in each case within twelve (12) months following the occurrence of such Change in Control, then any portion of the Options outstanding as of the termination of employment but not previously vested shall automatically accelerate and become vested.
“
Good Reason” with respect to the Optionee shall mean following a Change in Control: (A) a material reduction in the Optionee’s position or responsibilities from the Optionee’s position or responsibilities in effect immediately prior to such Change in Control, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith; (B) a material reduction in the Optionee's base salary or target bonus opportunity, if any, as in effect immediately prior to such Change in Control, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company, or (C) the reassignment, without the Optionee's consent, of the Optionee’s place of work to a location more than 50 miles from the Optionee's place of work immediately prior to the Change in Control; provided that none of the events described in clauses (A), (B) and (C) shall constitute Good Reason hereunder unless (x) the Optionee shall have given written notice to the Company of the Optionee’s intent to terminate his employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice.
(d)
For purposes of this Agreement, notwithstanding the definition of Change in Control in any other agreement or plan that may be applicable to the Optionee, “
Change in Control
” shall mean (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets, (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934 (the “
Exchange Act
”)), or (iii) the merger, consolidation reorganization, recapitalization or share exchange of the Company with another entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders of the voting power of the outstanding securities of the Company, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold less than 50% in voting power of the outstanding securities of the Company or the surviving entity or resulting entity, as the case may be, immediately following such transaction;
provided
,
however
, that the issuance of securities by the Company shall not, in any event, constitute a Change in Control, and for the avoidance of doubt a sale or other transfer or series of transfers of all or any portion of the securities of the Company held by the Investors and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in a entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting power of the outstanding securities of the Company.
For purposes hereof, “
Investors
” shall mean the “Investors” as defined in that certain Amended and Restated Purchase Agreement, dated March 17, 2008, by and between the Company and the other parties thereto, and their respective affiliates (not including the Company).
5.
Effect of Termination of Employment.
If the Optionee’s employment is terminated, the following shall apply:
(a)
if the Optionee’s employment with the Company or any of its Subsidiaries is terminated for Cause (as defined below), any portion of the Option that has not been exercised on the date of the Optionee’s termination of employment, whether vested or unvested, shall be immediately forfeited;
(b)
if the Optionee’s employment with the Company or any of its Subsidiaries is terminated by the Company without Cause or the Optionee terminates his employment with Good Reason, any portion of the Option that has not vested on the date of the Optionee’s termination of employment shall be forfeited, and any portion of the Option that has vested may be exercised until the earlier of (i) the Expiration Date and (ii) the date that is one hundred eighty (180) days after the date of the Optionee’s termination of employment;
(c)
if the Optionee resigns without Good Reason or for any reason other than death or Disability (as defined below), any portion of the Option that has not vested on the date of the Optionee’s termination of employment shall be immediately forfeited, and any portion of the Option that has vested may be exercised until the earlier of (i) the Expiration Date, or (ii) the date that is thirty (30) days after the date of the Optionee’s termination of employment;
(d)
if the Optionee’s employment with the Company or any of its Subsidiaries is terminated due to a Disability, any portion of the Option that has not vested on the date of the Optionee’s termination of employment and that does not vest pursuant to Section 5(f) shall be forfeited, and any portion of the Option that has vested, or that vests pursuant to Section 5(f) below, may be exercised until the earlier of (i) the Expiration Date and (ii) the date that is twelve (12) months after the later of the date of the Optionee’s termination due to Disability or the date of any subsequent vesting pursuant to Section 5(f) below;
(e)
if the Optionee’s employment with the Company or any of its Subsidiaries is terminated due to death, any portion of the Option that has not vested on the date of the Optionee’s termination of employment and that does not vest pursuant to Section 5(f) shall be forfeited, and any portion of the Option that has vested, or that vests pursuant to Section 5(f) below, may be exercised by the Optionee’s personal representative or the administrators of the Optionee’s estate or by any Person or Persons to whom the Option has been transferred by will or the applicable laws of descent and distribution until the earlier of (i) the Expiration Date and (ii) the date that is twelve (12) months after the later of the date of the Optionee’s death or the date of any subsequent vesting pursuant to Section 5(f) below; and
(f)
if the Optionee’s employment with the Company or any of its Subsidiaries is terminated due to a Disability (as defined below) or death, then (x) upon such termination, the portion of such Option that otherwise, absent such termination, would vest during the 12-month period following the date of such termination shall vest on the date of termination. The number of Options deemed exercisable upon termination shall be calculated after giving effect to the acceleration of vesting specified in this clause (f).
For purposes of this Agreement, the Optionee’s shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Optionee resides and/or is employed or the terms of the Optionee’s employment or service agreement, if any) as of the date that the Optionee is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Optionee resides and/or is employed, even if otherwise applicable to the Optionee’s employment benefits (
e.g.
, continuous employment would not include any contractual period or period of “garden leave” or similar period mandated under employment laws in the jurisdiction where the Optionee resides and/or is employed or the terms of the Optionee’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Optionee is no longer continuously employed for purposes of the Option. Furthermore, the Optionee’s right to vest in or exercise the Option after termination, if any, will be measured by the date the Optionee is no longer continuously employed.
For purposes of this Agreement, “
Cause
” shall mean (A) the Optionee’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the person or persons to whom the Optionee reports or the Board that are within the Optionee’s control and consistent with the Optionee’s status with the Company or its Subsidiary and his or her duties and responsibilities hereunder (except for a failure that is attributable to the Optionee’s illness, injury or Disability) for a period of 10 days following written notice by the Company or its Subsidiary to the Optionee of such failure, (B) fraud or material dishonesty in the performance of the Optionee’s duties hereunder, (C) an act or acts on the Optionee’s part constituting (x) a felony under the laws of the United States or any state thereof, (y) a misdemeanor involving moral turpitude or (z) a material violation of the securities laws of the United States or any state thereof, (D) an indictment of the Optionee for a felony under the laws of the United States or any state thereof, (E) the Optionee’s willful misconduct or gross negligence in connection with the Optionee’s duties which could reasonably be expected to be injurious in any material respect to the financial condition or business reputation of the Company as determined in good faith by the Board, (F) the Optionee’s material breach of the Company’s Code of Conduct policy or any other code of conduct in effect from time to time to the extent applicable to the Optionee, and which breach could reasonably be expected to have a material adverse effect on the Company as determined in good faith by the Board, or (G) the Optionee’s breach of the Employee Trade Secret, Confidential Information
and Post-Employment Restriction Agreement (or any similar agreement the Optionee received from the Company) (the “
Post-Employment Restriction Agreement
”) which breach has an adverse effect on the Company or its Subsidiaries.
For purposes of this Agreement, “
Disability
” shall mean that the Optionee becomes physically or mentally incapacitated and is therefore unable for a period of six (6) consecutive months or for an aggregate of nine (9) months in any twenty-four (24) consecutive month period to perform his or her duties. Any question as to the existence of the Disability of the Optionee for purposes of this Agreement as to which the Optionee and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Optionee and the Company. If the Optionee and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Optionee shall be final and conclusive for all purposes of the Agreement.
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6.
|
Forfeiture and Repayment Provisions.
|
(a)
Failure to properly execute the Agreement (and each other document required to be executed by the Optionee in connection with the Optionee’s receipt of the Option) in a timely manner following the Grant Date may result in the forfeiture of the Option, as determined in the sole discretion of the Company.
(b)
The right to exercise this Option shall be conditional upon the fact that the Optionee has read and understood the forfeiture and repayment provisions set forth in this Section 6, that the Optionee has not engaged in any misconduct or acts contrary to the Company as described below, and that the Optionee has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c)
The Company is authorized to suspend or terminate this Option and any other outstanding stock option held by the Optionee prior to or after termination of employment if the Optionee engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement. If, at any time during the applicable restriction period described in the Post-Employment Restriction Agreement, the Optionee engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement, then any gain (without regard to tax effects) realized by the Optionee from the exercise of this Option, in whole or in part, shall be paid by the Optionee to the Company. The Optionee consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Optionee to the extent of the amounts the Optionee owes the Company hereunder.
(d)
Misconduct.
(i)
The Company is authorized to suspend or terminate this Option and any other outstanding stock option held by the Optionee prior to or after termination of employment if the Company reasonably determines that during the Optionee’s employment with the Company or any of its Subsidiaries:
(1)
The Optionee knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Optionee or of the Code of Conduct program or similar program of the Company; or
(2)
The Optionee was aware of and failed to report, as required by any code of ethics of the Company applicable to the Optionee or by the Code of Conduct program or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Optionee or of the Code of Conduct program or similar program of the Company.
(ii)
If, at any time after the Optionee exercises this Option, in whole or in part, the Company reasonably determines that the provisions of Section 6(c) applies to the Optionee, then any gain (without regard to tax effects) realized by the Optionee from such exercise shall be paid by the Optionee to the Company. The Optionee consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Optionee to the extent of the amounts the Optionee owes the Company under this Section 6.
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7.
|
Method of Exercising Option; Payment of Option Price; Delivery of Purchased
|
(a)
Subject to the terms and conditions of this Agreement, the Optionee may exercise the Option by following the procedures established by the Company from time to time. In addition, the Optionee may exercise the Option by written notice to the Company as provided in Section 10(m) of this Agreement that states (i) the Optionee’s election to exercise the Option, (ii) the Grant Date of the Option, (iii) the Option Price of the shares, (iv) the number of shares as to which the Option is being exercised, (v) the manner of payment and (vi) the manner of payment for any Tax-Related Items (as defined in Section 8 below) withholding amount. The notice shall be signed by the Optionee or the Person or Persons exercising the Option. The notice shall be accompanied by payment in full of the Option Price and the Tax-Related Items withholding for all shares designated in the notice. To the extent that the Option is exercised after the Optionee’s death, the notice of exercise shall also be accompanied by appropriate proof of the right of such Person or Persons to exercise the Option.
(b)
Payment of the Option Price shall be made to the Company through one or a combination of the following methods; provided, that in each such case, such payment method is not prohibited by, or contrary to, any loan document to which the Company is a party:
(i)
cash, in United States currency (including check, draft, money order or wire transfer made payable to the Company);
(ii)
consideration received by the Company under a cashless exercise program adopted by the Company in connection with the Plan;
(iii)
if the Committee, in its sole discretion, allows such an exercise, by reducing the number of shares of Common Stock otherwise deliverable upon the exercise of the Option by the number of shares of Common Stock having an aggregate Fair Market Value on the date of exercise equal to the aggregate Option Price; or
(iv)
delivery (either actual delivery or by attestation) of shares of Common Stock acquired by the Optionee more than six (6) months prior to the date of exercise having an aggregate Fair Market Value on the date of exercise equal to the aggregate Option Price (only full shares of Common Stock shall be utilized for payment purposes). The Optionee shall represent and warrant in writing that the Optionee is the owner of the shares so delivered, free and clear of all liens, encumbrances, security interests and restrictions, and the Optionee shall duly endorse in blank all certificates delivered to the Company.
Notwithstanding the foregoing, the Optionees rendering services outside the United States may exercise the Option pursuant to Section 6(b)(iii) and (iv) only with the advance approval of the Company.
(c)
Upon any exercise of the Option, and subject to the payment of the Option Price under Section 7(b) and of all Tax-Related Items obligations under Section 8, the Company shall deliver the shares of Common Stock purchased in book entry form. The shares purchased shall be registered in the name of the Optionee, the Optionee’s transferee, or if the Optionee so requests, in writing at the time of exercise, jointly in the name of the Optionee and another person with rights of survivorship. If the Optionee dies, the shares purchased shall be registered in the name of the person entitled to exercise the Option in accordance with the Plan.
9.
Responsibility for Taxes
.
(a)
Regardless of any action the Company or the Optionees’s employer (the “
Employer
”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax‑related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee (“
Tax-Related Items
”), the Optionee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Optionee’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including, but not limited to, the grant, vesting or exercise of the Option, the subsequent sale of shares of Common Stock acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Optionee has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b)
Prior to the relevant taxable or tax withholding event, as applicable, the Optionee will pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; or (ii) withholding from proceeds of the sale of shares of Common Stock acquired at exercise of the Option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization); or (iii) if authorized by the Committee, withholding in shares of Common Stock to be issued at exercise of the Option.
(c)
To avoid any negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case the Optionee will receive a refund of any over-withheld amount in cash and will have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding in shares of Common Stock, for tax purposes, the Optionee is deemed to have been issued the full number of shares of Common Stock subject to the exercised Options, notwithstanding that a number of the shares of Common Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Optionee’s participation in the Plan.
(d)
Finally, the Optionee shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the shares or the proceeds of the sale of shares of Common Stock, if the Optionee fails to comply with the Optionee’s obligations in connection with the Tax-Related Items.
10.
Adjustments.
In the event that the Company engages in a transaction such that any dividend or other distribution (whether in the form of cash, shares of Common Stock, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of shares or other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company or other similar corporate transaction or event affects the shares covered by the Option, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this Option (including, without limitation, the number and kind of shares subject to this Option and the Option Price) shall be adjusted as set forth in Section 4(c) of the Plan.
Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of this Option (including, without limitation, the number and kind of shares subject to this Option and the Option Price) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
11.
General Provisions.
(a)
Interpretations
. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon the Optionee’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(b)
No Rights as a Shareholder
. Neither the Optionee nor the Optionee’s legal representatives shall have any of the rights and privileges of a shareholder of the Company with respect to the shares of Common Stock subject to the Option unless and until such shares are issued upon exercise of the Option. Except as expressly provided by the Plan, no adjustment shall be made for dividends or other rights for which the record date is prior to the issuance of any purchased shares and the delivery of any certificate or certificates for such shares.
(c)
Nature of Grant
. In accepting the Option, the Optionee acknowledges, understands and agrees that:
(i)
the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time;
(ii)
the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of options, or benefits in lieu of options, even if options have been granted repeatedly in the past;
(iii)
all decisions with respect to future option grants, if any, will be at the sole discretion of the Company;
(iv)
the Optionee’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Optionee’s employment or service relationship (if any) at any time;
(v)
the Optionee is voluntarily participating in the Plan;
(vi)
the Option and any shares of Common Stock acquired under the Plan are not intended to replace any pension rights or compensation;
(vii)
the Option and shares of Common Stock subject to the Option, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(viii)
the future value of the shares of Common Stock underlying the Option is unknown, indeterminable and cannot be predicted with certainty;
(ix)
if the underlying shares of Common Stock do not increase in value, the Option will have no value;
(x)
if the Optionee exercises the Option and acquires shares of Common Stock, the value of such shares of Common Stock may increase or decrease in value, even below the Option Price;
(xi)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from the Optionee’s termination of employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the terms of the Optionee’s employment agreement, if any, or of any employment law in the country where the Optionee resides and/or is employed, even if otherwise applicable to the Optionee’s employment benefits from the Employer) and in consideration of the grant of the Option to which the Optionee is otherwise not entitled, the Optionee irrevocably agrees never to institute any claim against the Company or the Employer, waives his or her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Optionee
shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(xii)
the following provisions apply only to the Optionees providing services outside the United States, as determined by the Company:
A.
the Option and any shares of Common Stock acquired under the Plan are extraordinary items that do not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Optionee’s employment or service contract, if any;
B.
the Option and any shares of Common Stock acquired under the Plan are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company
,
the Employer, or any Subsidiary of the Company; and
C.
the Option grant and the Optionee’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary.
(d)
No Advice Regarding Grant.
The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Optionee’s participation in the Plan, or the Optionee’s acquisition or sale of the underlying shares of Common Stock. The Optionee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan.
(e)
Data Privacy
.
(i)
The Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Optionee’s personal data as described in this Agreement and any other Option grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.
(ii)
The Optionee understands that the Company and the Employer may hold certain personal information about the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Options or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”).
(iii)
The Optionee understands that Data will be transferred to E*Trade Financial Services, or such other stock plan service provider as may be selected by the Company in the future or other stock plan service provider that is selected by the Optionee to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Optionee understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than the Optionee’s country. If the Optionee resides outside of the United States, the Optionee understands that he or she may request a list with the names and addresses of any potential recipients of the Data by contacting the Optionee’s local human resources representative. The Optionee authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purpose of implementing, administering and managing his or her participation in the Plan. The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee’s participation in the Plan. If the Optionee resides outside of the United States, the Optionee understands that he or she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. Further, the Optionee understands that he or she is providing the consents herein on a purely voluntary basis. If Optionee does not consent or if Optionee later seeks to revoke his or her consent, his or her status as an employee and career with the Employer will not be adversely affected; the only adverse consequences of refusing or withdrawing his or her consent is that the Company would not be able to grant Options or other equity awards or administer or maintain such Awards. Therefore, the Optionee understands that refusing or withdrawing his or her consent may affect the Optionee’s ability to participate in the Plan. For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.
(f)
Option Not Transferable
.
(i)
Except as otherwise provided by the Plan or by the Committee, the Option shall not be transferable other than by will or by the laws of descent and distribution and the Option shall be exercisable during the Optionee’s lifetime only by the Optionee or by the Optionee’s guardian or legal representative. The Option may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Option shall be void and unenforceable against the Company or any Subsidiaries.
(ii)
None of the purchased shares acquired pursuant to the exercise of this Option shall be assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
(g)
Reservation of Shares
. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Agreement.
(h)
Securities Matters
. The Company shall not be required to deliver any shares of Common Stock until the requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(i)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Optionee.
(j)
Successors and Assigns; No Third Party Beneficiaries
. This Agreement shall inure to the benefit of and be binding upon the Company and the Optionee and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Optionee, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(k)
Headings
. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(l)
Governing Law; Arbitration
. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “
AAA
”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render his or her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect of any thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(m)
Notices
. The Optionee should send all written notices regarding this Agreement or the Plan to the Company at the following address:
MoneyGram International, Inc.
EVP, General Counsel & Secretary
2828 North Harwood Street, 15
th
Floor
Dallas, TX 75201
(n)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 9 hereof and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Optionee’s consent, if such action would materially diminish any of the Optionee’s rights under this Agreement. The Company reserves the right to impose other requirements on the Options and the shares of Common Stock purchased upon exercise of the Option, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Optionee resides pertaining to the issuance or sale of shares of Common Stock or to facilitate the administration of the Plan.
(o)
Entire Agreement
. This Agreement, including the Appendix, and the Plan and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(p)
Severability
. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(q)
Optionee Undertaking
. The Optionee agrees to take such additional action and execute such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Optionee or upon this Option pursuant to the provisions of this Agreement.
(r)
Counterparts
. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(s)
Confidentiality
. The Optionee agrees to maintain the confidentiality of the existence and terms of this Option;
provided
,
however
, that the Optionee may disclose, on a confidential basis, the existence and terms of this Option to his or her spouse, accountant and legal counsel and to the extent required by law or legal process.
(t)
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(u)
Language
. If the Optionee has received this Agreement, or any other document related to the Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(v)
Appendix
. The Option shall be subject to any special provisions set forth in the Appendix for the Optionee’s country of residence, if any. If the Optionee relocates to one of the countries included in the Appendix during the life of the Option, the special provisions for such country shall apply to the Optionee, to the extent the Company determines that the application of such provisions is necessary or advisable under the laws of the country in which the Optionee resides pertaining to the issuance or sale of shares of Common Stock or to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(w)
Waiver
. The Optionee acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Optionee or any other Participant.
(x)
Insider Trading Restrictions/Market Abuse Laws
. Depending upon his or her country of residence, the Optionee may be subject to insider trading restrictions and/or market abuse laws, which may affect the Optionee’s ability to acquire or sell shares or rights to shares (
e.g
., the Option) under the Plan during such times as the Optionee is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Optionee is responsible for complying with any applicable restrictions and is advised to speak with his or her personal legal advisor on this matter.
* * * * * * * *
By signing below, the Optionee accepts this Option and the terms and conditions in this Agreement and the Plan.
MONEYGRAM INTERNATIONAL, INC.
By:
Title:
OPTIONEE
Signature:
Print Name: [____________________]
[THIS IS THE SIGNATURE PAGE TO THE GLOBAL STOCK OPTION AGREEMENT BETWEEN THE ABOVE-REFERENCED PARTIES]
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
APPENDIX To The
GLOBAL STOCK OPTION AGREEMENT
for OptionEES Outside the U.S.
Terms and Conditions
.
This Appendix includes additional terms and conditions that govern the Option granted to the Optionee under the Plan if he/she resides in one of the countries listed below. Certain capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or the Agreement.
If the Optionee is a citizen or resident of a country other than the one in which he/she is currently working, transfers employment to another country after the Grant Date, or is considered a resident of another country for tax or exchange control purposes, the Company shall, at its discretion, determine the extent to which the terms and conditions contained herein shall apply to the Optionee.
Notifications
.
This Appendix also includes information regarding exchange controls and certain other issues of which the Optionee should be aware with respect to the Optionee’s participation in the Plan. The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2014. Such laws are often complex and change frequently. As a result, the Company strongly recommends that the Optionee not rely on the information in this Appendix as the only source of information relating to the consequences of the Optionee’s participation in the Plan because the information may be out of date at the time that the Optionee exercises the Option or sells Common Stock acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation and the Company is not in a position to assure the Optionee of any particular result. Accordingly, the Optionee is advised to seek appropriate professional advice as to how the relevant laws in the Optionee’s country may apply to his/her situation.
Finally, if the Optionee is a citizen or resident of a country other than the one in which he/she is currently working, transfers employment to another country after the Grant Date, or is considered a resident of another country for tax or exchange control purposes, the information contained herein may not be applicable to the Optionee.
Belgium
Terms and Conditions
.
Tax Considerations.
The Option must be accepted in writing either (i) within 60 days of the offer (for tax at the offer date,
i.e.
, the date the written grant terms are communicated to the Optionee), or (ii) after 60 days of the offer (for tax at exercise). The Optionee will receive a separate offer letter, acceptance form and undertaking form in addition to the Agreement. The Optionee should refer to the offer letter for a more detailed description of the tax consequences of choosing to accept the Option. The Optionee should also consult a personal tax advisor with respect to completing the additional forms.
Notifications
.
Tax Reporting Notification.
The Optionee is required to report any taxable income attributable to the Option on his or her annual tax return. The Optionee is also required to report any bank accounts opened and maintained outside Belgium on his or her annual tax return.
France
Terms and Conditions
.
Consent to Receive Information in English.
By accepting the Option, the Optionee confirms having read and understood the Plan and Agreement, including all terms and conditions included therein, which were provided in the English language. The Optionee accepts the terms of those documents accordingly.
En acceptant ces Option, le Titulaire de l’Option confirme avoir lu et compris le Plan et le Contrat y relatifs, incluant tous leurs termes et conditions, qui ont été transmis en langue anglaise. Le Titulaire de l’Option accepte les dispositions de ces documents en connaissance de cause.
Notifications
.
Tax Notification.
The Option is not intended to be French-qualified for tax purposes.
Exchange Control Notification.
The Optionee
acknowledges and understands that the Optionee may hold shares of Common Stock acquired under the Plan outside of France, provided that the Optionee declares all foreign accounts, whether open, current, or closed, in the Optionee’s income tax return.
Germany
Notifications
.
Exchange Control Notification.
Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank (
Bundesbank
).
Effective from September 2013, the report must be filed electronically. The form of report (
Allgemeine Meldeportal Statistik
) can be accessed via the
Bundesbank’s
website (
www.bundesbank.de
) and is available in both German and English. The Optionee is responsible for satisfying the reporting obligation.
In addition, in the unlikely event the Optionee holds shares of Common Stock whose value exceeds 10% of the total capital of the Company, the Optionee must report these holdings to the Company on an annual basis.
Greece
Notifications
.
Exchange Control Notification.
If the Optionee exercises the Option through a cash purchase exercise, rather than a cashless exercise, in order to remit funds out of Greece, the Optionee will need to complete an application form that will be provided to the Optionee by the foreign exchange bank handling the transaction.
If the Optionee exercises the Option by way of a cashless method of exercise, this application will not be required since no funds will be remitted out of Greece.
Hong Kong
Terms and Conditions
.
Securities Law Notification.
To facilitate compliance with securities laws in Hong Kong, in the event the Option vests and becomes exercisable within six (6) months of the Grant Date, the Optionee agrees not to sell the shares of Common Stock issued upon exercise of the Option prior to the six-month anniversary of the Grant Date.
Notifications
.
Securities Law Notification.
Warning: The Option and shares of Common Stock issued at exercise do not constitute a public offering of securities under Hong Kong law and are available only to employees of the Company or one of its Subsidiaries. The Agreement, including this Appendix, and the Plan and other incidental communication materials have not been prepared in accordance with and are not intended to constitute a “prospectus” for a public offering of securities under the applicable securities legislation in Hong Kong. These documents have not been reviewed by any regulatory authority in Hong Kong. The Options are intended only for the personal use of the Optionee to whom they are granted and who meets the eligibility requirements of the Plan. The Optionee is advised to exercise caution in relation to this offer of the Option under the Plan. If the Optionee is in any doubt about any of the contents of the Agreement, including this Appendix, or the Plan, he or she should obtain independent professional advice.
Ireland
Notifications
.
Director Notification Obligation.
If the Optionee is a director, shadow director or secretary of the Company’s Irish Subsidiary, the Optionee must notify the Irish Subsidiary in writing within five business days of receiving or disposing of an interest in the Company (
e.g.,
an Option, shares of Common Stock, etc.), or within five business days of becoming aware of the event giving rise to the notification requirement or within five business days of becoming a director or secretary if such an interest exists at the time. This notification requirement also applies with respect to the interests of a spouse or children under the age of 18 (whose interests will be attributed to the director, shadow director or secretary).
Italy
Terms and Conditions
.
Payment of Option Price.
Notwithstanding Sections 7 and 8 of the Agreement, due to regulatory requirements in Italy, the Optionee will be required to pay the Option Price and any Tax-Related Items withholding by a full cashless method of exercise, whereby upon exercise of the Option, the Optionee immediately sells all of the shares of Common Stock being purchased upon such exercise through a brokerage firm acceptable to the Company and the proceeds of such sale, less an amount in cash equal to the Option Price for the shares of Common Stock being so purchased, any Tax-Related Items and any brokers’ fees or commissions, are remitted to the Optionee. The Company reserves the right to provide the Optionee with additional methods of exercise depending on local developments.
Data Privacy Notice and Consent
. The following replaces Section 10(e) of the Agreement:
The Optionee acknowledges that his or her personal data is collected, used, processed and transferred outside of the European Union, as described in this Agreement by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan. The Optionee understands that the Employer and/or the Company hold certain personal information about the Optionee, including, but not limited to, the Optionee’s name, home address and telephone number, date of birth, national insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Optionee’s favor (“Data”), for the purpose of implementing, administering and managing the Plan.
The Optionee is aware that providing the Company with the Data is necessary for the performance of this Agreement and that the Optionee’s refusal to provide the Data would make it impossible for the Company to perform its contractual obligations and may affect the Optionee’s ability to exercise or realize benefits from the Option. The Optionee’s Data shall be accessible within the Company’s organization only by the persons specifically charged with data-processing operations and by the persons that need to access the Data because of their duties and position in relation to the performance of the contract. The Controller of personal data processing is Moneygram International, Inc., with registered offices at 2828 North Harwood Street, Floor 15, Dallas, Texas 75201, and, pursuant to Legislative Decree no. 196/2003, its representative in Italy is MoneyGram Payment Systems Italy srl and MoneyGram International Limited, with registered offices at Via Bombay, 5, 00144 Roma.
The Optionee understands that Data will be transferred to E*Trade Financial Services and/or to such other stock plan service provider as may be selected by the Company, which are assisting the Company with the implementation, administration and management of the Plan and that Data may be transferred to certain other third parties assisting in the implementation, administration and management of the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom he or she may elect to deposit any shares of stock acquired upon exercise of the Option. The Optionee understands that these recipients, which may receive, possess, use, retain and transfer such Data for the above-mentioned purposes, may be located in the Optionee’s country, or elsewhere, including outside of the European Economic Area (e.g., the United States), and that the recipient’s country may have different data privacy laws and protections than the Optionee’s country. The processing activity, including communication and transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require the Optionee’s consent thereto as the processing is necessary to the performance of contractual obligations related to the implementation, administration and management of the Plan.
The Optionee understands that data-processing relating to the purposes above specified shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with
confidentiality and security provisions as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003. The Optionee understands that Data will be held only as long as is required by the law or is necessary to implement, administer and manage the Optionee’s participation in the Plan. The Optionee understands that, pursuant to Article 7 of Legislative Decree No. 196/2003, the Optionee has the right, without limitation, to access, delete, update, request the rectification of the Optionee’s Data and cease, for legitimate reasons, the Data-processing. Furthermore, the Optionee is aware that the Data will not be used for direct marketing purposes. In addition, the Data provided can be reviewed and questions or complaints can be addressed by contacting a local representative available at MoneyGram Payment Systems Italy srl and MoneyGram International Limited, with registered offices at Via Bombay, 5, 00144 Roma.
Plan Document Acknowledgment
. By accepting the Option, the Optionee acknowledges that he or she has received a copy of the Plan and the Agreement and has reviewed the Plan and the Agreement, including this Appendix, in their entirety and fully understands and accepts all provisions of the Plan and the Agreement, including this Appendix.
The Optionee further acknowledges that he or she has read and specifically and expressly approves the following sections of the Agreement and this Appendix: “Term of Option and Exercisability;” “Effect of Change in Control,” “Effect of Termination of Employment;” “Forfeiture and Repayment Provisions;” “Responsibility for Taxes;” “Nature of Grant;” “Option Not Transferable;” “Governing Law; Arbitration;” “Optionee Undertaking;” “Language;” “Waiver;” “Insider Trading Restrictions/Market Abuse Laws;” and the “Data Privacy” section above.
Notifications
.
Exchange Control Notification.
Italian residents who, at any time during the fiscal year, hold foreign financial assets (including cash and shares of Common Stock) which may generate income taxable in Italy are required to report these assets on their annual tax returns for the year during which the assets are held, or on a special form if no tax return is due. These reporting obligations will also apply to Italian residents who are the beneficial owners of foreign financial assets under Italian money laundering provisions.
Mexico
Terms and Conditions
.
Acknowledgement of the Grant Agreement.
By accepting the Option, the Optionee acknowledges that he or she has received a copy of the Plan and the Agreement, including this Appendix, which he or she has reviewed. The Optionee further acknowledges that he or she accepts all the provisions of the Plan and the Agreement, including this Appendix. The Optionee also acknowledges that he or she has read and specifically and expressly approves the terms and conditions set forth in the “Nature of Grant” section of the Agreement, which clearly provide as follows:
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(1)
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The Optionee's participation in the Plan does not constitute an acquired right;
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(2)
|
The Plan and the Optionee's participation in it are offered by the Company on a wholly discretionary basis;
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(3)
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The Optionee's participation in the Plan is voluntary; and
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(4)
|
The Company and its Subsidiaries or Affiliates are not responsible for any decrease in the value of any shares of Common Stock acquired under the Plan.
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Labor Law Acknowledgement and Policy Statement.
By accepting the Option, the Optionee acknowledges that the Company, with registered offices at 2828 North Harwood Street, 15
th
Floor, Dallas, TX 75201, U.S.A., is solely responsible for the administration of the Plan. The Optionee further acknowledges that his or her participation in the Plan, the grant of the Option and any acquisition of shares of Common Stock under the Plan do not constitute an employment relationship between the Optionee and the Company because the Optionee is participating in the Plan on a wholly commercial basis. Based on the foregoing, the Optionee expressly acknowledges that the Plan and the benefits that he or she may derive from participation in the Plan do not establish any rights between the Optionee and his or her Employer and do not form part of the employment conditions and/or benefits provided by his or her Employer, and any modification of the Plan or its termination shall not constitute a change or impairment of the terms and conditions of the Optionee's employment.
The Optionee further understands that his or her participation in the Plan is the result of a unilateral and discretionary decision of the Company and, therefore, the Company reserves the absolute right to amend and/or discontinue the Optionee's participation in the Plan at any time, without any liability to the Optionee.
Finally, the Optionee hereby declares that he or she does not reserve to him- or herself any action or right to bring any claim against the Company for any compensation or damages regarding any provision of the Plan or the benefits derived under the Plan, and that he or she therefore grants a full and broad release to the Company, its Subsidiaries, Affiliates, branches, representation offices, shareholders, officers, agents or legal representatives, with respect to any claim that may arise.
Spanish Translation
Reconocimiento del Convenio de Concesión. Al aceptar las Unidades de Acciones Restringidas, el Beneficiario reconoce que ha recibido y revisado una copia del Plan y de el Convenio de Concesión, incluyendo este Apéndice. El Beneficiario reconoce y acepta todas las disposiciones del Plan y del Convenio de Concesión, incluyendo el apéndice. El Beneficiario también reconoce que ha leído y aprobado de forma expresa los términos y condiciones establecidos en la sección: “Nature of Plan and Award” del Convenio de Concesión, que claramente establece lo siguiente:
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(1)
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La participación del Beneficiario en el Plan no constituye un derecho adquirido;
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(2)
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El Plan y la participación del Beneficiario en el es ofrecido por la Compañía de manera completamente discrecional;
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(3)
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La participación del Beneficiario en el Plan es voluntaria; y
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(4)
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La Compañía y sus Subsidiarias o afiliadas no son responsables por ninguna disminución en el valor de las Acciones de adquiridas al termino del Periodo de Restricción.
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Reconocimiento del Derecho Laboral y Declaración de la Política. Al aceptar el otorgamiento, el Beneficiario reconoce que Company, con domicilio social en E.U.A., es la única responsable de la administración del Plan. Además, el Beneficiario reconoce que su participación en el Plan, la concesión de Unidades de Acciones Restringidas y cualquier adquisición de Acciones de bajo el Plan no constituyen una relación laboral entre el Beneficiario y Company, en virtud de que el Beneficiario está participando en el Plan en su totalidad sobre una base comercial. Por lo anterior, el Beneficiario expresamente reconoce que el Plan y los beneficios que puedan derivarse de su participación no establecen ningún derecho entre el Beneficiario y su empleador y que no forman parte de las condiciones de trabajo y/o beneficios otorgados por su empleador, y cualquier modificación del Plan o la terminación no constituirá un cambio o modificación de los términos y condiciones en el empleo del Beneficiario.
Además, el Beneficiario comprende que su participación en el Plan es el resultado de una decisión discrecional y unilateral de Company, por lo que Company se reserva el derecho absoluto de modificar y/o suspender la participación del Beneficiario en el Plan en cualquier momento, sin responsabilidad alguna del Beneficiario.
Finalmente, el Beneficiario manifiesta que no se reserva acción o derecho alguno que origine una demanda en contra de Company, por cualquier indemnización o daño relacionada con las disposiciones del Plan o de los beneficios otorgados en el mismo, y en consecuencia el Beneficiario libera de la manera más amplia y total de responsabilidad a Company, sus subsidiarias, afiliadas, sucursales, oficinas de representación, sus accionistas, directores, agentes y representantes legales de cualquier demanda que pudiera surgir.
Netherlands
There are no country-specific provisions.
Peru
Notifications
.
Securities Law Notification.
The offer of the Option is considered a private offering in Peru and is therefore not subject to registration in Peru.
South Africa
Terms and Conditions
.
Withholding Taxes.
This provision supplements Section 8 of the Agreement:
By accepting the Option, the Optionee agrees to notify the Employer of the amount of any gain realized upon exercise of the Option. If the Optionee fails to advise the Employer of the gain realized upon exercise of the Option, he or she may be liable for a fine. The Optionee will be responsible for paying any difference between the actual Tax-Related Items liability and the amount withheld.
Exchange Control Notification.
The Optionee is solely responsible for complying with applicable South African exchange control regulations. Since the exchange control regulations change frequently and without notice, the Optionee should consult his or her legal advisor prior to the acquisition or sale of shares of Common Stock under the Plan to ensure compliance with current regulations. As noted, it is the Optionee’s responsibility to comply with South African exchange control laws, and neither the Company nor the Employer will be liable for any fines or penalties resulting from failure to comply with applicable laws.
Notifications
.
Tax Clearance Certificate for Cash Exercises.
If the Optionee exercises the Option by a cash purchase exercise, rather than a cashless exercise, the Optionee is required to obtain and provide to the Employer, or any third party designated by the Employer or the Company, a Tax Clearance Certificate (with respect to Foreign Investments) bearing the official stamp and signature of the Exchange Control Department of the South African Revenue Service (“
SARS
”). The Optionee must renew this Tax Clearance Certificate each twelve (12) months or in such other period as may be required by the SARS.
If the Optionee exercises the Option by a cashless exercise whereby no funds are remitted offshore for the purchase of shares, he or she is not required to obtain a Tax Clearance Certificate.
Exchange Control Notification.
Under current South African exchange control policy, an Optionee may invest a maximum of ZAR5,000,000 in offshore investments annually, including in shares of the Company’s Common Stock. The first ZAR1,000,000 of the annual investment allowance requires no prior authorization; the next ZAR4,000,000 requires tax clearance. If the Optionee wishes to exercise his or her Option through a cash purchase exercise and the ZAR5,000,000 limit would be exceeded upon the exercise of the Option, the Optionee may still transfer funds for payment of the shares provided that he or she immediately sells the shares and repatriates the full proceeds to South Africa. There is no repatriation requirement on the sale proceeds if the ZAR5,000,000 limit is not exceeded. If the Optionee exercises the Option using a cashless exercise, the value of the shares thus purchased will not be counted against the Optionee’s offshore investment allowance of ZAR5,000,000.
It is the Optionee’s responsibility to ensure that he or she does not exceed this limit. The Optionee should note that this is a cumulative allowance and that his or her ability to remit funds for the purchase of shares of Common Stock will be reduced if the Optionee’s foreign investment limit is utilized to make a transfer of funds offshore that is unrelated to the Plan.
Spain
Terms and Conditions
.
Nature of Grant.
The following section supplements Section 10(c) of the Agreement:
In accepting the Option, the Optionee acknowledges that he or she consents to participation in the Plan and has received a copy of the Plan.
The Optionee understands that the Company, in its sole discretion, has unilaterally and gratuitously decided to grant Options under the Plan to individuals who may be employees of the Company or a Subsidiary throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or a Subsidiary on an ongoing basis except to the extent provided in the Plan and Agreement. Consequently, the Optionee understands that the Option is granted on the assumption and condition that the Options and the shares issued upon settlement shall not become a part of any employment contract (either with the Company or a Subsidiary) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, the Optionee understands that the grant of Options would not be made to the Optionee but for the assumptions and conditions referred to above; thus, the Optionee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of Options shall be null and void.
The Optionee understands and agrees that, as a condition of the grant of the Option, the termination of the Optionee’s continuous employment for any reason (including the reasons listed below) will automatically result in the loss of the Option to the extent the Option has not vested as of the date the Optionee is no longer actively providing services as explained in Section 5(f) of the Agreement. In particular, the Optionee understands and agrees that any unvested portion of the Option as of the date the Optionee is no longer actively providing services and any vested portion of the Option not exercised within the periods set forth in the Agreement (depending on the reason of termination) will be forfeited without entitlement to the underlying shares of Common Stock or to any amount of indemnification in the event of termination of the Optionee’s continuous employment by reason of, but not limited to, resignation, retirement, disciplinary dismissal adjudged to be with Cause, disciplinary dismissal adjudged or recognized to be without Cause, individual or collective dismissal adjudged or recognized to be without Cause, individual or collective dismissal on objective grounds, whether adjudged or recognized to be with or without cause, material modification of the terms of employment under Article 41 of the Workers’ Statute, relocation under Article 40 of the Workers’ Statute, Article 50 of the Workers’ Statute, unilateral withdrawal by the Employer and under Article 10.3 of the Royal Decree 1382/1985. The Optionee acknowledges that he or she has read and specifically accepts the conditions referred to in Section 5 of the Agreement.
The Optionee understands that this grant would not be made but for the assumptions and conditions referred to above; thus, the Optionee understands, acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then this Option shall be null and void.
Notifications
.
Exchange Control Notification.
The acquisition, ownership and sale of shares of Common Stock under the Plan must be declared for statistical purposes to the Spanish Dirección General de Comercio e Inversiones (the “
DGCI
”), the Bureau for Commerce and Investments, which is a department of the Ministry of Economy and Competitiveness. Generally, the declaration must be made each January for shares owned as of December 31 of the prior year; however, if the amount of shares acquired or sold exceeds €1,502,530 (or if the Optionee holds 10% or more of the share capital of the Company or such other amount that would entitle the Optionee to join the Company’s board of directors), the declaration must be filed also within one month of the acquisition or sale, as applicable.
Foreign Asset Reporting Notification.
The Optionee is required to declare electronically to the Bank of Spain any securities accounts (including brokerage accounts held abroad), as well as the Shares held in such account if the value of the transactions during the prior tax year or the balances in such accounts as of December 31 of the prior tax year exceed €1,000,000. More frequent reporting is required if such transaction value or account balance exceeds €100,000,000.
Further, to the extent that the Optionee holds shares of Common Stock and/or has bank accounts outside Spain with a value in excess of €50,000 (for each type of asset) as of December 31, the Optionee will be required to report information on such assets on his or her tax return for such year. After such shares and/or accounts are initially reported, the reporting obligation will apply for subsequent years only if the value of any previously-reported shares or accounts increases by more than €20,000.
Securities Law Notification
. No “offer of securities to the public,” as defined under Spanish law, has taken place or will take place in the Spanish territory with respect to the Option. No public offering prospectus has been, nor will it be registered with the Comisión Nacional del Mercado de Valores (Spanish Securities Exchange Commission) (“
CNMV
”). Neither the Plan nor the Agreement constitute a public offering prospectus and they have not been, nor will they be, registered with the CNMV.
Sweden
There are no country-specific provisions.
United Arab Emirates (Dubai)
Notifications
.
Securities Law Notification.
The Agreement, including this Appendix, the Plan, and other incidental communication materials are intended for distribution only to employees of the Company and its Subsidiaries for the purposes of an employee compensation or reward scheme. The Dubai Airport Free Zone, Emirates Securities and Commodities Authority and/or the Central Bank has no responsibility for reviewing or verifying any documents in connection with the Award. Neither the Ministry of Economy nor the Dubai Department of Economic Development have approved this statement nor taken steps to verify the information set out in it, and have no responsibility for it.
Further, the shares of Common Stock underlying the Option may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the securities offered should conduct their own due diligence on the securities. If the Optionee is in any doubt about any of the contents of the Agreement, including this Appendix, or the Plan, the Optionee should obtain independent professional advice.
United Kingdom
Terms and Conditions
.
Responsibility for Taxes.
This section supplements Section 8 of the Agreement:
If payment or withholding of the income tax liability is not made within ninety (90) days of the event giving rise to the income tax liability or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “
Due Date
”), the amount of any uncollected Tax-Related Items shall constitute a loan owed by the Optionee to the Employer, effective as of the Due Date. The Optionee agrees that the loan will bear interest at the then-current official rate of Her Majesty’s Revenue & Customs (“
HMRC
”), it shall be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 8 of the Agreement.
Notwithstanding the foregoing, if the Optionee is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the Optionee shall not be eligible for a loan from the Company to cover the income tax due. In the event that the Optionee is a director or executive officer of the Company and income tax is not collected from or paid by the Optionee by the Due Date, the amount of any uncollected income tax may constitute a benefit to him/her on which additional income tax and national insurance contributions (“
NICs
”) may be payable. The Optionee will be responsible for reporting any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for reimbursing the Company or the Employer, as applicable, for the value of any NICs due on this additional benefit, which the Company or the Employer may recover at any time thereafter by any of the means referred to in Section 8 of the Agreement.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
GLOBAL Time-Based RESTRICTED STOCK UNIT
AWARD AGREEMENT
This
GLOBAL Time-Based RESTRICTED STOCK UNIT AWARD AGREEMENT
(the “
Agreement
”) is made by and between
MoneyGram International, Inc.
, a Delaware corporation (the “
Company
”), and Pamela H. Patsley (the “
Participant
”). The grant date of this award is February 24, 2014 (the “
Grant Date
”).
The Company hereby grants to the Participant a time-based Restricted Stock Unit (an “
RSU
”) award covering 138,198 shares (the “
Shares
”) of Common Stock, $.01 par value per share, of the Company according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “
Appendix
”), and in the Company’s 2005 Omnibus Incentive Plan (the “
Plan
”). Each RSU represents the right to receive one Share, subject to the vesting requirements of this Agreement and the terms of the Plan. The RSUs are granted under Section 6(c) and 6(d) of the Plan. The RSUs are subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(c) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
(a)
Unless otherwise provided in this Agreement, the RSUs granted under this Agreement shall vest as follows, provided the Participant remains continuously employed by the Company or a Subsidiary from the Grant Date through each anniversary (each a “
Vesting Date
”):
|
|
|
|
|
|
|
|
Vesting Date
|
|
Aggregate Percentage Vested
|
|
1st Anniversary of Grant Date
|
|
33.3
|
%
|
|
2nd Anniversary of Grant Date
|
|
33.3
|
%
|
|
3rd Anniversary of Grant Date
|
|
33.4
|
%
|
(b)
The Participant shall have no rights to the Shares until the RSUs have vested. Prior to settlement, the RSUs represent an unfunded and unsecured obligation of the Company.
(c)
For purposes of this Agreement, “
Subsidiary
” shall mean any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
3.
Settlement of RSUs
. Any RSUs that vest shall be paid to the Participant solely in whole Shares (i) on the date the RSUs vest in accordance with Section 2 above, including upon a vesting event arising pursuant to Section 6 hereof, or (ii) if sooner, on the date the RSUs vest pursuant to Section 5 below; provided, however, that if the Change in Control giving rise to the vesting acceleration event pursuant to Section 5 below is not a “change in control event” within the meaning of Section 409A of the Code and the regulations and guidance promulgated thereunder to the extent applicable (collectively, “
Code Section 409A
”), then the RSUs that vest pursuant to Section 5 shall be paid instead in accordance with Section 3(i).
4.
Restrictions on Transfer
.
(a)
Except as otherwise provided by the Plan or by the Committee, the RSUs shall not be transferable other than by will or by the laws of descent and distribution. The RSUs may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the RSUs shall be void and unenforceable against the Company or any Subsidiaries.
(b)
None of the Shares acquired pursuant to the RSU award shall be assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
5.
Effect of Involuntary Termination Following Change in Control
. Notwithstanding the vesting provisions contained in Section 2 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined below) the following provisions shall apply:
(a)
Notwithstanding the other provisions of this Section 5, if the RSUs are assumed or otherwise replaced in connection with a Change in Control and the Participant’s continuous employment is terminated by the Company or any of its Subsidiaries without Cause (as defined below) or the Participant terminates her employment for “Good Reason” (as such term is defined below) in each case within 12 months following the occurrence of such Change in Control but prior to a Vesting Date, then the unvested RSUs will automatically accelerate and become vested in full. The vesting acceleration benefits provided under this Section 5(a) are subject to the satisfaction of the conditions set forth in Section 6.6 of the Employment Agreement.
(b)
For purposes of this Agreement, “
Good Reason
” shall mean, without the Participant’s consent, (A) any material reduction in the Participant’s position or responsibilities, excluding the failure to continue to serve as Executive Chairman of the Company or an isolated, insubstantial or inadvertent action not taken in bad faith; (B) a material reduction of the Participant’s Base Salary, or Target Bonus (as these terms are defined in the Employment Agreement) opportunity then in effect, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company; or (C) the reassignment of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work on the Grant Date; provided that none of the events described in clauses (A), (B) and (C) shall constitute Good Reason hereunder unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate her employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice. Failing such cure, a termination of employment by the Participant for Good Reason shall be effective on the day following the expiration of such cure period.
Notwithstanding anything else to the contrary contained in this Agreement or the Employment Agreement, if the Company temporarily suspends the Participant from her duties but retains the Participant as an employee pending or during an investigation of whether an act or omission by the Participant constitutes Cause, and the Participant tenders her resignation based on Good Reason with respect to the suspension of duties within the required period for resigning for Good Reason, the Company may delay treating such resignation as for Good Reason until the completion of the investigation and need not treat the resignation as based on Good Reason at such date if it can then establish Cause; provided, however, that the Participant shall retain her right to terminate employment for Good Reason based on other factors, if applicable.
(c)
For purposes of this Agreement, notwithstanding the definition of Change in Control in any other agreement or plan that may be applicable to the Participant, “
Change in Control
” shall mean (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets, (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934, as amended (the “
Exchange Act
”)), or (iii) the merger, consolidation reorganization, recapitalization or share exchange of the Company with another entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders of the voting power of the outstanding securities of the Company, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold less than 50% in voting power of the outstanding securities of the Company or the surviving entity or resulting entity, as the case may be, immediately following such transaction; provided, however, that the issuance of securities by the Company shall not, in any event, constitute a Change in Control, and for the avoidance of doubt a sale or other transfer or series of transfers of all or any portion of the securities of the Company held by the Investors and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in an entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting power of the outstanding securities of the Company; and provided, further, that to the extent necessary to comply with Code Section 409A with respect to the payment of deferred compensation, “Change in Control” shall be limited to a “change in control event” within the meaning of Code Section 409A.
For purposes hereof, “
Investors
” shall mean the “Investors” as defined in that certain Amended and Restated Purchase Agreement, dated March 17, 2008, by and between the Company and the other parties thereto, and their respective affiliates (not including the Company).
(d)
For purposes of this Agreement, “
Cause
” shall mean a good faith finding by the Company’s Board of Directors (the “
Board
”) of: (A) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the Board that are within the Participant’s control and consistent with the Participant’s status as a senior executive of the Company and her duties and responsibilities hereunder (except for a failure that is attributable to the Participant’s illness, injury or Disability) for a period of 10 days following written notice by the Company to the Participant of such failure; (B) fraud or material dishonesty in the performance of the Participant’s duties hereunder; (C) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof, (y) a misdemeanor involving moral turpitude or (z) a material violation of federal or state securities laws; (D) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (E) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties
hereunder which is materially injurious to the financial condition or business reputation of the Company; (F) the Participant’s material breach of the Company’s Code of Conduct and Ethics or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach has a material adverse effect on the Company; or (G) the Participant’s breach of the provisions of Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement which breach has a material adverse effect on the Company.
(e)
For purposes of this Agreement, “
Employment Agreement
” shall mean the Employment Agreement dated March 27, 2013 by and among the Company and the Participant.
6.
Effect of Termination of Employment
. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Board, if the Participant ceases to be an employee of the Company or any of its Subsidiaries, the following actions shall occur:
(a)
Termination for Cause; Resignation Without Good Reason
. If the Participant’s employment with the Company or any of its Subsidiaries is terminated for Cause (as defined below) or the Participant resigns other than for Good Reason, any RSUs that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b)
Involuntary Termination (in the absence of a Change in Control)
. If the Participant’s employment with the Company or any of its Subsidiaries is terminated by the Company without Cause or by the Participant for Good Reason, then the unvested portion of the RSUs shall remain outstanding and eligible to vest following the date of termination as if such employment termination had not occurred, provided that if the Participant breaches her obligations pursuant to Section 8 of the Employment Agreement, such unvested portion shall be immediately forfeited without consideration.
(c)
Death/Disability
. Upon the termination of the Participant’s employment due to the Participant’s death or Disability (as defined below), then a pro-rated portion of the RSUs (determined by multiplying the total number of RSUs subject to the award by a fraction, the numerator of which is the number of days during the vesting period (
i.e.
, the period commencing the Grant Date and ending on the third anniversary of the Grant Date) that the Participant is employed with the Company and the denominator of which is the total number of days in the vesting period) shall remain outstanding and eligible to vest following the termination of employment as if such employment termination had not occurred.
(d)
For purposes of this Agreement, “
Disability
” shall mean a determination by a qualified independent physician mutually acceptable to the Participant and the Company that the Participant is unable to perform her duties under this Agreement and in all reasonable medical likelihood such inability will continue for a period of 120 consecutive days or 180 days in any 365 day period. The Participant shall fully cooperate in connection with the determination of whether Disability exists. If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement.
(e)
For purposes of this Agreement, the Participant shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any) as of the date that the Participant is no longer actively providing services and will not be continuously employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits (
e.g.
, continuous employment would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the RSU award, and if the Participant is a U.S. taxpayer, such determination shall be made in accordance with Code Section 409A.
(f)
The continued vesting benefits provided in this Section 6 are subject to satisfaction of the conditions set forth in Section 6.6 of the Employment Agreement.
7.
Forfeiture and Repayment Provisions
.
(a)
Failure to properly execute the Agreement (and each other document required to be executed by the Participant in connection with the Participant’s receipt of the RSUs) in a timely manner following the Grant Date may result in the forfeiture of the RSUs, as determined in the sole discretion of the Company.
(b)
The right to vest in the RSUs shall be conditional upon the fact that the Participant has read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c)
The Company is authorized to suspend or terminate this RSU award prior to or after termination of employment if the Participant engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement. If, at any time during the applicable restriction period described in the Post-Employment Restriction Agreement, the Participant engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement, then any gain (without regard to tax effects) realized by the Participant from the vesting of the RSUs, in whole or in part, shall be paid
by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company hereunder.
(d)
Misconduct
(i)
The Company is authorized to suspend or terminate this RSU award prior to or after termination of employment if the Company reasonably determines that during the Participant’s employment with the Company or any of its Subsidiaries:
(1)
The Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(2)
The Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company.
(ii)
If, at any time after the Participant vests in the RSUs, in whole or in part, the Company reasonably determines that the provisions of Section 7(c) apply to the Participant, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7.
8.
Miscellaneous
.
(a)
Issuance of Shares.
Upon any vesting of the RSUs, and subject to the payment of any Tax-Related Items (as defined under Section 8(d) below), the Company shall deliver the Shares in book entry form at the times specified in Section 3 above. The Shares acquired shall be registered in the name of the Participant, the Participant’s transferee, or if the Participant so requests, in writing at the time of vesting, jointly in the name of the Participant and another person with rights of survivorship. If the Participant dies, the Shares acquired shall be registered in the name of the person entitled to receive the Shares in accordance with the Plan.
(b)
Rights as Shareholder.
RSUs are not actual Shares, but rather, represent a right to receive Shares according to the terms and conditions set forth herein and the terms of the Plan. Accordingly, the issuance of an RSU shall not entitle the Participant to any of the rights or benefits generally accorded to stockholders unless and until a Share is actually issued under Section 8(a) hereof.
(c)
Adjustments to Award
.
(i)
In the event that the Company engages in a transaction such that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the shares covered by the RSU award, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this RSU award (including, without limitation, the number and kind of Shares subject to this RSU award) shall be adjusted as set forth in Section 4(c) of the Plan.
(ii)
Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of this RSU award (including, without limitation, the number and kind of Shares subject to this RSU award) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
(d)
Responsibility for Taxes
.
(i)
Regardless of any action the Company or the Participant’s employer (the “
Employer
”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“
Tax-Related Items
”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the RSUs, including, but not limited to, the grant, vesting or settlement of the RSUs, the issuance of Shares upon settlement of the RSUs, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the RSUs to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii)
In this regard, the Participant authorizes the Company or its agent to satisfy the obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon vesting/settlement of the RSUs. In the event that
such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the RSUs, the Participant authorizes and directs the Company and/or its agent to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant at vesting/settlement of the RSUs as the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.
(iii)
To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested RSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
(iv)
Finally, the Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e)
Interpretations
. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(f)
Nature of Grant
. In accepting the grant, the Participant acknowledges, understands and agrees that:
(i)
the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
(ii)
the grant of the RSUs is voluntary and occasional and does not create any contractual or other right to receive future grants of restricted stock units, or benefits in lieu of restricted stock units, even if restricted stock units have been granted repeatedly in the past;
(iii)
all decisions with respect to future RSU grants, if any, will be at the sole discretion of the Company;
(iv)
the Participant’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;
(v)
the Participant is voluntarily participating in the Plan;
(vi)
the RSUs and the Shares subject to the RSUs are not intended to replace any pension rights or compensation;
(vii)
the RSUs and the Shares subject to the RSUs, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(viii)
the future value of the underlying Shares is unknown and cannot be predicted with certainty;
(ix)
no claim or entitlement to compensation or damages shall arise from forfeiture of the RSUs resulting from the Participant’s termination of continuous employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the Participant’s employment or service agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even it otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the RSUs to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(x)
the following provisions apply only to the extent the Participant provides services outside the United States, as determined by the Company:
(A) the RSUs and the Shares subject to the RSUs are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Participant’s employment or service contract, if any;
(B) the RSUs and the Shares subject to the RSUs are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event
should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary; and
(C) the RSU grant and the Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary.
(g)
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with her own personal tax, legal and financial advisors regarding her participation in the Plan before taking any action related to the Plan.
(h)
Data Privacy
.
(i)
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other RSU grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
(ii)
The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”).
(iii)
The Participant understands that Data will be transferred to E*Trade Financial Services, or such other stock plan service provider as may be selected by the Company in the future or other stock plan service provider that is selected by the Participant to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. If the Participant resides outside the United States, the Participant understands that she may request a list with the names and addresses of any potential recipients of the Data by contacting her local human resources representative. The Participant authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing her participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan. If the Participant resides outside the United States, the Participant understands that she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing her local human resources representative. Further, the Participant understands that she is providing the consents herein on a purely voluntary basis. If the Participant does not consent or if the Participant later seeks to revoke her consent, her status as an employee and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing her consent is that the Company would not be able to grant RSUs or other equity awards or administer or maintain such Awards. Therefore, the Participant understands that refusing or withdrawing her consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that she may contact her local human resources representative.
(i)
Reservation of Shares
. The Company shall at all times during the term of the RSU award reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement.
(j)
Securities Matters
. The Company shall not be required to deliver any Shares until the requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(k)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(l)
Successors and Assigns; No Third Party Beneficiaries
. This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(m)
Headings
. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(n)
Governing Law; Arbitration
. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “
AAA
”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect of any thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(o)
Notices
. The Participant should send all written notices regarding this Agreement or the Plan to the Company at the following address:
MoneyGram International, Inc.
EVP, General Counsel & Secretary
2828 North Harwood Street, 15
th
Floor
Dallas, TX 75201
(p)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 8(p) hereof and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the Participant’s rights under this Agreement. The Company reserves the right to impose other requirements on the RSUs and the Shares acquired upon vesting of the RSUs, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan.
(q)
Entire Agreement
. This Agreement, including the Appendix, and the Plan and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(r)
Severability
. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(s)
Participant Undertaking
. The Participant agrees to take such additional action and execute such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this RSU award pursuant to the provisions of this Agreement.
(t)
Counterparts
. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(u)
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(v)
Language
. If the Participant has received this Agreement, or any other document related to the RSU award and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(w)
Appendix
. The RSU award shall be subject to any special provisions set forth in the Appendix for the Participant’s country of residence, if any. If the Participant relocates to one of the countries included in the Appendix during the life of the RSU award, the special provisions for such country shall apply to the Participant, to the extent the Company determines that the application of such provisions is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(x)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other Participant.
(y)
Insider Trading Restrictions/Market Abuse Laws
. Depending upon her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect the Participant’s ability to acquire or sell Shares or rights to Shares (
e.g
., RSUs) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for complying with any applicable restrictions and is advised to speak with her personal legal advisor on this matter.
(z)
No Trust or Fund Created
. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(aa)
Section 409A Provisions
. This Agreement is intended to comply with Code Section 409A. Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that the payment of RSUs hereunder that constitutes “deferred compensation” to the Participant under Code Section 409A is otherwise payable to the Participant under the Plan or this Agreement solely by reason of the Participant’s termination of employment, such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that the circumstances giving rise to such termination of employment meet the definition of a “separation from service,” within the meaning of Code Section 409A. If the payment of RSUs constitutes deferred compensation subject to Code Section 409A, is made on account of a separation from service and the Participant is a specified employee as defined in Section 409A(a)(2)(B) of the Code at the time of such separation from service, the RSUs shall be paid instead on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
IN WITNESS WHEREOF
, the Company and the Participant have executed this Agreement on the date set forth in the first paragraph.
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MONEYGRAM INTERNATIONAL, INC.
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By: /s/ Steve Piano
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PARTICIPANT
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/s/ Pamela H. Patsley
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PAMELA H. PATSLEY
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MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN
GLOBAL performance-BASED RESTRICTED STOCK UNIT
AWARD AGREEMENT
This
GLOBAL PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT
(the “
Agreement
”) is made by and between
MoneyGram International, Inc.
, a Delaware corporation (the “
Company
”), and Pamela H. Patsley (the “
Participant
”). The grant date of this award is February 24, 2014 (the “
Grant Date
”).
The Company hereby grants to the Participant a performance-based Restricted Stock Unit (a “
Unit
”) award covering 138,198 shares (the “
Shares
”) of Common Stock, $.01 par value per share, of the Company according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “
Appendix
”), and in the Company’s 2005 Omnibus Incentive Plan (the “
Plan
”). Each Unit represents the right to receive one Share, subject to the vesting requirements of this Agreement and the terms of the Plan. The Units are granted under Section 6(c) and 6(d) of the Plan. The Units are subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(c) of this Agreement. A copy of the Plan will be furnished upon request of the Participant. Each capitalized term used but not defined in this Agreement shall have the meaning assigned to that term in the Plan.
The Units granted under this Agreement to “covered employees” (within the meaning of Code Section 162(m) of the United States Internal Revenue Code of 1986, as amended (the “
Code
”), and the regulations promulgated thereunder) are intended to qualify as “qualified performance-based compensation” as described in Code Section 162(m)(4)(C) (“
Qualified Performance-Based Compensation
”).
(a)
Unless otherwise provided in this Agreement, the Units granted under this Agreement shall vest and become payable in Shares as of the Vesting Date (specified in the attached Schedule A, Section 6), (i) to the extent the performance goals (the “
Performance Goals
”) applicable to the performance period (the “
Performance Period
”) (specified in the attached Schedule A, Section 3) are attained, as determined accordance with Section 2(b) below and (ii) as long as the Participant remains continuously employed by the Company or a Subsidiary from the Grant Date through the Vesting Date (specified in the attached Schedule A, Section 6).
(b)
As soon as reasonably practicable after the completion of the Performance Period, the Committee shall determine the actual level of attainment of the Performance Goals;
provided
,
however
, that in the case of Units intended to constitute Qualified Performance-Based Compensation, the determination of the level of attainment of Performance Goals shall be certified in writing in accordance with the requirements of Code Section 162(m) by the Committee, which shall be comprised of “outside directors” within the meaning of Code Section 162(m). On the basis of the determination or certified level of attainment of the Performance Goal, the number of Units that are eligible to vest shall be calculated. In the case of Units that are intended to constitute Qualified Performance-Based Compensation, the Committee may not increase the number of Units that may be eligible to vest to a number that is greater than the number of Units determined in accordance with the foregoing sentence, but it retains the sole discretion to reduce the number of Units that would otherwise be eligible to vest based on the attainment level of the Performance Goals. For Units that are intended to constitute Qualified Performance-Based Compensation, the Performance Goal may not be adjusted except as specified in the attached Schedule A, Section 4 in accordance with the requirements of Code Section 162(m). For Units that are not intended to constitute Qualified Performance-Based Compensation, the Committee may make such adjustment to the Performance Goal as the Committee in its sole discretion deems appropriate.
(c)
The Participant shall have no rights to the Shares until the Units have vested. Prior to settlement, the Units represent an unfunded and unsecured obligation of the Company.
(d)
For purposes of this Agreement, “Subsidiary” shall mean any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code.
3.
Settlement of Units
. Any Units that vest shall be paid to the Participant solely in whole Shares on, or as soon as practicable after, the date the Units vest in accordance with Section 2 above, but in any event, no later than March 15 of the calendar year following the calendar year of vesting.
4.
Restrictions on Transfer
.
(a)
Except as otherwise provided by the Plan or by the Committee, the Units shall not be transferable other than by will or by the laws of descent and distribution. The Units may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Units shall be void and unenforceable against the Company or any Subsidiaries.
(b)
None of the Shares acquired pursuant to the Unit award shall be assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, whether voluntarily or by operation of law, unless such transfer is in compliance with all applicable securities laws (including, without limitation, the United States Securities Act of 1933, as amended).
5.
Effect of Involuntary Termination Following Change in Control
. Notwithstanding the vesting provisions contained in Section 2 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined below), the following provisions shall apply:
(a)
Notwithstanding the other provisions of this Section 5, if the Units are assumed or otherwise replaced in connection with a Change in Control and the Participant’s employment is terminated by the Company or any of its Subsidiaries without Cause (as defined below) or the Participant terminates her employment for “Good Reason” (as such term is defined below) in each case within 12 months following the occurrence of such Change in Control but prior to the Vesting Date, then the Units will remain outstanding and continue to be eligible to vest with respect to a prorated number of Units equal to the product of (x) the number of Units that would be eligible for vesting based on the actual level attainment of the Performance Goal with respect to the entire Performance Period, multiplied by (y) a fraction, the numerator of which is the number of days the Participant was employed during the Performance Period as of the date of the employment termination and the denominator of which is the number of days contained in the Performance Period. The vesting acceleration benefits provided under this Section 5(a) are subject to the satisfaction of the conditions set forth in Section 6.6 of the Employment Agreement.
(b)
For purposes of this Agreement, “
Good Reason
” shall mean, without the Participant’s consent, (A) any material reduction in the Participant’s position or responsibilities, excluding the failure to continue to serve as Executive Chairman of the Company or an isolated, insubstantial or inadvertent action not taken in bad faith; (B) a material reduction of the Participant’s Base Salary, or Target Bonus (as these terms are defined in the Employment Agreement) opportunity then in effect, except in connection with an across-the-board reduction of not more than 10% applicable to similarly situated employees of the Company; or (C) the reassignment of the Participant’s place of work to a location more than 50 miles from the Participant’s place of work on the Grant Date; provided that none of the events described in clauses (A), (B) and (C) shall constitute Good Reason hereunder unless (x) the Participant shall have given written notice to the Company of the Participant’s intent to terminate her employment with Good Reason within sixty (60) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice. Failing such cure, a termination of employment by the Participant for Good Reason shall be effective on the day following the expiration of such cure period.
Notwithstanding anything else to the contrary contained in this Agreement or the Employment Agreement, if the Company temporarily suspends the Participant from her duties but retains the Participant as an employee pending or during an investigation of whether an act or omission by the Participant constitutes Cause, and the Participant tenders her resignation based on Good Reason with respect to the suspension of duties within the required period for resigning for Good Reason, the Company may delay treating such resignation as for Good Reason until the completion of the investigation and need not treat the resignation as based on Good Reason at such date if it can then establish Cause; provided, however, that the Participant shall retain her right to terminate employment for Good Reason based on other factors, if applicable.
(c)
For purposes of this Agreement, notwithstanding the definition of Change in Control in any other agreement or plan that may be applicable to the Participant, “
Change in Control
” shall mean (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets, (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the United States Securities Exchange Act of 1934, as amended (the “
Exchange Act
”)), or (iii) the merger, consolidation reorganization, recapitalization or share exchange of the Company with another entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders of the voting power of the outstanding securities of the Company, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold less than 50% in voting power of the outstanding securities of the Company or the surviving entity or resulting entity, as the case may be, immediately following such transaction; provided, however, that the issuance of securities by the Company shall not, in any event, constitute a Change in Control, and for the avoidance of doubt a sale or other transfer or series of transfers of all or any portion of the securities of the Company held by the Investors and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in an entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding
more than 50% in voting power of the outstanding securities of the Company; and provided, further, that to the extent necessary to comply with Code Section 409A with respect to the payment of deferred compensation, “Change in Control” shall be limited to a “change in control event” within the meaning of Code Section 409A.
For purposes hereof, “
Investors
” shall mean the “Investors” as defined in that certain Amended and Restated Purchase Agreement, dated March 17, 2008, by and between the Company and the other parties thereto, and their respective affiliates (not including the Company).
(d)
For purposes of this Agreement, “
Cause
” shall mean a good faith finding by the Board of: (A) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the Board that are within the Participant’s control and consistent with the Participant’s status as a senior executive of the Company and her duties and responsibilities hereunder (except for a failure that is attributable to the Participant’s illness, injury or Disability) for a period of 10 days following written notice by the Company to the Participant of such failure; (B) fraud or material dishonesty in the performance of the Participant’s duties hereunder; (C) an act or acts on the Participant’s part constituting (x) a felony under the laws of the United States or any state thereof, (y) a misdemeanor involving moral turpitude or (z) a material violation of federal or state securities laws; (D) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (E) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties hereunder which is materially injurious to the financial condition or business reputation of the Company; (F) the Participant’s material breach of the Company’s Code of Conduct and Ethics or any other code of conduct in effect from time to time to the extent applicable to the Participant, and which breach has a material adverse effect on the Company; or (G) the Participant’s breach of the provisions of Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement which breach has a material adverse effect on the Company.
(e)
For purposes of this Agreement, “
Employment Agreement
” shall mean the Employment Agreement dated March 27, 2013 by and among the Company and the Participant.
6.
Effect of Termination of Employment
. Except as provided in this Section 6 and in Section 5 above or as otherwise may be determined by the Board, if the Participant ceases to be an employee of the Company or any of its Subsidiaries, the following actions shall occur:
(a)
Termination for Cause; Resignation Without Good Reason
. If the Participant’s employment with the Company or any of its Subsidiaries is terminated for Cause (as defined above) or the Participant resigns other than for Good Reason, any Units that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b)
Involuntary Termination (in the absence of a Change in Control)
. If the Participant’s employment is terminated by the Company or any of its Subsidiaries without Cause or by the Participant for Good Reason prior to the Vesting Date, the Units that are not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall remain outstanding and continue to be eligible to vest following the date of termination based on the actual level of attainment of the Performance Goal with respect to the entire Performance Period as if such employment termination had not occurred, provided that if the Participant breaches her obligations pursuant to Section 8 of the Employment Agreement, such unvested Units shall be immediately forfeited without consideration.
(c)
Death/Disability
. Upon the termination of the Participant’s employment with the Company or any of its Subsidiaries is terminated due to the Participant’s death or Disability (as defined below) prior to the Vesting Date, the Units that are not vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall remain outstanding and continue to be eligible to vest with respect to a prorata number of Units equal to the product of (x) the number of Units that would be eligible for vesting based on the actual level attainment of the Performance Goal with respect to the entire Performance Period, multiplied by (y) a fraction, the numerator of which is the number of days the Participant was employed during the Performance Period as of the date of the employment termination and the denominator of which is the number of days contained in the Performance Period.
(d)
For purposes of this Agreement, “
Disability
” shall mean a determination by a qualified independent physician mutually acceptable to the Participant and the Company that the Participant is unable to perform her duties under this Agreement and in all reasonable medical likelihood such inability will continue for a period of 120 consecutive days or 180 days in any 365 day period. The Participant shall fully cooperate in connection with the determination of whether Disability exists. If the Participant and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Participant shall be final and conclusive for all purposes of the Agreement.
(e)
For purposes of this Agreement, the Participant shall cease to be continuously employed (whether or not later found to be invalid or in breach of any local employment law in the country where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any) as of the date that the Participant is no longer actively providing services and will not be employed for purposes of the Plan through any notice period mandated under an employment law or practice in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits (
e.g.
, continuous employment would not include any contractual notice period or any period
of “garden leave” or similar period mandated under employment laws in the jurisdictions where the Participant resides and/or is employed or the terms of the Participant’s employment or service agreement, if any); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Unit award, and if the Participant is a U.S. taxpayer, such determination shall be made in accordance with Code Section 409A.
(f)
The continued vesting benefits provided in this Section 6 are subject to satisfaction of the conditions set forth in Section 6.6 of the Employment Agreement.
7.
Forfeiture and Repayment Provisions
.
(a)
Failure to properly execute the Agreement (and each other document required to be executed by the Participant in connection with the Participant’s receipt of the Units) in a timely manner following the Grant Date may result in the forfeiture of the Units, as determined in the sole discretion of the Company.
(b)
The right to vest in the Units shall be conditional upon the fact that the Participant has read and understood the forfeiture and repayment provisions set forth in this Section 7, that the Participant has not engaged in any misconduct or acts contrary to the Company as described below, and that the Participant has no intent to leave employment with the Company or any of its Subsidiaries for the purpose of engaging in any activity or providing any services which are contrary to the spirit and intent of the Post-Employment Restriction Agreement.
(c)
The Company is authorized to suspend or terminate this Unit award prior to or after termination of employment if the Participant engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement. If, at any time during the applicable restriction period described in the Post-Employment Restriction Agreement, the Participant engages in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement, then any gain (without regard to tax effects) realized by the Participant from the vesting of the Units, in whole or in part, shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company hereunder.
(d)
Misconduct
(i)
The Company is authorized to suspend or terminate this Unit award prior to or after termination of employment if the Company reasonably determines that during the Participant’s employment with the Company or any of its Subsidiaries:
(1)
The Participant knowingly participated in misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company; or
(2)
The Participant was aware of and failed to report, as required by any code of ethics of the Company applicable to the Participant or by the Code of Conduct or similar program of the Company, misconduct that causes a misstatement of the financial statements of the Company or any of its Subsidiaries or misconduct which represents a material violation of any code of ethics of the Company applicable to the Participant or of the Code of Conduct or similar program of the Company.
(ii)
If, at any time after the Participant vests in the Units, in whole or in part, the Company reasonably determines that the provisions of Section 7(c) apply to the Participant, then any gain (without regard to tax effects) realized by the Participant from such vesting shall be paid by the Participant to the Company. The Participant consents to the deduction from any amounts the Company or any of its Subsidiaries owes to the Participant to the extent of the amounts the Participant owes the Company under this Section 7.
8.
Miscellaneous
.
(a)
Issuance of Shares.
Upon any vesting of the Units, and subject to the payment of any Tax-Related Items (as defined under Section 8(d) below), the Company shall deliver the Shares in book entry form at the times specified in Section 3 above. The Shares acquired shall be registered in the name of the Participant, the Participant’s transferee, or if the Participant so requests, in writing at the time of vesting, jointly in the name of the Participant and another person with rights of survivorship. If the Participant dies, the Shares acquired shall be registered in the name of the person entitled to receive the Shares in accordance with the Plan.
(b)
Rights as Shareholder.
Units are not actual Shares, but rather, represent a right to receive Shares according to the terms and conditions set forth herein and the terms of the Plan. Accordingly, the issuance of a Unit shall not entitle the Participant to any of the rights or benefits generally accorded to stockholders unless and until a Share is actually issued under Section 8(a) hereof.
(c)
Adjustments to Award
.
(i)
In the event that the Company engages in a transaction such that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the shares covered by the Unit award, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Agreement, the terms of this Unit award (including,
without limitation, the number and kind of Shares subject to this Unit award) shall be adjusted as set forth in Section 4(c) of the Plan.
(ii)
Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of this Unit award (including, without limitation, the number and kind of Shares subject to this Unit award) by taking any of the actions permitted under this Agreement and in accordance with Section 4(c) of the Plan.
(d)
Responsibility for Taxes
.
(i)
Regardless of any action the Company or the Participant’s employer (the “
Employer
”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Participant’s participation in the Plan and legally applicable to the Participant (“
Tax-Related Items
”), the Participant acknowledges that the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and may exceed the amount actually withheld by the Company or the Employer. The Participant further acknowledges that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including, but not limited to, the grant, vesting or settlement of the Units, the issuance of Shares upon settlement of the Units, the subsequent sale of Shares acquired pursuant to such issuance and the receipt of any dividends and/or any dividend equivalents; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Participant’s liability for Tax-Related Items or achieve any particular tax result. Further, if the Participant has become subject to tax in more than one jurisdiction between the Grant Date and the date of any relevant taxable or tax withholding event, as applicable, the Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(ii)
In this regard, the Participant authorizes the Company or its agent to satisfy the obligations with regard to all Tax-Related Items by withholding in Shares to be issued upon vesting/settlement of the Units. In the event that such withholding in Shares is problematic under applicable tax or securities law or has materially adverse accounting consequences, by the Participant’s acceptance of the Units, the Participant authorizes and directs the Company and/or its agent to sell on the Participant’s behalf a whole number of Shares from those Shares issued to the Participant at vesting/settlement of the Units as the Company determines to be appropriate, to generate cash proceeds sufficient to satisfy the obligation for Tax-Related Items.
(iii)
To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum withholding rates, in which case the Participant will receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent in Shares. If the obligation for Tax-Related Items is satisfied by withholding in Shares, for tax purposes, the Participant is deemed to have been issued the full number of Shares subject to the vested Units, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Participant’s participation in the Plan.
(iv)
Finally, the Participant shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Participant’s participation in the Plan that cannot be satisfied by the means previously described. The Company may refuse to issue or deliver the Shares or the proceeds of the sale of Shares, if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(e)
Interpretations
. This Agreement is subject in all respects to the terms of the Plan. A copy of the Plan is available upon the Participant’s request. Terms used herein which are defined in the Plan shall have the respective meanings given to such terms in the Plan, unless otherwise defined herein. In the event that any provision of this Agreement is inconsistent with the terms of the Plan, the terms of the Plan shall govern. Any question of administration or interpretation arising under this Agreement shall be determined by the Committee, and such determination shall be final, conclusive and binding upon all parties in interest.
(f)
Nature of Grant
. In accepting the grant, the Participant acknowledges, understands and agrees that:
(i)
the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;
(ii)
the grant of the Units is voluntary and occasional and does not create any contractual or other right to receive future grants of units, or benefits in lieu of units, even if units have been granted repeatedly in the past;
(iii)
all decisions with respect to future Unit grants, if any, will be at the sole discretion of the Company;
(iv)
the Participant’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Participant’s employment or service relationship (if any) at any time;
(v)
the Participant is voluntarily participating in the Plan;
(vi)
the Units and the Shares subject to the Units are not intended to replace any pension rights or compensation;
(vii)
the Units and the Shares subject to the Units, and the income and value of same, are not part of normal or expected compensation for purposes of calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments;
(viii)
the future value of the underlying Shares is unknown and cannot be predicted with certainty;
(ix)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Units resulting from the Participant’s termination of employment by the Company or the Employer (for any reason whatsoever and whether or not later found to be invalid or in breach of the Participant’s employment or service agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even it otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the Units to which the Participant is otherwise not entitled, the Participant irrevocably agrees never to institute any claim against the Company or the Employer, waives her ability, if any, to bring any such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan, the Participant shall be deemed irrevocably to have agreed not to pursue such claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and
(x)
the following provisions apply only to the extent the Participant provides services outside the United States, as determined by the Company:
(A) the Units and the Shares subject to the Units are an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of the Participant’s employment or service contract, if any;
(B) the Units and the Shares subject to the Units are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary; and
(C) the Unit grant and the Participant’s participation in the Plan will not be interpreted to form an employment or service contract or relationship with the Company or any Subsidiary.
(g)
No Advice Regarding Grant
. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Participant’s participation in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is hereby advised to consult with her own personal tax, legal and financial advisors regarding her participation in the Plan before taking any action related to the Plan.
(h)
Data Privacy
.
(i)
The Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this Agreement and any other Unit grant materials by and among, as applicable, the Employer, the Company and its Subsidiaries for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan.
(ii)
The Participant understands that the Company and the Employer may hold certain personal information about the Participant, including, but not limited to, the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all Units or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the exclusive purpose of implementing, administering and managing the Plan (“Data”).
(iii)
The Participant understands that Data will be transferred to E*Trade Financial Services, or such other stock plan service provider as may be selected by the Company in the future or other stock plan service provider that is selected by the Participant to the extent permitted by the Company in its sole discretion, in each case, that is assisting the Company with the implementation, administration and management of the Plan. The Participant understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipients’ country (e.g., the United States) may have different data privacy laws and protections than the Participant’s country. If the Participant resides outside the United States, the Participant understands that she may request a list with the names and addresses of any potential recipients of the Data by contacting her local human resources representative. The Participant authorizes the Company, E*Trade Financial Services and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing her participation in the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan. If the Participant resides outside the United States, the Participant understands that she may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing
her local human resources representative. Further, the Participant understands that she is providing the consents herein on a purely voluntary basis. If the Participant does not consent or if the Participant later seeks to revoke her consent, her status as an employee and career with the Employer will not be adversely affected; the only adverse consequence of refusing or withdrawing her consent is that the Company would not be able to grant Units or other equity awards or administer or maintain such Awards. Therefore, the Participant understands that refusing or withdrawing her consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant understands that she may contact her local human resources representative.
(i)
Reservation of Shares
. The Company shall at all times during the term of the Unit award reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of this Agreement.
(j)
Securities Matters
. The Company shall not be required to deliver any Shares until the requirements of any securities or other laws, rules or regulations (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied.
(k)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(l)
Successors and Assigns; No Third Party Beneficiaries
. This Agreement shall inure to the benefit of and be binding upon the Company and the Participant and their respective heirs, successors, legal representatives and permitted assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the Company and the Participant, and their respective heirs, successors, legal representatives and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(m)
Headings
. Headings are given to the sections and subsections of this Agreement solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provision hereof.
(n)
Governing Law; Arbitration
. The internal law, and not the law of conflicts, of the State of Texas will govern all questions concerning the validity, construction and effect of this Agreement. Any controversy, dispute or claim arising under or in connection with this Agreement (including, without limitation, the existence, validity, interpretation or breach hereof and any claim based on contract, tort or statute) shall be resolved by a binding arbitration, to be held in Dallas, Texas pursuant to the U.S. Federal Arbitration Act and in accordance with the then-prevailing National Rules of Resolution of Employment Disputes of the American Arbitration Association (the “
AAA
”). The AAA shall select a sole arbitrator. Each party shall bear its own expenses incurred in connection with arbitration and the fees and expenses of the arbitrator shall be shared equally by the parties involved in the dispute and advanced by them from time to time as required. It is the mutual intention and desire of the parties that the arbitrator be chosen as expeditiously as possible following the submission of the dispute to arbitration. Once such arbitrator is chosen, and except as may otherwise be agreed in writing by the parties involved in such dispute or as ordered by the arbitrator upon substantial justification shown, the hearing for the dispute will be held within sixty (60) days of submission of the dispute to arbitration. The arbitrator shall render her final award within sixty (60) days, subject to extension by the arbitrator upon substantial justification shown of extraordinary circumstances, following conclusion of the hearing and any required post-hearing briefing or other proceedings ordered by the arbitrator. Any discovery in connection with arbitration hereunder shall be limited to information directly relevant to the controversy or claim in arbitration. The arbitrator will state the factual and legal basis for the award. The decision of the arbitrator in any such proceeding will be final and binding and not subject to judicial review and final judgment may be entered upon such an award in any court of competent jurisdiction, but entry of such judgment will not be required to make such award effective. Any action against any party hereto ancillary to arbitration, including any action for provisional or conservatory measures or action to enforce an arbitration award or any judgment entered by any court in respect of any thereof may be brought in any federal or state court of competent jurisdiction located within the State of Texas, and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of any federal or state court located within the State of Texas over any such action. The parties hereby irrevocably waive, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to the laying of venue of any such action brought in such court or any defense of inconvenient forum for the maintenance of such action. Each of the parties hereto agrees that a judgment in any such action may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
(o)
Notices
. The Participant should send all written notices regarding this Agreement or the Plan to the Company at the following address:
MoneyGram International, Inc.
EVP, General Counsel & Secretary
2828 North Harwood Street, 15
th
Floor
Dallas, TX 75201
(p)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 8(p) hereof and Section 7 of the Plan, no such amendment, alteration, suspension, discontinuation or termination shall be made without the Participant’s consent, if such action would materially diminish any of the
Participant’s rights under this Agreement. The Company reserves the right to impose other requirements on the Units and the Shares acquired upon vesting of the Units, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan.
(q)
Entire Agreement
. This Agreement, including the Appendix, and the Plan and the other agreements referred to herein and therein and any schedules, exhibits and other documents referred to herein and therein constitute the entire agreement and understanding among the parties hereto in respect of the subject matter hereof and thereof and supersede all prior and contemporaneous arrangements, agreements and understandings, both oral and written, whether in term sheets, presentations or otherwise, among the parties hereto, or between any of them, with respect to the subject matter hereof and thereof.
(r)
Severability
. If any provision of this Agreement is invalid, illegal, or incapable of being enforced by any law, all other provisions of this Agreement shall remain in full force and effect so long as the economic and legal substance of the transactions contemplated hereby are not affected in any manner materially adverse to any party. If any provision of this Agreement is held to be invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.
(s)
Participant Undertaking
. The Participant agrees to take such additional action and execute such additional documents the Company may deem necessary or advisable to carry out or effect one or more of the obligations or restrictions imposed either on the Participant or upon this Unit award pursuant to the provisions of this Agreement.
(t)
Counterparts
. For the convenience of the parties and to facilitate execution, this Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same document.
(u)
Electronic Delivery
. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
(v)
Language
. If the Participant has received this Agreement, or any other document related to the Unit award and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
(w)
Appendix
. The Unit award shall be subject to any special provisions set forth in the Appendix for the Participant’s country of residence, if any. If the Participant relocates to one of the countries included in the Appendix during the life of the Unit award, the special provisions for such country shall apply to the Participant, to the extent the Company determines that the application of such provisions is necessary or advisable under the laws of the country in which the Participant resides pertaining to the issuance or sale of Shares or to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(x)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Participant or any other Participant.
(y)
Insider Trading Restrictions/Market Abuse Laws
. Depending upon her country of residence, the Participant may be subject to insider trading restrictions and/or market abuse laws, which may affect the Participant’s ability to acquire or sell Shares or rights to Shares (
e.g
., Units) under the Plan during such times as the Participant is considered to have “inside information” regarding the Company (as defined by the laws in the Participant’s country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. The Participant is responsible for complying with any applicable restrictions and is advised to speak with her personal legal advisor on this matter.
(z)
No Trust or Fund Created
. Neither the Plan nor the Agreement shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Subsidiary and the Participant or any other person.
(aa)
Section 409A Provisions
. The payment of Shares under this Agreement are intended to be exempt from the application of Section 409A of the Code, as amended (“
Section 409A
”) by reason of the short-term deferral exemption set forth in Treasury Regulation §1.409A-1(b)(4). Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that any amount or benefit hereunder that constitutes “deferred compensation” to the Participant under Section 409A is otherwise payable to the Participant under the Plan or this Agreement solely by reason of the Participant’s termination of employment, such amount or benefit will not be payable or distributable to the Participant by reason of such circumstance unless the Committee determines in good faith that the circumstances giving rise to such termination of employment meet the definition of a “separation from service,” within the meaning of Section 409A of the Code. If the payment of Units constitutes deferred compensation subject to Code Section 409A, is made on account of a separation from service and the Participant is a specified employee as defined in Section 409A(a)(2)(B) of the Code at the time of such separation from service, the Units shall
be paid instead on the earlier of the date that is six months and one day after the date of the specified employee’s separation from service and the specified employee’s death.
IN WITNESS WHEREOF
, the Company and the Participant have executed this Agreement on the date set forth in the first paragraph.
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MONEYGRAM INTERNATIONAL, INC.
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By: /s/ Steve Piano
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PARTICIPANT
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/s/ Pamela H. Patsley
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PAMELA H. PATSLEY
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SCHEDULE A
1.
Target Number of Restricted Stock Units (“
Target Units
”)
:
The actual number of Units that are eligible to vest in accordance with Section 2 of the Agreement shall be based on the attainment level of the Performance Goals, in accordance with the following formula:
The sum of (a) the Target Units x 50% x Self-Service Revenue Attainment Factor (as set forth below),
plus
(b) the Target Units x 50% x Adjusted EBITDA Attainment Factor (as set forth below).
2.
Performance Period
: January 1, 2014 - December 31, 2016.
3.
Performance Goals
:
The two Performance Goals applicable to the Units shall consist of (A) Self-Service Revenue generated during fiscal year ending December 31, 2016 as set forth in the table below and (B) the percentage increase of Adjusted EBITDA over the Performance Period as set forth in the table below.
If 50% of the Target Adjusted EBITDA Performance Goal is not attained, all Units shall be forfeited (including, for the avoidance of any doubt, the percentage of the Units allocated to the attainment of the Self-Service Revenue Performance Goal).
Self-Service Revenue Performance Goal
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Self-Service Revenue Performance Goal
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Self-Service Revenue Attainment Factor
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Threshold Self-Service Revenue Performance Goal: $
165M
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50%
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Target Self-Service Revenue Performance Goal:
$200M
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100%
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Adjusted EBITDA Performance Goal
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Adjusted EBITDA Performance Goal
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Adjusted EBITDA Attainment Factor
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Threshold Adjusted EBITDA Performance Goal = simple
average annual Adjusted EBITDA increase of 5 percent over the Performance Period
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50%
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Target Adjusted EBITDA Performance Goal = simple
average annual Adjusted EBITDA increase of 7 percent or greater over the Performance Period
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100%
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Attainment between the Threshold and Target Performance Goals (for each Performance Goal) shall be subject to straight-line interpolation.
4.
Performance Goal Adjustments
: None anticipated.
5.
Performance Criteria
:
“
Self-Service Revenue
” shall mean revenue from “Self-Service” transactions. “Self-Service” transactions means transactions either initiated or received using a method that is directed by the consumer simplifying the transaction process. With Self-Service transactions, a consumer or technology replaces activities normally conducted by an agent in-person or on a phone. “Self-Service Revenue” includes revenue from those transactions initiated or received online via Moneygram mobile or online, a third-party website or mobile device, via a staging or full service kiosk or ATM, received directly into a customer account (bank, card, or mobile including, but not limited to, PayPal and Visa), MoneyGram xpress, or other transactions initiated or received through Self-Service.
“
Adjusted EBITDA
” shall mean, Adjusted EBITDA as reported in the Company’s annual financial statements on the Company’s Form 10-K.
6.
Vesting Date (assuming Performance Goals are attained)
: The date, following the end of the Performance Period, on which the Committee determines or certifies, as applicable, the level of attainment of the Performance Goals achieved during the Performance Period.
Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Pamela H. Patsley, certify that:
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1.
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I have reviewed this Quarterly Report on Form 10-Q of MoneyGram International, Inc. for the period ended
March 31, 2014
;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: May 2, 2014
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/s/ PAMELA H. PATSLEY
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Pamela H. Patsley
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Chairman and Chief Executive Officer
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(Principal Executive Officer)
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Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, W. Alexander Holmes, certify that:
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1.
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I have reviewed this Quarterly Report on Form 10-Q of MoneyGram International, Inc. for the period ended
March 31, 2014
;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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Date: May 2, 2014
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/s/ W. ALEXANDER HOLMES
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W. Alexander Holmes
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Executive Vice President, Chief Financial Officer and Chief Operating Officer
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(Principal Financial Officer)
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Certification Pursuant to 18 U.S.C. §1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q (the “Report”), of MoneyGram International, Inc. (the “Company”) for the period ended
March 31, 2014
, as filed with the Securities and Exchange Commission on the date hereof I, Pamela H. Patsley, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: May 2, 2014
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/s/ PAMELA H. PATSLEY
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Pamela H. Patsley
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Chairman and Chief Executive Officer
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(Principal Executive Officer)
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Certification Pursuant to 18 U.S.C. §1350,
as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q (the “Report”), of MoneyGram International, Inc. (the “Company”) for the period ended
March 31, 2014
, as filed with the Securities and Exchange Commission on the date hereof I, W. Alexander Holmes, Executive Vice President, Chief Financial Officer and Chief Operating Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: May 2, 2014
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/s/ W. ALEXANDER HOLMES
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W. Alexander Holmes
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Executive Vice President, Chief Financial Officer and Chief Operating Officer
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(Principal Financial Officer)
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