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, 2017
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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
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No
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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
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No
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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,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
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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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Emerging growth company
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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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
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No
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Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
As of
May 3, 2017
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54,022,994
shares of common stock, $0.01 par value, were outstanding.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MONEYGRAM INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
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(Amounts in millions, except share data)
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March 31, 2017
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December 31, 2016
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ASSETS
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Cash and cash equivalents
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$
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127.4
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$
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157.2
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Settlement assets
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3,492.9
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3,634.3
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Property and equipment, net
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204.8
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201.0
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Goodwill
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442.2
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442.2
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Other assets
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170.2
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162.7
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Total assets
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$
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4,437.5
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$
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4,597.4
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LIABILITIES
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Payment service obligations
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$
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3,492.9
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$
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3,634.3
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Debt, net
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913.4
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915.2
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Pension and other postretirement benefits
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79.6
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87.6
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Accounts payable and other liabilities
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150.9
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168.7
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Total liabilities
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4,636.8
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4,805.8
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COMMITMENTS AND CONTINGENCIES (NOTE 11)
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STOCKHOLDERS’ DEFICIT
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Participating convertible preferred stock - series D, $0.01 par value, 200,000 shares authorized, 71,282 issued at March 31, 2017 and December 31, 2016
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183.9
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183.9
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Common stock, $0.01 par value, 162,500,000 shares authorized, 58,823,567 shares issued at March 31, 2017 and December 31, 2016
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0.6
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0.6
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Additional paid-in capital
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1,024.3
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1,020.3
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Retained loss
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(1,283.5
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(1,247.6
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Accumulated other comprehensive loss
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(50.9
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(53.9
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Treasury stock: 4,856,901 and 6,058,856 shares at March 31, 2017 and December 31, 2016, respectively
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(73.7
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(111.7
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Total stockholders’ deficit
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(199.3
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(208.4
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Total liabilities and stockholders’ deficit
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$
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4,437.5
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$
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4,597.4
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See Notes to the Condensed Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
CONDENSED 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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2017
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2016
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REVENUE
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Fee and other revenue
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$
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380.3
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$
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383.4
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Investment revenue
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5.8
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3.7
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Total revenue
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386.1
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387.1
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EXPENSES
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Fee and other commissions expense
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186.0
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191.0
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Investment commissions expense
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1.3
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0.5
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Total commissions expense
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187.3
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191.5
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Compensation and benefits
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71.5
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71.7
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Transaction and operations support
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71.6
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64.5
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Occupancy, equipment and supplies
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15.3
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15.2
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Depreciation and amortization
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18.3
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21.1
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Total operating expenses
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364.0
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364.0
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OPERATING INCOME
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22.1
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23.1
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Other expense
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Interest expense
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10.8
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11.3
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Total other expense
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10.8
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11.3
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Income before income taxes
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11.3
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11.8
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Income tax expense
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2.5
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16.0
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NET INCOME (LOSS)
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$
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8.8
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$
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(4.2
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EARNINGS (LOSS) PER COMMON SHARE
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Basic
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$
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0.14
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$
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(0.07
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Diluted
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$
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0.13
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$
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(0.07
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Weighted-average outstanding common shares and equivalents used in computing earnings (loss) per common share
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Basic
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62.1
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62.4
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Diluted
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66.1
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62.4
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See Notes to the Condensed Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
CONDENSED 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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2017
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2016
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NET INCOME (LOSS)
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$
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8.8
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$
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(4.2
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OTHER COMPREHENSIVE INCOME
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Net change in unrealized holding gains on available-for-sale securities arising during the period, net of tax expense of $0.0 for each of the three months ended March 31, 2017 and 2016
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0.1
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—
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Net change in pension liability due to amortization of prior service credit and net actuarial loss, net of tax benefit of $0.4 and $0.5 for the three months ended March 31, 2017 and 2016, respectively
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0.7
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0.8
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Unrealized foreign currency translation adjustments, net of tax expense of $0.0 and $2.8 for the three months ended March 31, 2017 and 2016, respectively
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2.2
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1.2
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Other comprehensive income
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3.0
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2.0
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COMPREHENSIVE INCOME (LOSS)
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$
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11.8
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$
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(2.2
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See Notes to the Condensed Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
CONDENSED 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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2017
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2016
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CASH FLOWS FROM OPERATING ACTIVITIES:
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Net income (loss)
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$
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8.8
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$
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(4.2
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Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
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Depreciation and amortization
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18.3
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21.1
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Signing bonus amortization
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13.0
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14.3
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Signing bonus payments
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(10.2
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(7.4
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Amortization of debt issuance costs and debt discount
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0.8
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0.9
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Non-cash compensation and pension expense
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5.3
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6.7
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Change in other assets
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(8.6
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(1.2
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Change in accounts payable and other liabilities
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(37.1
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(30.1
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Other non-cash items, net
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0.1
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—
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Net cash (used in) provided by operating activities
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(9.6
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0.1
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CASH FLOWS FROM INVESTING ACTIVITIES:
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Purchases of property and equipment
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(18.6
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(18.0
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Net cash used in investing activities
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(18.6
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(18.0
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CASH FLOWS FROM FINANCING ACTIVITIES:
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Principal payments on debt
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(2.5
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(2.5
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Proceeds from exercise of stock options
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0.9
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—
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Stock repurchases
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—
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(1.9
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Payments to tax authorities for stock-based compensation
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—
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(0.7
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)
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Net cash used in financing activities
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(1.6
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(5.1
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NET CHANGE IN CASH AND CASH EQUIVALENTS
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(29.8
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(23.0
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CASH AND CASH EQUIVALENTS—Beginning of period
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157.2
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164.5
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CASH AND CASH EQUIVALENTS—End of period
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$
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127.4
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$
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141.5
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Supplemental cash flow information:
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Cash payments for interest
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$
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10.0
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$
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10.4
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Cash taxes, net
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$
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0.7
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$
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2.4
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See Notes to the Condensed Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS 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, 2017
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$
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183.9
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$
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0.6
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$
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1,020.3
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$
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(1,247.6
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$
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(53.9
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$
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(111.7
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$
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(208.4
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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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8.8
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—
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—
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8.8
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Stock-based compensation activity
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—
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—
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4.0
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(44.7
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)
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—
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38.0
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(2.7
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)
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Other comprehensive income
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—
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—
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—
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—
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3.0
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—
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3.0
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March 31, 2017
|
$
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183.9
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$
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0.6
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$
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1,024.3
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$
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(1,283.5
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)
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$
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(50.9
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$
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(73.7
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)
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$
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(199.3
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)
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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, 2016
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$
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183.9
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$
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0.6
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$
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1,002.4
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$
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(1,226.8
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)
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$
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(48.7
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)
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$
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(134.2
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)
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$
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(222.8
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)
|
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Net loss
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—
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—
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—
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(4.2
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)
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—
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—
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(4.2
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)
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Stock-based compensation activity
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—
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—
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5.0
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(29.1
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)
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—
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26.7
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2.6
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Stock repurchases
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—
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—
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—
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—
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—
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(1.9
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)
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(1.9
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)
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Other comprehensive income
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—
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|
|
—
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|
|
—
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—
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2.0
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—
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2.0
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|
March 31, 2016
|
$
|
183.9
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|
|
$
|
0.6
|
|
|
$
|
1,007.4
|
|
|
$
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(1,260.1
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)
|
|
$
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(46.7
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)
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|
$
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(109.4
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)
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$
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(224.3
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)
|
See Notes to the Condensed Consolidated Financial Statements
MONEYGRAM INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED 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.
Nature of Operations
— MoneyGram offers products and services under its
two
reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global money transfer services and bill payment services to consumers. We primarily offer services through third-party agents, including retail chains, independent retailers, post offices and other financial institutions. We also offer Digital solutions such as moneygram.com, mobile solutions, account deposit and kiosk-based services. Additionally, we have Company-operated retail locations in the U.S. and Western Europe. The Financial Paper Products segment provides official check outsourcing services and money orders through financial institutions and agent locations.
Basis of Presentation
— The accompanying unaudited condensed consolidated financial statements of MoneyGram are prepared in conformity with generally accepted accounting principles in the United States of America (“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, 2017
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, 2016
.
Use of Estimates
— The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates and assumptions are based on historical experience, future expectations and other factors and assumptions the Company believes to be reasonable under the circumstances. These estimates and assumptions 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.
Recent Accounting Pronouncements and Related Developmen
ts — In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-09,
Revenue from Contracts with Customers
(Topic 606)
. The new guidance sets forth a five-step revenue recognition model which replaces the current revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance and requires more detailed disclosures. To further assist with adoption and implementation of ASU 2014-09, the FASB issued the following ASUs:
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•
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ASU 2016-08 (Issued March 2016) —
Principal versus Agent Consideration (Reporting Revenue Gross versus Net)
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•
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ASU 2016-10 (Issued April 2016) —
Identifying Performance Obligations and Licensing
|
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•
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ASU 2016-12 (Issued May 2016) —
Narrow-Scope Improvements and Practical Expedients
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•
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ASU 2016-20 (Issued December 2016) —
Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers
|
These ASUs are effective for public entities for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted, but not before interim and annual reporting periods beginning after December 15, 2016. The Company will not be early adopting these standards and will use the cumulative effect transition method upon adoption. Based on our initial evaluation for money transfer and bill payment services provided by the Global Funds Transfer segment, the Company has determined that each of these services includes only one performance obligation to the customer and the satisfaction of that performance obligation occurs at a point in time, which is not a change from how we currently recognize revenue. The Company continues to evaluate all other impacts from these standards as they pertain to our money transfer and bill payment services and the impacts on products and services provided by our Financial Paper Products segment.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842)
. ASU 2016-02 requires organizations to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about leasing arrangements. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous lease guidance. The FASB retained the distinction between finance leases and operating leases, leaving the effect of leases in the statement of comprehensive income and the statement of cash flows largely unchanged from previous GAAP. ASU 2016-02 mandates a modified retrospective transition method and is effective for fiscal years beginning after December 15, 2018. Early adoption of the amendment is permitted. The Company has begun evaluating and planning for the adoption and implementation of ASU 2016-02. The impact of this ASU on the Company’s consolidated financial statements is still being evaluated.
In April 2016, the FASB issued ASU 2016-09,
Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.
This standard makes several modifications to Topic 718 related to the accounting for forfeitures, employer tax withholding on share-based compensation and the financial statement presentation of excess tax benefits or deficiencies. Under the new ASU, companies are allowed to withhold up to the employees' maximum statutory tax rates in the applicable jurisdictions without resulting in liability classification. Further, the ASU requires that cash payments to tax authorities in connection with shares withheld to meet statutory tax withholding requirements be presented as a financing activity in the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016. The Company adopted ASU 2016-09 in the first quarter of 2017. Prior to the adoption of ASU 2016-09, the Company presented cash payments to tax authorities in connection with shares withheld to meet statutory tax withholdings requirements as an operating activity in its statement of cash flows. Upon adoption of this ASU the presentation of these payments was reclassified to a financing activity and prior period Condensed Consolidated Statements of Cash Flows have been updated to reflect this change.
The Company has determined that there have been no other recently adopted or issued accounting standards that had, or will have, a material impact on its consolidated financial statements.
Merger Agreement
— On January 26, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) among the Company, Alipay (UK) Limited, a United Kingdom limited company (“Alipay”), Matrix Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Alipay (“Merger Sub”) and, solely for purposes of certain specified provisions in the Merger Agreement, Alipay (Hong Kong) Holding Limited, a Hong Kong limited company. The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly owned subsidiary of Alipay, and holders of the Company’s common stock would be entitled to receive
$13.25
in cash, less any required withholding taxes, for each share of the Company’s common stock, on an as-converted basis, owned at the effective time of the Merger. On April 15, 2017, the Company entered into the First Amendment to the Agreement and Plan of Merger (the “Merger Agreement Amendment”) to the Merger Agreement. The Merger Agreement Amendment increased the merger consideration to
$18.00
per share and also increased the termination fee payable by the Company in connection with the termination of the Merger Agreement under specified circumstances, including the termination of the Merger Agreement by the Company to accept a Company Superior Proposal (as defined in the Merger Agreement), the termination of the Merger Agreement by Alipay following a change of recommendation by the Company’s Board of Directors, and other customary circumstances. Completion of the Merger is subject to a number of conditions, including the receipt of regulatory approvals and shareholder approval.
Note 2 — Settlement Assets and Payment Service Obligations
Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and consumer payments. The Company records corresponding payment service obligations relating to amounts payable under money transfers, money orders and consumer payment service arrangements. These obligations are recognized by the Company at the time the underlying transactions occur.
The following table summarizes the amount of Settlement assets and Payment service obligations:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2017
|
|
December 31, 2016
|
|
Settlement assets:
|
|
|
|
|
Settlement cash and cash equivalents
|
$
|
1,461.0
|
|
|
$
|
1,365.0
|
|
|
Receivables, net
|
861.1
|
|
|
999.4
|
|
|
Interest-bearing investments
|
1,153.4
|
|
|
1,252.1
|
|
|
Available-for-sale investments
|
17.4
|
|
|
17.8
|
|
|
|
$
|
3,492.9
|
|
|
$
|
3,634.3
|
|
|
Payment service obligations
|
$
|
(3,492.9
|
)
|
|
$
|
(3,634.3
|
)
|
Note 3 — 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.
The following table summarizes the Company’s financial assets and liabilities measured at fair value by hierarchy level on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Level 2
|
|
Level 3
|
|
Total
|
|
March 31, 2017
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
Available-for-sale investments:
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
$
|
6.8
|
|
|
$
|
—
|
|
|
$
|
6.8
|
|
|
Asset-backed and other securities
|
—
|
|
|
10.6
|
|
|
10.6
|
|
|
Forward contracts
|
0.2
|
|
|
—
|
|
|
0.2
|
|
|
Total financial assets
|
$
|
7.0
|
|
|
$
|
10.6
|
|
|
$
|
17.6
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
Forward contracts
|
$
|
0.7
|
|
|
$
|
—
|
|
|
$
|
0.7
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
|
Available-for-sale investments:
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
$
|
7.2
|
|
|
$
|
—
|
|
|
$
|
7.2
|
|
|
Asset-backed and other securities
|
—
|
|
|
10.6
|
|
|
10.6
|
|
|
Forward contracts
|
2.4
|
|
|
—
|
|
|
2.4
|
|
|
Total financial assets
|
$
|
9.6
|
|
|
$
|
10.6
|
|
|
$
|
20.2
|
|
|
Financial liabilities:
|
|
|
|
|
|
|
Forward contracts
|
$
|
0.1
|
|
|
$
|
—
|
|
|
$
|
0.1
|
|
The following table provides a roll-forward of the asset-backed and other securities classified as Level 3, which are measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Beginning balance
|
$
|
10.6
|
|
|
$
|
11.6
|
|
|
Principal paydowns
|
(0.1
|
)
|
|
(0.2
|
)
|
|
Change in unrealized gains
|
0.1
|
|
|
—
|
|
|
Ending balance
|
$
|
10.6
|
|
|
$
|
11.4
|
|
Assets and liabilities that are disclosed at fair value
—
Debt and interest-bearing investments 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 an observable market quotation (Level 2). The following table is a summary of the Company's fair value and carrying value of debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value
|
|
Carrying Value
|
|
(Amounts in millions)
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Senior secured credit facility
|
$
|
921.5
|
|
|
$
|
912.5
|
|
|
$
|
921.5
|
|
|
$
|
924.0
|
|
The carrying amounts for the Company's cash and cash equivalents, settlement cash and cash equivalents, interest-bearing investments and payment service obligations approximate fair value as of
March 31, 2017
and
December 31, 2016
.
Note 4 — Investment Portfolio
The following table shows the components of the investment portfolio:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2017
|
|
December 31, 2016
|
|
Cash
|
$
|
1,580.7
|
|
|
$
|
1,514.5
|
|
|
Money market securities
|
7.7
|
|
|
7.7
|
|
|
Cash and cash equivalents
(1)
|
1,588.4
|
|
|
1,522.2
|
|
|
Interest-bearing investments
|
1,153.4
|
|
|
1,252.1
|
|
|
Available-for-sale investments
|
17.4
|
|
|
17.8
|
|
|
Total investment portfolio
|
$
|
2,759.2
|
|
|
$
|
2,792.1
|
|
(1)
For purposes of the disclosure of the investment portfolio as a whole, the cash and cash equivalents balance includes settlement cash and cash equivalents.
The following table is a summary of the amortized cost and fair value of available-for-sale investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Fair
Value
|
|
(Amounts in millions)
|
|
|
|
March 31, 2017
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
$
|
6.2
|
|
|
$
|
0.6
|
|
|
$
|
6.8
|
|
|
Asset-backed and other securities
|
0.9
|
|
|
9.7
|
|
|
10.6
|
|
|
Total
|
$
|
7.1
|
|
|
$
|
10.3
|
|
|
$
|
17.4
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
|
|
|
Residential mortgage-backed securities
|
$
|
6.6
|
|
|
$
|
0.6
|
|
|
$
|
7.2
|
|
|
Asset-backed and other securities
|
1.0
|
|
|
9.6
|
|
|
10.6
|
|
|
Total
|
$
|
7.6
|
|
|
$
|
10.2
|
|
|
$
|
17.8
|
|
As of
March 31, 2017
and
December 31, 2016
,
39%
and
40%
, respectively, of the available-for-sale portfolio were invested in residential mortgage-backed securities issued by U.S. government agencies. 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.
Gains and Losses
— For the three months ended
March 31, 2017
and
2016
, the Company had no net realized gains or losses. The Company had nominal and no gross unrealized losses in its available-for-sale portfolio as of
March 31, 2017
and
December 31, 2016
, respectively. See summary of net unrealized gains included in Accumulated other comprehensive loss in Note 8 —
Stockholders' Deficit
.
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 residential mortgage-backed and asset-backed and other securities depend on the repayment characteristics and experience of the underlying obligations.
Note 5 — Derivative Financial Instruments
The following gains (losses) related to assets and liabilities denominated in foreign currencies are included in the “Transaction and operations support” line in the Condensed Consolidated Statements of Operations and in the "Net cash (used in) provided by operating activities" line in the Condensed Consolidated Statements of Cash Flows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Net realized foreign currency gains
|
$
|
3.0
|
|
|
$
|
6.7
|
|
|
Net (losses) gains from the related forward contracts
|
(2.0
|
)
|
|
4.0
|
|
|
Net gains from foreign currency transactions and related forward contracts
|
$
|
1.0
|
|
|
$
|
10.7
|
|
As of
March 31, 2017
and
December 31, 2016
, the Company had
$318.0 million
and
$294.5 million
, respectively, of outstanding notional amounts relating to its foreign currency forward contracts. The Company reflects the following fair values of derivative forward contract instruments in its Condensed Consolidated Balance Sheets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount of Recognized Assets
|
|
Gross Amount of Offset
|
|
Net Amount of Assets Presented in the Condensed Consolidated Balance Sheets
|
|
|
Balance Sheet
Location
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
|
(Amounts in millions)
|
|
|
|
|
|
|
|
Forward contracts
|
Other assets
|
|
$
|
0.5
|
|
|
$
|
2.6
|
|
|
$
|
(0.3
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
0.2
|
|
|
$
|
2.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Amount of Recognized Liabilities
|
|
Gross Amount of Offset
|
|
Net Amount of Liabilities Presented in the Condensed Consolidated Balance Sheets
|
|
|
Balance Sheet
Location
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
|
March 31, 2017
|
|
December 31, 2016
|
|
(Amounts in millions)
|
|
|
|
|
|
|
|
Forward contracts
|
Accounts payable and other liabilities
|
|
$
|
1.0
|
|
|
$
|
0.3
|
|
|
$
|
(0.3
|
)
|
|
$
|
(0.2
|
)
|
|
$
|
0.7
|
|
|
$
|
0.1
|
|
The Company's forward contracts are primarily executed with counterparties governed by International Swaps and Derivatives Association agreements that generally include standard netting arrangements. Asset and liability positions from forward contracts and all other foreign exchange transactions with the same counterparty are net settled upon maturity.
The Company is exposed to credit loss in the event of non-performance by counterparties to its derivative contracts. In the unlikely event the counterparty fails to meet the contractual terms of the derivative contract, the Company’s risk is limited to the fair value of the instrument. The Company has not had any historical instances of non-performance by any counterparties, nor does it anticipate any future instances of non-performance.
Note 6 — Debt
The following is a summary of the Company’s outstanding debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions, except percentages)
|
Effective Interest Rate
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Senior secured credit facility due 2020
|
4.25
|
%
|
|
$
|
921.5
|
|
|
$
|
924.0
|
|
|
Unamortized debt issuance costs and debt discount
|
|
|
(8.1
|
)
|
|
(8.8
|
)
|
|
Total debt, net
|
|
|
$
|
913.4
|
|
|
$
|
915.2
|
|
Revolving Credit Facility
— As of
March 31, 2017
, the Company had
no
outstanding letters of credit and
no
borrowings under its revolving credit facility, leaving
$125.0 million
of availability thereunder.
Debt Covenants and Other Restrictions
— Borrowings under the credit agreement that provides for the senior secured facility due 2020 and the revolving credit facility 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 revolving credit facility contains certain financial covenants, in addition to the non-financial covenants described above. The Company is required to maintain asset coverage greater than its payment service obligations. Assets used in the determination of the asset coverage covenant are cash and cash equivalents and settlement assets.
The following table shows the components of our assets in excess of payment service obligations used for the asset coverage calculation:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2017
|
|
December 31, 2016
|
|
Cash and cash equivalents
|
$
|
127.4
|
|
|
$
|
157.2
|
|
|
Settlement assets
|
3,492.9
|
|
|
3,634.3
|
|
|
Total cash and cash equivalents and settlement assets
|
3,620.3
|
|
|
3,791.5
|
|
|
Payment service obligations
|
(3,492.9
|
)
|
|
(3,634.3
|
)
|
|
Assets in excess of payment service obligations
|
$
|
127.4
|
|
|
$
|
157.2
|
|
The credit agreement also has quarterly financial covenants to maintain the following interest coverage and secured leverage ratios:
|
|
|
|
|
|
|
|
|
Interest Coverage Minimum Ratio
|
|
Secured Leverage Not to Exceed
|
|
January 1, 2017 through December 31, 2017
|
2.25:1
|
|
4.250:1
|
|
January 1, 2018 through June 30, 2018
|
2.25:1
|
|
4.000:1
|
|
July 1, 2018 through December 31, 2018
|
2.25:1
|
|
3.750:1
|
|
January 1, 2019 through maturity
|
2.25:1
|
|
3.500:1
|
As of
March 31, 2017
, the Company was in compliance with its financial covenants: our interest coverage ratio was
6.67
to 1.00 and our secured leverage ratio was
3.345
to 1.00. We continuously monitor our compliance with our debt covenants.
Note 7 — Pensions and Other Benefits
The following table is a summary of net periodic benefit expense for the Company's defined pension plan ("Pension Plan") and supplemental executive retirement plans ("SERPs"), collectively referred to as "Pension":
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Interest cost
|
1.5
|
|
|
1.7
|
|
|
Expected return on plan assets
|
(1.3
|
)
|
|
(1.3
|
)
|
|
Amortization of net actuarial loss
|
1.1
|
|
|
1.4
|
|
|
Net periodic benefit expense
|
$
|
1.3
|
|
|
$
|
1.8
|
|
The following table is a summary of net periodic benefit income for the Company’s postretirement medical benefit plan ("Postretirement Benefits"):
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Amortization of prior service credit
|
$
|
(0.1
|
)
|
|
$
|
(0.1
|
)
|
|
Amortization of net actuarial loss
|
0.1
|
|
|
—
|
|
|
Net periodic benefit income
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
Note 8 — Stockholders’ Deficit
Common Stock
—
No
dividends were paid during the
three months ended
March 31, 2017
or
March 31, 2016
.
Accumulated Other Comprehensive Loss
— The following tables are a summary of the changes to Accumulated other comprehensive loss by component:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
|
|
January 1, 2017
|
$
|
10.8
|
|
|
$
|
(19.9
|
)
|
|
$
|
(44.8
|
)
|
|
$
|
(53.9
|
)
|
|
Other comprehensive income before reclassification
|
0.1
|
|
|
2.2
|
|
|
—
|
|
|
2.3
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
—
|
|
|
—
|
|
|
0.7
|
|
|
0.7
|
|
|
Net current period other comprehensive income
|
0.1
|
|
|
2.2
|
|
|
0.7
|
|
|
3.0
|
|
|
March 31, 2017
|
$
|
10.9
|
|
|
$
|
(17.7
|
)
|
|
$
|
(44.1
|
)
|
|
$
|
(50.9
|
)
|
|
|
|
|
|
|
|
|
|
|
January 1, 2016
|
$
|
11.1
|
|
|
$
|
(13.5
|
)
|
|
$
|
(46.3
|
)
|
|
$
|
(48.7
|
)
|
|
Other comprehensive income before reclassification
|
0.1
|
|
|
1.2
|
|
|
—
|
|
|
1.3
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
(0.1
|
)
|
|
—
|
|
|
0.8
|
|
|
0.7
|
|
|
Net current period other comprehensive income
|
—
|
|
|
1.2
|
|
|
0.8
|
|
|
2.0
|
|
|
March 31, 2016
|
$
|
11.1
|
|
|
$
|
(12.3
|
)
|
|
$
|
(45.5
|
)
|
|
$
|
(46.7
|
)
|
The following table is a summary of the significant amounts reclassified out of each component of Accumulated other comprehensive loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Statement of Operations Location
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
|
Change in unrealized gains on securities classified as available-for-sale, before and net of tax
|
$
|
—
|
|
|
$
|
(0.1
|
)
|
|
"Investment revenue"
|
|
|
|
|
|
|
|
|
Pension and Postretirement Benefits adjustments:
|
|
|
|
|
|
|
Amortization of prior service credit
|
(0.1
|
)
|
|
(0.1
|
)
|
|
"Compensation and benefits"
|
|
Amortization of net actuarial loss
|
1.2
|
|
|
1.4
|
|
|
"Compensation and benefits"
|
|
Total before tax
|
1.1
|
|
|
1.3
|
|
|
|
|
Tax benefit
|
(0.4
|
)
|
|
(0.5
|
)
|
|
|
|
Total, net of tax
|
0.7
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
Total reclassified for the period, net of tax
|
$
|
0.7
|
|
|
$
|
0.7
|
|
|
|
Note 9 — Stock-Based Compensation
The following table is a summary of the Company's stock-based compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Expense recognized related to stock options
|
$
|
0.3
|
|
|
$
|
0.9
|
|
|
Expense recognized related to restricted stock units
|
3.7
|
|
|
4.1
|
|
|
Stock-based compensation expense
|
$
|
4.0
|
|
|
$
|
5.0
|
|
Stock Options
— The following table is a summary of the Company’s stock option activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
($000,000)
|
|
Options outstanding at December 31, 2016
|
2,485,461
|
|
|
$
|
18.02
|
|
|
4.0 years
|
|
$
|
—
|
|
|
Exercised
|
(54,472
|
)
|
|
13.88
|
|
|
|
|
|
|
Forfeited/Expired
|
(110,934
|
)
|
|
26.31
|
|
|
|
|
|
|
Options outstanding at March 31, 2017
|
2,320,055
|
|
|
$
|
17.72
|
|
|
3.6 years
|
|
$
|
2.9
|
|
|
Vested or expected to vest at March 31, 2017
|
2,319,415
|
|
|
$
|
17.72
|
|
|
3.6 years
|
|
$
|
2.9
|
|
|
Options exercisable at March 31, 2017
|
2,273,235
|
|
|
$
|
17.77
|
|
|
3.5 years
|
|
$
|
2.8
|
|
As of
March 31, 2017
, the unrecognized stock option expense related to outstanding options was
$0.2 million
with a remaining weighted-average vesting period of
0.4 years
.
Restricted Stock Units
— In February 2017, the Company issued time-based and performance-based restricted stock units. The time-based restricted stock units vest in three equal installments on each anniversary of the grant date. The performance-based restricted stock units are subject to performance conditions that must be satisfied. If such performance conditions are satisfied at the conclusion of a one-year performance period, the performance-based restricted stock units will vest in three equal installments on each anniversary of the grant date. With respect to the performance-based restricted stock units, up to
50%
of such awards become eligible to vest over such three year period if a target level of Adjusted EBITDA is achieved for the year ended December 31, 2017. Adjusted EBITDA is EBITDA (earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization) adjusted for certain significant items. The other
50%
of the performance-based restricted stock units become eligible to vest over such three year period if a target level of revenue is achieved for the year ended December 31, 2017. The performance-based restricted stock units have a threshold level of performance for each of the target levels. Achievement of the threshold level will result in vesting of
50%
of the target levels discussed above. The number of performance-based restricted stock units that will vest for performance achievement between the threshold and target will be determined based on a straight-line interpolation. No performance-based restricted stock units will vest for performance achievement below the thresholds.
The following table is a summary of the Company’s restricted stock unit activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Shares
|
|
Weighted
Average
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
($000,000)
|
|
Restricted stock units outstanding at December 31, 2016
|
4,630,038
|
|
|
$
|
7.68
|
|
|
0.9 years
|
|
$
|
54.7
|
|
|
Granted
|
1,316,881
|
|
|
12.72
|
|
|
|
|
|
|
Vested and converted to shares
|
(1,731,135
|
)
|
|
7.63
|
|
|
|
|
|
|
Forfeited
|
(474,417
|
)
|
|
14.91
|
|
|
|
|
|
|
Restricted stock units outstanding at March 31, 2017
|
3,741,367
|
|
|
$
|
8.56
|
|
|
1.4 years
|
|
$
|
62.9
|
|
|
Restricted stock units vested and outstanding at March 31, 2017
|
69,253
|
|
|
$
|
6.81
|
|
|
|
|
$
|
1.2
|
|
As of
March 31, 2017
, the Company’s outstanding restricted stock units had unrecognized compensation expense of
$26.6 million
. Unrecognized restricted stock unit expense and the remaining weighted-average vesting period are presented using the Company’s current estimate of achievement of performance goals. The grant-date fair value of restricted stock units vested and converted was
$13.2 million
and
$12.9 million
for the
three
months ended
March 31,
2017
and
2016
, respectively.
Note 10 — Income Taxes
For the
three months ended March 31, 2017
, the Company recognized income tax expense of
$2.5 million
on a pre-tax income of
$11.3 million
. The recorded income tax expense for the
three months ended March 31, 2017
differs from taxes calculated at the statutory rate primarily due to the recognition of excess tax benefits on stock-based compensation vested during the quarter.
For the
three months ended March 31, 2016
, the Company recognized an income tax expense of
$16.0 million
on pre-tax income of
$11.8 million
. The recorded income tax expense for the
three months ended March 31, 2016
differs from taxes calculated at the statutory rate primarily due to tax expense of
$7.7 million
from the settlement reached with the Internal Revenue Service (the "IRS") related to the deduction of payments previously made by the Company to the Asset Forfeiture and Money Laundering Section of the Department of Justice ("U.S. DOJ") pursuant to the Deferred Prosecution Agreement with the U.S. Attorney's Office for the Middle District of Pennsylvania and the U.S. DOJ (the "Deferred Prosecution Agreement"), the reversal of tax benefits of
$2.8 million
on share-based compensation and a tax expense of
$1.1 million
related to non-deductible executive compensation.
The IRS completed its examination of the Company’s consolidated income tax returns for the tax years 2011 through 2013 and issued a Revenue Agent Report (“RAR”) in the first quarter of 2015 that included disallowing
$100.0 million
of deductions related to payments the Company made to the U.S. DOJ pursuant to the Deferred Prosecution Agreement. In April 2016, the Company entered into a settlement agreement with the IRS allowing a deduction of
$39.3 million
. As of December 31, 2016, the Company had fully settled this matter with
$21.2 million
of existing deferred tax assets and
$0.5 million
of cash after recognizing an additional
$7.7 million
of Income tax expense for the
three months ended
March 31, 2016
. The state tax liabilities related to the federal settlement have yet to be settled due to the pending implications of the security losses.
Unrecognized tax benefits are recorded in “Accounts payable and other liabilities” in the Condensed Consolidated Balance Sheets. As of
March 31, 2017
and
December 31, 2016
, the liability for unrecognized tax benefits was
$24.2 million
. For the
three months ended
March 31, 2017
and
2016
, the net amount of unrecognized tax benefits that if recognized could impact the effective tax rate was
$16.7 million
and
$38.2 million
, respectively. The Company accrues interest and penalties for unrecognized tax benefits through “Income tax expense” in the Condensed Consolidated Statements of Operations. For the
three months ended
March 31, 2017
and
2016
, the Company's accrual for interest and penalties increased by
$0.6 million
and
$0.5 million
, respectively. As of
March 31, 2017
and
December 31, 2016
, the Company had a liability of
$7.0 million
and
$6.4 million
, respectively, for interest and penalties related to its unrecognized tax benefits. As a result of the Company's litigation related to its securities losses previously discussed, it is possible that there could be a significant decrease to the total amount of unrecognized tax benefits over the next 12 months. As of
March 31, 2017
, it is not possible to reasonably estimate the expected change to the total amount of unrecognized tax positions over the next 12 months.
Note 11 — Commitments and Contingencies
Participation Agreement between the Investors and Wal-Mart Stores, Inc.
—
Upon completion of the proposed Merger, described in Note 1 —
Description of the Business and Basis of Presentation
, the Company may recognize an expense and a corresponding increase to additional paid-in capital in regards to the Participation Agreement of approximately
$30 million
. As of March 31, 2017, the Company has not recognized any further liability or expense because completion of the Merger remains subject to certain closing conditions that have not yet been satisfied.
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 matters. In relation to various legal matters, including those described below, the Company had
$2.0 million
and
$1.2 million
of liability recorded in the “Accounts payable and other liabilities” line in the Condensed Consolidated Balance Sheets as of
March 31, 2017
and
December 31, 2016
, respectively. A charge of
$0.9 million
and a nominal charge were recorded for legal proceedings during the
three
months ended
March 31, 2017
and
2016
, respectively, in the "Transaction and operations support" line in the Condensed Consolidated Statements of Operations.
Litigation Commenced Against the Company:
Class Action Securities Litigation
—
On April 15, 2015, a securities class action lawsuit was filed in the Superior Court of the State of Delaware, County of New Castle, against MoneyGram, all of its directors, certain of its executive officers, Thomas H. Lee Partners, L.P., Goldman, Sachs & Co. and the underwriters of the secondary public offering of the Company’s common stock that closed on April 2, 2014 (the “2014 Offering”). The lawsuit was brought by the Iron Workers District Council of New England Pension Fund seeking to represent a class consisting of all purchasers of the Company’s common stock issued pursuant and/or traceable to the Company’s registration statement and prospectus, and all documents incorporated by reference therein, for the 2014 Offering. The lawsuit alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, due to allegedly false and misleading statements in connection with the 2014 Offering and seeks unspecified damages and other relief. In May 2015, MoneyGram and the other defendants filed a notice of removal to the federal district court of the District of Delaware. In September 2016, the court denied plaintiffs' motion to remand. The Company believes that the claims are without merit and intends to vigorously defend against the lawsuit. The Company is unable to predict the outcome, or the possible loss or range of loss, if any, related to this matter.
Merger-Related Litigation
— On March 13, 2017 and March 17, 2017, respectively, putative securities class action lawsuits challenging the Merger were filed in the United States District Court for the District of Delaware and the United States District Court for the Northern District of Texas against MoneyGram and its directors. One of the lawsuits also named as defendants certain of our executive officers, Alipay and other parties to the Merger. The plaintiffs, our stockholders, challenged the Merger and the disclosures made in connection with the Merger. The lawsuits alleged violations of various securities laws and regulations due to allegedly material and misleading omissions in the preliminary proxy statement filed in connection with the Merger. Additionally, the lawsuits alleged that the Merger Agreement is unfair to our stockholders, resulted from an inadequate process, and contains terms that will supposedly deter third parties from making alternative offers. The plaintiffs sought to enjoin the Merger and to recover damages, costs and attorneys’ fees in unspecified amounts. On April 26, 2017 and April 28, 2017, the plaintiffs in the Delaware and Texas suits, respectively, filed notices of voluntary dismissal of those actions.
Other Matters
— The Company is involved in various other 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 received Civil Investigative Demands from a working group of
nine
state attorneys general who initiated an investigation into whether the Company took adequate steps to prevent consumer fraud during the period from 2007 to 2014. On February 11, 2016, the Company entered into a settlement agreement with 49 states and the District of Columbia to settle any civil or administrative claims such attorneys general may have asserted under their consumer protection laws through the date of the settlement agreement in connection with the investigation. Under the settlement agreement, the Company made a non-refundable payment of
$13.0 million
to the participating states in March 2016 to be used by the states to provide restitution to consumers. The Company also agreed to implement certain enhancements to its compliance program and provide periodic reports to the states party to the settlement agreement.
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.
In 2015, we initiated an internal investigation to identify any payments processed by the Company that were violations of the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC") sanctions regulations. We notified OFAC of the internal investigation, which was conducted in conjunction with the Company's outside counsel. On March 28, 2017, we filed a Voluntary Self-Disclosure with OFAC regarding the findings of our internal investigation. OFAC is currently reviewing the results of the Company’s investigation. At this time, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition, or operations, and we cannot predict when OFAC will conclude their review of our Voluntary Self-Disclosure.
Actions Commenced by the Company:
Tax Litigation
— The IRS completed its examination of the Company’s consolidated income tax returns through 2013 and issued Notices of Deficiency for 2005-2007 and 2009, and an Examination Report for 2008. The Notices of Deficiency and Examination Report disallow, among other items, approximately
$900.0 million
of ordinary deductions on securities losses in the 2007, 2008 and 2009 tax returns. In May 2012 and December 2012, the Company filed petitions in the U.S. Tax Court challenging the 2005-2007 and 2009 Notices of Deficiency, respectively. In 2013, the Company reached a partial settlement with the IRS allowing ordinary loss treatment on
$186.9 million
of deductions in dispute. In January 2015, the U.S. Tax Court granted the IRS's motion for summary judgment upholding the remaining adjustments in the Notices of Deficiency. The Company filed a notice of appeal with the U.S. Tax Court on July 27, 2015 for an appeal to the U.S. Court of Appeals for the Fifth Circuit. Oral arguments were held before the Fifth Circuit on June 7, 2016, and on November 15, 2016, the Fifth Circuit vacated the Tax Court's decision and remanded the case to the Tax Court for further proceedings.
The January 2015 Tax Court decision was a change in facts which warranted reassessment of the Company's uncertain tax position. Although the Company believes that it has substantive tax law arguments in favor of its position and has appealed the ruling, the reassessment resulted in the Company determining that it is no longer more likely than not that its existing position will be sustained. Accordingly, the Company re-characterized certain deductions relating to securities losses to be capital in nature, rather than ordinary. The Company recorded a full valuation allowance against these losses in the quarter ended March 31, 2015. This change increased "Income tax expense" in the Consolidated Statements of Operations in the quarter ended March 31, 2015 by
$63.7 million
. During 2015, the Company made payments to the IRS of
$61.0 million
for federal tax payments and associated interest related to the matter. The November 2016 Fifth Circuit decision to remand the case back to the Tax Court does not change the Company’s current assessment regarding the likelihood that these deductions will be sustained. Accordingly, no change in the valuation allowance was made as of
March 31, 2017
. Pending the outcome of the Tax Court proceeding, the Company may be required to file amended state returns and make additional cash payments of up to
$17.8 million
on amounts that have previously been accrued.
Note 12 — Earnings per Common Share
For all periods in which it is outstanding, the Series D Participating Convertible Preferred Stock (the "D Stock") is included in the weighted-average number of common shares outstanding utilized to calculate basic earnings (loss) per common share because the D Stock is deemed a common stock equivalent. Diluted earnings (loss) 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 (loss) 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 (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Basic common shares outstanding
|
62.1
|
|
|
62.4
|
|
|
Shares related to stock options and restricted stock units
|
4.0
|
|
|
—
|
|
|
Diluted common shares outstanding
|
66.1
|
|
|
62.4
|
|
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 and restricted stock units are anti-dilutive if they are subject to performance conditions that have not been met. 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:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Shares related to stock options
|
1.9
|
|
|
3.0
|
|
|
Shares related to restricted stock units
|
0.2
|
|
|
4.1
|
|
|
Shares excluded from the computation
|
2.1
|
|
|
7.1
|
|
Note 13 — 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. See Note 1 —
Description of the Business and Basis for Presentation
for further discussion on our segments. One of the Company’s agents for both the Global Funds Transfer segment and the Financial Paper Products segment accounted for
18%
and
19%
of total revenue for the
three
months ended
March 31, 2017
and
2016
, respectively.
The following table is a summary of the total revenue by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Global Funds Transfer revenue:
|
|
|
|
|
Money transfer revenue
|
$
|
341.7
|
|
|
$
|
344.9
|
|
|
Bill payment revenue
|
25.1
|
|
|
24.1
|
|
|
Total Global Funds Transfer revenue
|
366.8
|
|
|
369.0
|
|
|
Financial Paper Products revenue:
|
|
|
|
|
Money order revenue
|
12.5
|
|
|
12.7
|
|
|
Official check revenue
|
6.8
|
|
|
5.4
|
|
|
Total Financial Paper Products revenue
|
19.3
|
|
|
18.1
|
|
|
Total revenue
|
$
|
386.1
|
|
|
$
|
387.1
|
|
The following table is a summary of the operating income by segment and detail of the income before income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Global Funds Transfer operating income
|
$
|
26.1
|
|
|
$
|
23.7
|
|
|
Financial Paper Products operating income
|
4.8
|
|
|
4.5
|
|
|
Total segment operating income
|
30.9
|
|
|
28.2
|
|
|
Other operating loss
|
(8.8
|
)
|
|
(5.1
|
)
|
|
Total operating income
|
22.1
|
|
|
23.1
|
|
|
Interest expense
|
10.8
|
|
|
11.3
|
|
|
Income before income taxes
|
$
|
11.3
|
|
|
$
|
11.8
|
|
The following table sets forth the assets by segment:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2017
|
|
December 31, 2016
|
|
Global Funds Transfer
|
$
|
2,217.7
|
|
|
$
|
2,213.9
|
|
|
Financial Paper Products
|
2,065.6
|
|
|
2,198.3
|
|
|
Other
|
154.2
|
|
|
185.2
|
|
|
Total assets
|
$
|
4,437.5
|
|
|
$
|
4,597.4
|
|
Note 14 — Condensed Consolidating Financial Statements
In the event the Company offers 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 the Securities and Exchange Commission 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, 2017
and
December 31, 2016
, Condensed Consolidating Statements of Operations for the
three
months ended
March 31, 2017
and
2016
and Condensed Consolidating Statements of Cash Flows for the
three months ended
March 31, 2017
and
2016
. 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, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
0.9
|
|
|
$
|
107.5
|
|
|
$
|
19.0
|
|
|
$
|
—
|
|
|
$
|
127.4
|
|
|
Settlement assets
|
—
|
|
|
3,364.2
|
|
|
128.7
|
|
|
—
|
|
|
3,492.9
|
|
|
Property and equipment, net
|
—
|
|
|
188.7
|
|
|
16.1
|
|
|
—
|
|
|
204.8
|
|
|
Goodwill
|
—
|
|
|
315.4
|
|
|
126.8
|
|
|
—
|
|
|
442.2
|
|
|
Other assets
|
40.0
|
|
|
141.3
|
|
|
41.2
|
|
|
(52.3
|
)
|
|
170.2
|
|
|
Equity investments in subsidiaries
|
879.3
|
|
|
238.0
|
|
|
—
|
|
|
(1,117.3
|
)
|
|
—
|
|
|
Intercompany receivables
|
—
|
|
|
146.3
|
|
|
57.5
|
|
|
(203.8
|
)
|
|
—
|
|
|
Total assets
|
$
|
920.2
|
|
|
$
|
4,501.4
|
|
|
$
|
389.3
|
|
|
$
|
(1,373.4
|
)
|
|
$
|
4,437.5
|
|
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
|
Payment service obligations
|
$
|
—
|
|
|
$
|
3,374.5
|
|
|
$
|
118.4
|
|
|
$
|
—
|
|
|
$
|
3,492.9
|
|
|
Debt
|
913.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
913.4
|
|
|
Pension and other postretirement benefits
|
—
|
|
|
79.6
|
|
|
—
|
|
|
—
|
|
|
79.6
|
|
|
Accounts payable and other liabilities
|
2.3
|
|
|
168.0
|
|
|
32.9
|
|
|
(52.3
|
)
|
|
150.9
|
|
|
Intercompany liabilities
|
203.8
|
|
|
—
|
|
|
—
|
|
|
(203.8
|
)
|
|
—
|
|
|
Total liabilities
|
1,119.5
|
|
|
3,622.1
|
|
|
151.3
|
|
|
(256.1
|
)
|
|
4,636.8
|
|
|
Total stockholders’ (deficit) equity
|
(199.3
|
)
|
|
879.3
|
|
|
238.0
|
|
|
(1,117.3
|
)
|
|
(199.3
|
)
|
|
Total liabilities and stockholders’ (deficit) equity
|
$
|
920.2
|
|
|
$
|
4,501.4
|
|
|
$
|
389.3
|
|
|
$
|
(1,373.4
|
)
|
|
$
|
4,437.5
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED CONSOLIDATING BALANCE SHEETS
AS OF
DECEMBER 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
128.8
|
|
|
$
|
28.4
|
|
|
$
|
—
|
|
|
$
|
157.2
|
|
|
Settlement assets
|
—
|
|
|
3,504.7
|
|
|
129.6
|
|
|
—
|
|
|
3,634.3
|
|
|
Property and equipment, net
|
—
|
|
|
184.3
|
|
|
16.7
|
|
|
—
|
|
|
201.0
|
|
|
Goodwill
|
—
|
|
|
315.3
|
|
|
126.9
|
|
|
—
|
|
|
442.2
|
|
|
Other assets
|
36.0
|
|
|
146.0
|
|
|
39.4
|
|
|
(58.7
|
)
|
|
162.7
|
|
|
Equity investments in subsidiaries
|
879.1
|
|
|
232.3
|
|
|
—
|
|
|
(1,111.4
|
)
|
|
—
|
|
|
Intercompany receivables
|
—
|
|
|
155.1
|
|
|
51.3
|
|
|
(206.4
|
)
|
|
—
|
|
|
Total assets
|
$
|
915.1
|
|
|
$
|
4,666.5
|
|
|
$
|
392.3
|
|
|
$
|
(1,376.5
|
)
|
|
$
|
4,597.4
|
|
|
LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY
|
|
|
|
|
|
|
|
|
|
|
Payment service obligations
|
$
|
—
|
|
|
$
|
3,525.4
|
|
|
$
|
108.9
|
|
|
$
|
—
|
|
|
$
|
3,634.3
|
|
|
Debt
|
915.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
915.2
|
|
|
Pension and other postretirement benefits
|
—
|
|
|
87.6
|
|
|
—
|
|
|
—
|
|
|
87.6
|
|
|
Accounts payable and other liabilities
|
1.9
|
|
|
174.4
|
|
|
51.1
|
|
|
(58.7
|
)
|
|
168.7
|
|
|
Intercompany liabilities
|
206.4
|
|
|
—
|
|
|
—
|
|
|
(206.4
|
)
|
|
—
|
|
|
Total liabilities
|
1,123.5
|
|
|
3,787.4
|
|
|
160.0
|
|
|
(265.1
|
)
|
|
4,805.8
|
|
|
Total stockholders’ (deficit) equity
|
(208.4
|
)
|
|
879.1
|
|
|
232.3
|
|
|
(1,111.4
|
)
|
|
(208.4
|
)
|
|
Total liabilities and stockholders’ (deficit) equity
|
$
|
915.1
|
|
|
$
|
4,666.5
|
|
|
$
|
392.3
|
|
|
$
|
(1,376.5
|
)
|
|
$
|
4,597.4
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
Fee and other revenue
|
$
|
—
|
|
|
$
|
365.4
|
|
|
$
|
94.0
|
|
|
$
|
(79.1
|
)
|
|
$
|
380.3
|
|
|
Investment revenue
|
—
|
|
|
5.8
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
|
Total revenue
|
—
|
|
|
371.2
|
|
|
94.0
|
|
|
(79.1
|
)
|
|
386.1
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Fee and other commissions expense
|
—
|
|
|
180.6
|
|
|
48.9
|
|
|
(43.5
|
)
|
|
186.0
|
|
|
Investment commissions expense
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
Total commissions expense
|
—
|
|
|
181.9
|
|
|
48.9
|
|
|
(43.5
|
)
|
|
187.3
|
|
|
Compensation and benefits
|
—
|
|
|
48.0
|
|
|
23.5
|
|
|
—
|
|
|
71.5
|
|
|
Transaction and operations support
|
0.4
|
|
|
95.2
|
|
|
11.6
|
|
|
(35.6
|
)
|
|
71.6
|
|
|
Occupancy, equipment and supplies
|
—
|
|
|
11.8
|
|
|
3.5
|
|
|
—
|
|
|
15.3
|
|
|
Depreciation and amortization
|
—
|
|
|
15.5
|
|
|
2.8
|
|
|
—
|
|
|
18.3
|
|
|
Total operating expenses
|
0.4
|
|
|
352.4
|
|
|
90.3
|
|
|
(79.1
|
)
|
|
364.0
|
|
|
OPERATING (LOSS) INCOME
|
(0.4
|
)
|
|
18.8
|
|
|
3.7
|
|
|
—
|
|
|
22.1
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
10.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.8
|
|
|
Total other expense
|
10.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.8
|
|
|
(Loss) income before income taxes
|
(11.2
|
)
|
|
18.8
|
|
|
3.7
|
|
|
—
|
|
|
11.3
|
|
|
Income tax (benefit) expense
|
(4.1
|
)
|
|
6.4
|
|
|
0.2
|
|
|
—
|
|
|
2.5
|
|
|
(Loss) income after income taxes
|
(7.1
|
)
|
|
12.4
|
|
|
3.5
|
|
|
—
|
|
|
8.8
|
|
|
Equity income in subsidiaries
|
15.9
|
|
|
3.5
|
|
|
—
|
|
|
(19.4
|
)
|
|
—
|
|
|
NET INCOME
|
8.8
|
|
|
15.9
|
|
|
3.5
|
|
|
(19.4
|
)
|
|
8.8
|
|
|
TOTAL OTHER COMPREHENSIVE INCOME
|
3.0
|
|
|
3.0
|
|
|
2.1
|
|
|
(5.1
|
)
|
|
3.0
|
|
|
COMPREHENSIVE INCOME
|
$
|
11.8
|
|
|
$
|
18.9
|
|
|
$
|
5.6
|
|
|
$
|
(24.5
|
)
|
|
$
|
11.8
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED
MARCH 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
Fee and other revenue
|
$
|
—
|
|
|
$
|
381.6
|
|
|
$
|
92.4
|
|
|
$
|
(90.6
|
)
|
|
$
|
383.4
|
|
|
Investment revenue
|
—
|
|
|
3.7
|
|
|
—
|
|
|
—
|
|
|
3.7
|
|
|
Total revenue
|
—
|
|
|
385.3
|
|
|
92.4
|
|
|
(90.6
|
)
|
|
387.1
|
|
|
OPERATING EXPENSES
|
|
|
|
|
|
|
|
|
|
|
Fee and other commissions expense
|
—
|
|
|
186.1
|
|
|
54.8
|
|
|
(49.9
|
)
|
|
191.0
|
|
|
Investment commissions expense
|
—
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
Total commissions expense
|
—
|
|
|
186.6
|
|
|
54.8
|
|
|
(49.9
|
)
|
|
191.5
|
|
|
Compensation and benefits
|
—
|
|
|
49.5
|
|
|
22.2
|
|
|
—
|
|
|
71.7
|
|
|
Transaction and operations support
|
0.4
|
|
|
92.6
|
|
|
12.2
|
|
|
(40.7
|
)
|
|
64.5
|
|
|
Occupancy, equipment and supplies
|
—
|
|
|
11.3
|
|
|
3.9
|
|
|
—
|
|
|
15.2
|
|
|
Depreciation and amortization
|
—
|
|
|
17.7
|
|
|
3.4
|
|
|
—
|
|
|
21.1
|
|
|
Total operating expenses
|
0.4
|
|
|
357.7
|
|
|
96.5
|
|
|
(90.6
|
)
|
|
364.0
|
|
|
OPERATING (LOSS) INCOME
|
(0.4
|
)
|
|
27.6
|
|
|
(4.1
|
)
|
|
—
|
|
|
23.1
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
11.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.3
|
|
|
Total other expense
|
11.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.3
|
|
|
(Loss) income before income taxes
|
(11.7
|
)
|
|
27.6
|
|
|
(4.1
|
)
|
|
—
|
|
|
11.8
|
|
|
Income tax (benefit) expense
|
(4.3
|
)
|
|
24.5
|
|
|
(4.2
|
)
|
|
—
|
|
|
16.0
|
|
|
(Loss) income after income taxes
|
(7.4
|
)
|
|
3.1
|
|
|
0.1
|
|
|
—
|
|
|
(4.2
|
)
|
|
Equity income in subsidiaries
|
3.2
|
|
|
0.1
|
|
|
—
|
|
|
(3.3
|
)
|
|
—
|
|
|
NET (LOSS) INCOME
|
(4.2
|
)
|
|
3.2
|
|
|
0.1
|
|
|
(3.3
|
)
|
|
(4.2
|
)
|
|
TOTAL OTHER COMPREHENSIVE INCOME
|
2.0
|
|
|
4.3
|
|
|
5.4
|
|
|
(9.7
|
)
|
|
2.0
|
|
|
COMPREHENSIVE (LOSS) INCOME
|
$
|
(2.2
|
)
|
|
$
|
7.5
|
|
|
$
|
5.5
|
|
|
$
|
(13.0
|
)
|
|
$
|
(2.2
|
)
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
$
|
(7.5
|
)
|
|
$
|
0.4
|
|
|
$
|
(2.5
|
)
|
|
$
|
—
|
|
|
$
|
(9.6
|
)
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
—
|
|
|
(17.5
|
)
|
|
(1.1
|
)
|
|
—
|
|
|
(18.6
|
)
|
|
Dividend from subsidiary guarantors
|
12.6
|
|
|
—
|
|
|
—
|
|
|
(12.6
|
)
|
|
—
|
|
|
Intercompany investments
|
—
|
|
|
8.8
|
|
|
(6.2
|
)
|
|
(2.6
|
)
|
|
—
|
|
|
Capital contributions to non-guarantors
|
—
|
|
|
(0.4
|
)
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
Net cash provided by (used in) investing activities
|
12.6
|
|
|
(9.1
|
)
|
|
(7.3
|
)
|
|
(14.8
|
)
|
|
(18.6
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Principal payments on debt
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
Proceeds from exercise of stock options
|
0.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
Dividend to parent
|
—
|
|
|
(12.6
|
)
|
|
—
|
|
|
12.6
|
|
|
—
|
|
|
Intercompany financings
|
(2.6
|
)
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
Capital contribution from subsidiary guarantors
|
—
|
|
|
—
|
|
|
0.4
|
|
|
(0.4
|
)
|
|
—
|
|
|
Net cash (used in) provided by financing activities
|
(4.2
|
)
|
|
(12.6
|
)
|
|
0.4
|
|
|
14.8
|
|
|
(1.6
|
)
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
0.9
|
|
|
(21.3
|
)
|
|
(9.4
|
)
|
|
—
|
|
|
(29.8
|
)
|
|
CASH AND CASH EQUIVALENTS—Beginning of period
|
—
|
|
|
128.8
|
|
|
28.4
|
|
|
—
|
|
|
157.2
|
|
|
CASH AND CASH EQUIVALENTS—End of period
|
$
|
0.9
|
|
|
$
|
107.5
|
|
|
$
|
19.0
|
|
|
$
|
—
|
|
|
$
|
127.4
|
|
MONEYGRAM INTERNATIONAL, INC.
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
MARCH 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Parent
|
|
Subsidiary Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
|
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
|
$
|
(9.7
|
)
|
|
$
|
16.9
|
|
|
$
|
(7.1
|
)
|
|
$
|
—
|
|
|
$
|
0.1
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Purchases of property and equipment
|
—
|
|
|
(15.4
|
)
|
|
(2.6
|
)
|
|
—
|
|
|
(18.0
|
)
|
|
Dividend from subsidiary guarantors
|
12.9
|
|
|
—
|
|
|
—
|
|
|
(12.9
|
)
|
|
—
|
|
|
Intercompany investments
|
—
|
|
|
(17.0
|
)
|
|
—
|
|
|
17.0
|
|
|
—
|
|
|
Net cash provided by (used in) investing activities
|
12.9
|
|
|
(32.4
|
)
|
|
(2.6
|
)
|
|
4.1
|
|
|
(18.0
|
)
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Principal payments on debt
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
Stock repurchase
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|
Dividend to parent
|
—
|
|
|
(12.9
|
)
|
|
—
|
|
|
12.9
|
|
|
—
|
|
|
Intercompany financings
|
1.2
|
|
|
—
|
|
|
15.8
|
|
|
(17.0
|
)
|
|
—
|
|
|
Payments to tax authorities for stock-based compensation
|
—
|
|
|
(0.7
|
)
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|
Net cash (used in) provided by financing activities
|
(3.2
|
)
|
|
(13.6
|
)
|
|
15.8
|
|
|
(4.1
|
)
|
|
(5.1
|
)
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
—
|
|
|
(29.1
|
)
|
|
6.1
|
|
|
—
|
|
|
(23.0
|
)
|
|
CASH AND CASH EQUIVALENTS—Beginning of period
|
2.1
|
|
|
88.2
|
|
|
74.2
|
|
|
—
|
|
|
164.5
|
|
|
CASH AND CASH EQUIVALENTS—End of period
|
$
|
2.1
|
|
|
$
|
59.1
|
|
|
$
|
80.3
|
|
|
$
|
—
|
|
|
$
|
141.5
|
|
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 Condensed Consolidated Financial Statements and related Notes included in this Quarterly Report on Form 10-Q and the Consolidated Financial Statements and Notes included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2016
. 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 and Estimates
|
|
|
|
|
•
|
Cautionary Statements Regarding Forward-Looking Statements
|
OVERVIEW
MoneyGram is a global provider of innovative money transfer services and is recognized worldwide as a financial connection to friends and family. Whether online, through a mobile device, at a kiosk or in a local store, we connect consumers in any way that is convenient for them. We also provide bill payment services, issue money orders and process official checks in the U.S. and in select countries and territories. We primarily offer services through third-party agents, including retail chains, independent retailers, post offices and financial institutions. We also have Company-operated retail locations in the U.S. and Western Europe. Additionally, we offer Digital solutions, which include moneygram.com, mobile solutions, account deposit and kiosk-based services.
We manage our revenue and related commissions expense through two reporting segments: Global Funds Transfer and Financial Paper Products. The Global Funds Transfer segment provides global money transfer services in approximately
350,000
agent locations in more than
200
countries and territories. Our global money transfer services are our primary revenue driver, accounting for
89%
of total revenue for the
three
months ended
March 31, 2017
. The Global Funds Transfer segment also provides bill payment services to consumers through substantially all of our money transfer agent and Company-operated locations in the U.S., Canada and Puerto Rico, at certain agent locations in select Caribbean and European countries and through our Digital solutions. The Financial Paper Products segment provides money order services to consumers through retail locations and financial institutions located in the U.S. and Puerto Rico, and provides official check services to financial institutions in the U.S. Corporate expenses that are not related to our segments' performance are excluded from operating income for Global Funds Transfer and Financial Paper Products segments.
Business Environment
During the
three months ended
March 31, 2017
, worldwide political and economic conditions remained unstable, as evidenced by high unemployment rates in key markets, historically low oil prices, weak currencies, low currency reserves, currency controls and restricted lending activity, among other factors. Also, there is continued political and economic unrest in parts of the Middle East and Africa that contributed to the volatility. The remittance industry has generally been resilient during times of economic softness as money transfers are deemed essential to many, with the funds used by the receiving party for food, housing and other basic needs. Given the global reach and extent of the current economic conditions, the growth of money transfer volumes and the average face value of money transfers continued to fluctuate by corridor and country during the
three
months ended
March 31, 2017
.
The June 23, 2016 referendum by British voters to exit the European Union (referred to as Brexit) introduced additional volatility and uncertainty in global markets and currency exchange rates. So far the primary impact of Brexit has been the weakening of the British pound compared to the U.S. dollar, which has negatively impacted our reported revenue in the
three
months ended
March 31, 2017
. However, our restructuring efforts and the diversification of our employment base outside of the U.S. better aligned the currency exposure of our expenses with our revenues, which lessens the currency impact.
The market for money transfer services remains very competitive, consisting of a small number of large competitors and a large number of small, niche competitors, and we will continue to encounter competition from new technologies that allow consumers to send and receive money in a variety of ways. We generally compete for money transfer consumers on the basis of trust, convenience, price, technology and brand recognition. We believe that our investment in innovative products and services, particularly Digital solutions such as moneygram.com, mobile solutions, account deposit and kiosk-based services, positions the Company to grow our revenues and diversify our product and service offerings. Digital solutions revenue for the
three
months ended
March 31, 2017
and 2016, was
$51.2 million
and
$45.2 million
, respectively, or
15%
and
13%
, respectively, of money transfer revenue.
Anticipated Trends
This discussion of trends expected to impact our business in
2017
is based on information presently available and reflects certain assumptions, including assumptions regarding future economic conditions. Differences in actual economic conditions compared with our assumptions could have a material impact on our results. See “Cautionary Statements Regarding Forward-Looking Statements" included further below and Part I, Item 1A, “Risk Factors" included in the Company's Annual Report on Form 10-K for the year ended
December 31, 2016
for additional factors that could cause results to differ materially from those contemplated by the following forward-looking statements.
We see increased opportunities to capitalize on growth and expansion both geographically and through product and service offerings. However, we continue to have challenges in countries that restrict our ability to transact, such as Libya, Angola and Nigeria. Additionally, the strengthened U.S. dollar and political instability, which have led to increased currency volatility, liquidity pressure on central banks and pressure on labor markets in certain countries, may continue to impact our business in 2017.
We are currently unable to determine the long term impact that Brexit will have on us and the global economic environment, as any impact will depend, in part, on the outcome of tariff, trade, regulatory and other negotiations. In the near term, we expect a weaker British pound to cause local currency results of our U.K. business to be translated into fewer U.S. dollars, partially offset by the Company's foreign currency forward contracts and lower pound operating costs in the United Kingdom.
For our Financial Paper Products segment, we expect the decline in overall paper-based transactions to continue primarily due to continued migration by customers to other payment methods. Our investment revenue, which consists primarily of interest income generated through the investment of cash balances received from the sale of our Financial Paper Products, is dependent on the interest rate environment. The Company expects to see a positive impact on our investment revenue if interest rates increase.
We continue to see a trend among state, federal and international regulators toward 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. Our compliance enhancement program is focused on improving our services for consumers and completing the programs recommended in adherence with 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"). For the
three months ended
March 31, 2017
, the Company has invested
$10.1 million
, which includes
$8.0 million
of capital expenditures and
$2.1 million
of expenses incurred.
In the first quarter of 2013, a compliance monitor was selected pursuant to a requirement of our settlement with the MDPA and U.S. DOJ. We have received four annual reports from the compliance monitor, which have resulted in us continuing to make investments in our compliance systems and operations. We incurred
$2.8 million
of expense directly related to the compliance monitor for the
three months ended
March 31, 2017
.
Financial Measures and Key Metrics
This Quarterly Report on Form 10-Q includes financial information prepared in accordance with generally accepted accounting principles 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 commissions expense, fee and other revenue less commissions, operating income and operating margin. Due to our regulatory capital requirements, we deem certain payment service assets as settlement assets. Settlement assets represent funds received or to be received from agents for unsettled money transfers, money orders and customer payments. Settlement assets include settlement cash and cash equivalents, receivables, net, interest-bearing investments and available-for-sale investments. See Note 2
— Settlement Assets and Payment Service Obligations
of the Notes to the Condensed 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 are non-GAAP financial measures we use to assess our overall performance:
EBITDA
(Earnings before interest, taxes, depreciation and amortization, including agent signing bonus amortization)
Adjusted EBITDA
(EBITDA adjusted for certain significant items)
—
Adjusted EBITDA does not reflect cash requirements necessary to service interest or principal payments on our indebtedness or tax payments that may result in a reduction in cash available.
Adjusted Free Cash Flow
(Adjusted EBITDA less cash interest, cash taxes, cash payments for capital expenditures and cash payments for agent signing bonuses)
—
Adjusted Free Cash Flow does not reflect cash payments related to the adjustment of certain significant items in Adjusted EBITDA.
Constant Currency
—
Constant currency metrics assume that amounts denominated in foreign currencies are translated to the U.S. dollar at rates consistent with those in the prior year.
The Company utilizes specific terms 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.
Corridor mix
—
The relative impact of increases or decreases in money transfer transaction volume in each 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 on our financial results 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 on revenues, commissions and other operating expenses for all countries where the functional currency is not the U.S. dollar.
RESULTS OF OPERATIONS
The following table is a summary of the results of operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
(Amounts in millions, except percentages)
|
2017
|
|
2016
|
|
|
REVENUE
|
|
|
|
|
|
|
Fee and other revenue
|
$
|
380.3
|
|
|
$
|
383.4
|
|
|
(1
|
)%
|
|
Investment revenue
|
5.8
|
|
|
3.7
|
|
|
57
|
%
|
|
Total revenue
|
386.1
|
|
|
387.1
|
|
|
—
|
%
|
|
EXPENSES
|
|
|
|
|
|
|
Fee and other commissions expense
|
186.0
|
|
|
191.0
|
|
|
(3
|
)%
|
|
Investment commissions expense
|
1.3
|
|
|
0.5
|
|
|
NM
|
|
|
Total commissions expense
|
187.3
|
|
|
191.5
|
|
|
(2
|
)%
|
|
Compensation and benefits
|
71.5
|
|
|
71.7
|
|
|
—
|
%
|
|
Transaction and operations support
|
71.6
|
|
|
64.5
|
|
|
11
|
%
|
|
Occupancy, equipment and supplies
|
15.3
|
|
|
15.2
|
|
|
1
|
%
|
|
Depreciation and amortization
|
18.3
|
|
|
21.1
|
|
|
(13
|
)%
|
|
Total operating expenses
|
364.0
|
|
|
364.0
|
|
|
—
|
%
|
|
OPERATING INCOME
|
22.1
|
|
|
23.1
|
|
|
(4
|
)%
|
|
Other expense
|
|
|
|
|
|
|
|
Interest expense
|
10.8
|
|
|
11.3
|
|
|
(4
|
)%
|
|
Total other expense
|
10.8
|
|
|
11.3
|
|
|
(4
|
)%
|
|
Income before income taxes
|
11.3
|
|
|
11.8
|
|
|
(4
|
)%
|
|
Income tax expense
|
2.5
|
|
|
16.0
|
|
|
(84
|
)%
|
|
NET INCOME (LOSS)
|
$
|
8.8
|
|
|
$
|
(4.2
|
)
|
|
NM
|
|
NM=Not meaningful
Global Funds Transfer
The following discussion provides a summary of fee and other revenue and fee and other commissions expense for the Global Funds Transfer segment for the
three
months ended
March 31, 2017
and
2016
.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
(Amounts in millions, except percentages)
|
2017
|
|
2016
|
|
|
Money transfer fee and other revenue
|
$
|
341.7
|
|
|
$
|
344.9
|
|
|
(1
|
)%
|
|
Bill payment fee and other revenue
|
25.1
|
|
|
24.1
|
|
|
4
|
%
|
|
Global Funds Transfer fee and other revenue
|
$
|
366.8
|
|
|
$
|
369.0
|
|
|
(1
|
)%
|
|
Fee and other commissions expense
|
$
|
185.6
|
|
|
$
|
190.9
|
|
|
(3
|
)%
|
Money Transfer Fee and Other Revenue
The following table details the changes in money transfer fee and other revenue from
2016
to
2017
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2016
|
$
|
344.9
|
|
|
Change resulting from:
|
|
|
Money transfer volume
|
14.7
|
|
|
Corridor mix
|
(9.0
|
)
|
|
Average face value per transaction and pricing
|
(6.7
|
)
|
|
Impact from changes in exchange rates
|
(5.7
|
)
|
|
Other
|
3.5
|
|
|
For the period ended March 31, 2017
|
$
|
341.7
|
|
For the
three
months ended
March 31, 2017
, the decrease in money transfer fee and other revenue was primarily driven by a negative change in corridor mix, a decrease in the average face value per transaction and pricing and the stronger U.S. dollar compared to prior year, partially offset by increased Non-U.S. and U.S. outbound money transfer volume discussed further below.
The following table displays year-over-year money transfer fee and other revenue growth by geographic channel (the region originating the transaction):
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2017 vs 2016
|
|
Total money transfer fee and other revenue
|
(1)%
|
|
U.S. Outbound
|
2%
|
|
Non-U.S.
|
1%
|
|
U.S. to U.S.
|
(16)%
|
Money Transfer Transactions
The following table displays the percentage distribution of total money transfer transactions by geographic channel (the region originating the transaction):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2017
|
|
2016
|
|
U.S. Outbound
|
43
|
%
|
|
44
|
%
|
|
Non-U.S.
|
44
|
%
|
|
40
|
%
|
|
U.S. to U.S.
|
13
|
%
|
|
16
|
%
|
The following table displays year-over-year money transfer transaction growth by geographic channel (the region originating the transaction):
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2017 vs 2016
|
|
Total transactions
|
4%
|
|
U.S. Outbound
|
2%
|
|
Non-U.S.
|
14%
|
|
U.S. to U.S.
|
(14)%
|
For the
three
months ended
March 31, 2017
, total money transfer fee and other revenue decreased by
1%
and total money transfer transactions grew by
4%
. The U.S. Outbound channel generated
2%
revenue and transaction growth for the
three
months ended
March 31, 2017
. The revenue and transaction growth was primarily driven by sends to Latin America, Europe and Asia Pacific, which was partially offset by the discontinuation of our full-service kiosk offerings. The U.S. Outbound channel accounted for
43%
of our total money transfer transactions for the
three
months ended
March 31, 2017
.
For the
three
months ended
March 31, 2017
, the Non-U.S. channel money transfer fee and other revenue growth was
1%
and the transaction growth was
14%
for the same period. The revenue and transaction growth was primarily driven by sends from Europe, Latin America and the Middle East, partially offset by lower revenue and transaction volume caused by geopolitical and economic challenges in parts of Africa. The Non-U.S. channel accounted for
44%
of total money transfer transactions for the
three
months ended
March 31, 2017
.
For the
three
months ended
March 31, 2017
, the U.S. to U.S. channel money transfer fee and other revenue declined by
16%
and transactions declined by
14%
for the same period. The decline was primarily due to lower volume of transactions under $200 and over $900. The U.S. to U.S. channel accounted for
13%
of total money transfer transactions for the
three
months ended
March 31, 2017
.
Bill Payment Fee and Other Revenue
For the three months ended
March 31, 2017
, bill payment fee and other revenue increased by
$1.0 million
as a result of an increase in price per transaction. Bill payment transactions decreased by
3%
for the three months ended
March 31, 2017
.
Fee and Other Commissions Expense
The following table details the changes in fee and other commissions for the Global Funds Transfer segment from
2016
to
2017
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2016
|
$
|
190.9
|
|
|
Change resulting from:
|
|
|
Impact from changes in exchange rates
|
(3.0
|
)
|
|
Money transfer corridor and agent mix
|
(2.3
|
)
|
|
Money transfer revenue
|
1.2
|
|
|
Signing bonus amortization
|
(1.0
|
)
|
|
Other
|
(0.2
|
)
|
|
For the period ended March 31, 2017
|
$
|
185.6
|
|
For the
three
months ended
March 31, 2017
, fee and other commissions expense decreased by
$5.3 million
. The decrease in fee and other commissions expense was primarily driven by the impact from a stronger U.S. dollar compared to prior year, changes in money transfer corridor and agent mix and a decrease in signing bonus amortization. Fee and other commissions expense as a percentage of fee and other revenue decreased to
51%
for the
three
months ended
March 31, 2017
, from
52%
for the same period in
2016
.
Financial Paper Products
The following discussion provides a summary of fee and other revenue and fee and other commissions expense for the Financial Paper Product segment for the
three
months ended
March 31, 2017
and
2016
. Investment revenue and investment commissions expense are not included in the following analysis. For further detail, see "Investment Revenue Analysis" included below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
(Amounts in millions, except percentages)
|
2017
|
|
2016
|
|
|
Money order fee and other revenue
|
$
|
10.8
|
|
|
$
|
11.6
|
|
|
(7
|
)%
|
|
Official check fee and other revenue
|
2.7
|
|
|
2.8
|
|
|
(4
|
)%
|
|
Financial Paper Product fee and other revenue
|
$
|
13.5
|
|
|
$
|
14.4
|
|
|
(6
|
)%
|
|
Fee and other commissions expense
|
$
|
0.4
|
|
|
$
|
0.1
|
|
|
NM
|
|
NM=Not meaningful
For the
three
months ended
March 31, 2017
, Financial Paper Product fee and other revenue decreased primarily due to transaction declines attributed to the migration by consumers to other payment methods.
Investment Revenue Analysis
The following discussion provides a summary of the Company's investment revenue and investment commissions expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
%
Change
|
|
(Amounts in millions, except percentages)
|
2017
|
|
2016
|
|
|
Investment revenue
|
$
|
5.8
|
|
|
$
|
3.7
|
|
|
57
|
%
|
|
Investment commissions expense
(1)
|
1.3
|
|
|
0.5
|
|
|
NM
|
|
(1)
Investment commissions expense consists of amounts paid to financial institution customers based on short-term interest rate indices times the average outstanding cash balances of official checks sold by the financial institution.
NM=Not meaningful
Investment Revenue
Investment revenue consists primarily of interest income generated through the investment of cash balances received from the sale of official checks and money orders. These cash balances are available to us for investment until the payment instrument is cleared. Investment revenue varies depending on the level of investment balances and the yield on our investments.
Investment revenue increased for the
three
months ended
March 31, 2017
when compared to the same period in 2016, primarily due to higher yields and investment balances.
Operating Expenses
The following table is a summary of operating expenses, excluding commissions expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2017
|
|
2016
|
|
(Amounts in millions, except percentages)
|
Dollars
|
|
Percent of Total Revenue
|
|
Dollars
|
|
Percent of Total Revenue
|
|
Compensation and benefits
|
$
|
71.5
|
|
|
19
|
%
|
|
$
|
71.7
|
|
|
19
|
%
|
|
Transaction and operations support
|
71.6
|
|
|
19
|
%
|
|
64.5
|
|
|
17
|
%
|
|
Occupancy, equipment and supplies
|
15.3
|
|
|
4
|
%
|
|
15.2
|
|
|
4
|
%
|
|
Depreciation and amortization
|
18.3
|
|
|
5
|
%
|
|
21.1
|
|
|
5
|
%
|
|
Total operating expenses
|
$
|
176.7
|
|
|
46
|
%
|
|
$
|
172.5
|
|
|
45
|
%
|
For the
three
months ended
March 31, 2017
, total operating expenses as a percentage of total revenue increased as compared to the same period in
2016
, mainly due to a decrease in net realized foreign exchange gains, partially offset by a decrease in depreciation and amortization, which are discussed in more detail below.
Compensation and Benefits
Compensation and benefits include salaries and benefits, management incentive programs, related payroll taxes and other employee related costs. The following table is a summary of the change in compensation and benefits from
2016
to
2017
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2016
|
$
|
71.7
|
|
|
Change resulting from:
|
|
|
Salaries and related payroll taxes
|
2.0
|
|
|
Cash-based incentive compensation
|
(1.3
|
)
|
|
Stock-based compensation
|
(1.0
|
)
|
|
Other
|
0.1
|
|
|
For the period ended March 31, 2017
|
$
|
71.5
|
|
For the
three
months ended
March 31, 2017
, compensation and benefits expense decreased primarily due to lower performance incentive compensation expense and stock-based compensation, partially offset by an increase in salaries and related payroll taxes
driven by higher headcount.
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
2016
to
2017
:
|
|
|
|
|
|
|
|
(Amounts in millions)
|
Three Months Ended
|
|
For the period ended March 31, 2016
|
$
|
64.5
|
|
|
Change resulting from:
|
|
|
Net realized foreign exchange gains
|
9.7
|
|
|
Outsourcing, independent contractor and consultant costs
|
(3.6
|
)
|
|
Legal expenses
|
3.5
|
|
|
Provision for loss
|
(2.1
|
)
|
|
Agent-related costs
|
1.5
|
|
|
Marketing costs
|
(1.4
|
)
|
|
Other
|
(0.5
|
)
|
|
For the period ended March 31, 2017
|
$
|
71.6
|
|
For the
three months ended March 31, 2017
, transaction and operations support expense increased primarily due to the decrease in net realized foreign exchange gains related to certain currency purchases which traded outside of their historical norms in the first quarter of
2016
, an increase in legal expenses due to Merger-related costs and an increase in agent-related costs. The increase was partially offset by a decrease in costs for outsourcing, independent contractor and consultant costs, a decrease in our provision for loss and a decrease in marketing costs.
Occupancy, Equipment and Supplies
Occupancy, equipment and supplies expense includes facilities rent and maintenance costs, software and equipment maintenance costs, freight and delivery costs and supplies.
For the
three
months ended
March 31, 2017
, occupancy, equipment and supplies expense remained relatively flat when compared to the same period in
2016
.
Depreciation and Amortization
Depreciation and amortization includes depreciation on computer hardware and software, agent signage, point of sale equipment, capitalized software development costs, office furniture, equipment and leasehold improvements and amortization of intangible assets.
For the three months ended
March 31, 2017
and
2016
, depreciation and amortization was
$18.3 million
and
$21.1 million
, respectively. Depreciation and amortization was higher in the first quarter of
2016
by
$2.8 million
, or
13%
, due to accelerated depreciation expense on our non-core point of sale equipment that was early retired in that period.
Other Expenses
Interest Expense
For the
three
months ended
March 31, 2017
and
2016
, interest expense was
$10.8 million
and
$11.3 million
, respectively. Interest expense decreased
$0.5 million
when compared to the same period in
2016
due to our lower debt balance from additional principal payments made in the fourth quarter of 2016.
Income Taxes
For the
three months ended
March 31, 2017
, the Company recognized income tax expense of
$2.5 million
on pre-tax income of
$11.3 million
. The recorded income tax expense for the
three months ended March 31, 2017
differs from taxes calculated at the statutory rate primarily due to the recognition of excess tax benefits on stock-based compensation vested during the quarter.
For the
three months ended March 31, 2016
, the Company recognized an income tax expense of
$16.0 million
on a pre-tax income of
$11.8 million
. The income tax expense was impacted by tax expense of
$7.7 million
from the settlement reached with the Internal Revenue Service (the "IRS") related to the deduction of payments previously made by the Company to the U.S. DOJ pursuant to the Deferred Prosecution Agreement, the reversal of tax benefits of
$2.8 million
on share-based compensation and a tax expense of
$1.1 million
related to non-deductible executive compensation.
Operating Income and Operating Margin
The following table provides a summary overview of operating income and operating margin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
Change
|
|
(Amounts in millions, except percentages)
|
|
2017
|
|
2016
|
|
|
Operating income:
|
|
|
|
|
|
|
|
Global Funds Transfer
|
|
$
|
26.1
|
|
|
$
|
23.7
|
|
|
$
|
2.4
|
|
|
Financial Paper Products
|
|
4.8
|
|
|
4.5
|
|
|
0.3
|
|
|
Total segment operating income
|
|
30.9
|
|
|
28.2
|
|
|
2.7
|
|
|
Other operating loss
|
|
(8.8
|
)
|
|
(5.1
|
)
|
|
(3.7
|
)
|
|
Total operating income
|
|
$
|
22.1
|
|
|
$
|
23.1
|
|
|
$
|
(1.0
|
)
|
|
|
|
|
|
|
|
|
|
Total operating margin
|
5.7
|
%
|
6.0
|
%
|
|
|
|
Global Funds Transfer
|
7.1
|
%
|
6.4
|
%
|
|
|
|
Financial Paper Products
|
24.9
|
%
|
24.9
|
%
|
|
|
For the
three
months ended
March 31, 2017
, the Company experienced an increase in Global Funds Transfer segment operating income and operating margin due to a decrease in fee and other commissions expense as a percentage of fee and other revenue when compared to the three months ended March 31, 2016. Our Financial Paper Products segment operating income and margin remained relatively flat when compared to the first quarter of 2016. Other operating loss increased primarily from Merger-related costs incurred in the first quarter of 2017.
EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and Constant Currency
We believe that EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and constant currency measures provide useful information to investors because they are indicators of the strength and performance of our ongoing business operations. These calculations are commonly used as a basis for investors, analysts and other interested parties 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. EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and constant currency are financial and performance measures used by management in reviewing results of operations, forecasting, allocating resources and establishing employee incentive programs. We also present Adjusted EBITDA growth, constant currency adjusted, which provides information to investors regarding MoneyGram's performance without the effect of foreign currency exchange rate fluctuations year-over-year.
Although we believe that EBITDA, Adjusted EBITDA, Adjusted Free Cash Flow and constant currency measures enhance investors' understanding of our business and performance, these non-GAAP financial measures should not be considered in isolation or as substitutes for the accompanying GAAP financial measures. These metrics are not necessarily comparable with similarly named metrics of other companies.
The following table is a reconciliation of our non-GAAP financial measures to the related GAAP financial measures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
|
(Amounts in millions, except percentages)
|
|
2017
|
|
2016
|
|
Change
|
|
Income before income taxes
|
|
$
|
11.3
|
|
|
$
|
11.8
|
|
|
$
|
(0.5
|
)
|
|
Interest expense
|
|
10.8
|
|
|
11.3
|
|
|
(0.5
|
)
|
|
Depreciation and amortization
|
|
18.3
|
|
|
21.1
|
|
|
(2.8
|
)
|
|
Signing bonus amortization
|
|
13.0
|
|
|
14.3
|
|
|
(1.3
|
)
|
|
EBITDA
|
|
53.4
|
|
|
58.5
|
|
|
(5.1
|
)
|
|
Significant items impacting EBITDA:
|
|
|
|
|
|
|
|
Stock-based, contingent and incentive compensation
|
|
4.0
|
|
|
6.2
|
|
|
(2.2
|
)
|
|
Merger-related costs
|
|
2.8
|
|
|
—
|
|
|
2.8
|
|
|
Direct monitor costs
|
|
2.8
|
|
|
1.9
|
|
|
0.9
|
|
|
Compliance enhancement program
|
|
2.1
|
|
|
3.0
|
|
|
(0.9
|
)
|
|
Legal and contingent matters
|
|
1.2
|
|
|
0.2
|
|
|
1.0
|
|
|
Adjusted EBITDA
|
|
$
|
66.3
|
|
|
$
|
69.8
|
|
|
$
|
(3.5
|
)
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA growth, as reported
|
(5
|
)%
|
|
|
|
|
|
Adjusted EBITDA growth, constant currency adjusted
|
(2
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
$
|
66.3
|
|
|
$
|
69.8
|
|
|
$
|
(3.5
|
)
|
|
Cash payments for interest
|
|
(10.0
|
)
|
|
(10.4
|
)
|
|
0.4
|
|
|
Cash taxes, net
|
|
(0.7
|
)
|
|
(2.4
|
)
|
|
1.7
|
|
|
Cash payments for capital expenditures
|
|
(18.6
|
)
|
|
(18.0
|
)
|
|
(0.6
|
)
|
|
Cash payments for agent signing bonuses
|
|
(10.2
|
)
|
|
(7.4
|
)
|
|
(2.8
|
)
|
|
Adjusted Free Cash Flow
|
|
$
|
26.8
|
|
|
$
|
31.6
|
|
|
$
|
(4.8
|
)
|
|
|
|
|
|
|
|
|
For the
three
months ended
March 31, 2017
, the Company generated EBITDA of
$53.4 million
and Adjusted EBITDA of
$66.3 million
. The decrease of
$3.5 million
in Adjusted EBITDA from prior year was primarily driven by a decrease in money transfer fee and other revenue and an increase in total operating expenses as a percent of total revenue. The decrease of
$5.1 million
in EBITDA from prior year was driven by the same factors that impacted Adjusted EBITDA as well as from adjusted Merger-related costs incurred in the first quarter of
2017
, partially offset by a decrease in stock-based, contingent and incentive compensation from prior year.
For the
three
months ended
March 31, 2017
, Adjusted Free Cash Flow decreased by
$4.8 million
when compared to the same period in
2016
. The decrease was a result of a decrease in Adjusted EBITDA and an increase in cash payments for agent signing bonuses, partially offset by a decrease in cash payments for taxes.
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, settlement cash and cash equivalents, interest-bearing investments and available-for-sale investments collectively as our “investment portfolio.” The Company utilizes cash and cash equivalents in various liquidity and capital assessments.
Cash and Cash Equivalents, Settlement Assets and Payment Service Obligations
The following table shows the components of the Company's cash and cash equivalents and settlement assets:
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions)
|
March 31, 2017
|
|
December 31, 2016
|
|
Cash and cash equivalents
|
$
|
127.4
|
|
|
$
|
157.2
|
|
|
|
|
|
|
|
Settlement assets:
|
|
|
|
|
Settlement cash and cash equivalents
|
1,461.0
|
|
|
1,365.0
|
|
|
Receivables, net
|
861.1
|
|
|
999.4
|
|
|
Interest-bearing investments
|
1,153.4
|
|
|
1,252.1
|
|
|
Available-for-sale investments
|
17.4
|
|
|
17.8
|
|
|
|
$
|
3,492.9
|
|
|
$
|
3,634.3
|
|
|
Payment service obligations
|
$
|
(3,492.9
|
)
|
|
$
|
(3,634.3
|
)
|
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, general operating expenses and debt service.
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. 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 obligations, as well as to provide working capital for the operational and growth requirements of our business. 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 our credit facilities, will be sufficient to meet our anticipated funding requirements.
Cash and Cash Equivalents and Interest-bearing Investments
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 A- or better by two of the following three rating agencies: Moody’s Investor Service ("Moody's"), Standard & Poor's ("S&P"), and Fitch Ratings, Inc.; and in AAA rated U.S. government money market funds. If the rating agencies have split ratings, the Company uses the highest two out of three ratings across the agencies for disclosure purposes. If none of the three rating agencies have the same rating, the Company uses the lowest rating across the agencies for disclosure purposes. As of
March 31, 2017
, cash and cash equivalents (including unrestricted and settlement cash and cash equivalents) and interest-bearing investments totaled
$2.7 billion
. Cash and cash equivalents consist of interest-bearing deposit accounts, non-interest bearing transaction accounts and money market securities; interest-bearing investments consist of time deposits and certificates of deposit with maturities of up to 24 months.
Available-for-sale Investments
Our investment portfolio includes
$17.4 million
of available-for-sale investments as of
March 31, 2017
. U.S. government agency residential mortgage-backed securities compose
$6.8 million
of our available-for-sale investments, while asset-backed and other securities compose the remaining
$10.6 million
.
Credit Facilities
On March 28, 2013, we entered into the Amended and Restated Credit Agreement ("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 provided 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
(“Term Credit Facility”). 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 and which would reduce the amount available under the Revolving Credit Facility.
On April 2, 2014, we entered into a First Incremental Amendment and Joinder Agreement with BOA, as administrative agent, and various lenders, which provided for (i) a tranche under the Term Credit Facility in an aggregate principal amount of
$130.0 million
, (ii) an increase in the aggregate revolving loan commitments under the 2013 Credit Agreement from
$125.0 million
to
$150.0 million
, and (iii) certain other amendments to the 2013 Credit Agreement.
On December 12, 2016, the Company entered into Amendment No. 2 to the 2013 Credit Agreement (the "2016 Amendment") with BOA and various lenders. The 2016 Amendment includes, but is not limited to, decreasing the aggregate revolving credit commitments from $150.0 million to $125.0 million from December 12, 2016 to March 27, 2018 (the remainder of the original Revolving Credit Facility term), and increasing the maximum secured leverage ratio, effective the first quarter of 2017. The 2016 Amendment also extends the maturity date of the revolving credit commitments of the extending lenders, which represent commitments of $85.8 million in the aggregate, from March 28, 2018 to September 28, 2019.
The following table is a summary of the Company’s outstanding debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Amounts in millions, except percentages)
|
Effective Interest Rate
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Senior secured credit facility due 2020
|
4.25
|
%
|
|
$
|
921.5
|
|
|
$
|
924.0
|
|
|
Unamortized debt issuance costs and debt discount
|
|
|
(8.1
|
)
|
|
(8.8
|
)
|
|
Total debt, net
|
|
|
$
|
913.4
|
|
|
$
|
915.2
|
|
As of
March 31, 2017
, the Company had no outstanding letters of credit or borrowings under the Revolving Credit Facility, leaving
$125.0 million
of borrowing capacity thereunder.
The 2013 Credit Agreement contains various financial and non-financial covenants. We continuously monitor our compliance with our debt covenants. At
March 31, 2017
, the Company was in compliance with its financial covenants. See Note 6
—
Debt
of the Notes to Condensed Consolidated Financial Statements for additional disclosure related to the Company's credit facilities and financial covenants.
Credit Ratings
As of
March 31, 2017
, our credit ratings from Moody’s and S&P were B1 with a stable outlook and B+ with a positive outlook, respectively. Our credit facilities, regulatory capital requirements and other obligations will not be impacted by a future change in our credit ratings.
Regulatory Capital Requirements
We were in compliance with all financial regulatory requirements as of
March 31, 2017
. We believe that our liquidity and capital resources will remain sufficient to ensure ongoing compliance with all financial regulatory requirements.
Analysis of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
(Amounts in millions)
|
2017
|
|
2016
|
|
Net cash (used in) provided by operating activities
|
$
|
(9.6
|
)
|
|
$
|
0.1
|
|
|
Net cash used in investing activities
|
(18.6
|
)
|
|
(18.0
|
)
|
|
Net cash used in financing activities
|
(1.6
|
)
|
|
(5.1
|
)
|
|
Net change in cash and cash equivalents
|
$
|
(29.8
|
)
|
|
$
|
(23.0
|
)
|
Cash Flows (Used in) Provided by Operating Activities
For the
three months ended March 31, 2017
, net cash used in operating activities was
$9.6 million
compared to net cash provided by operating activities of
$0.1 million
for the
three months ended
March 31, 2016
. The decrease in cash from operating activities was driven by an increase in payments for prepaid expenses related to software licenses and maintenance, payments on our pension and postretirement benefits obligation and an increase in agent signing bonus payments due to timing of agent expansion and retention efforts, partially offset by an increase in net income of
$13.0 million
.
Cash Flows Used in Investing and Financing Activities
For the
three months ended March 31, 2017
and
2016
, investing activities used cash of
$18.6 million
and
$18.0 million
, respectively, for capital expenditures.
For the
three months ended
March 31, 2017
, financing activities used cash of
$1.6 million
primarily for principal payments associated with the 2013 Credit Agreement. For the
three months ended
March 31, 2016
, financing activities used cash of
$5.1 million
primarily for principal payments associated with the 2013 Credit Agreement and stock repurchases.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts and related disclosures in the consolidated financial statements. Actual results could differ from those estimates. On a regular basis, management reviews its accounting policies, assumptions and estimates to ensure that our financial statements are presented fairly and in accordance with GAAP. Our significant accounting policies are discussed in Note 2 —
Summary of Significant Accounting Policies
of the Notes to the Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016
.
Critical accounting policies are those policies that management believes are very 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 and estimates during the quarter ended
March 31, 2017
. For further information regarding our critical accounting policies and estimates, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016
.
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, 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,” "intends," “continues,” “will,” “should,” “could,” “may,” “would,” "goals" and other similar expressions are intended to identify some of the forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 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, 2016
, 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 statements 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:
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•
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our ability to compete effectively;
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•
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our ability to maintain key agent or biller relationships, or a reduction in business or transaction volume from these relationships, including with our largest agent, Walmart, through the introduction by Walmart of competing white label money transfer products or otherwise;
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•
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our ability to manage fraud risks from consumers or agents;
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•
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the ability of us and our agents to comply with U.S. and international laws and regulations;
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•
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litigation and regulatory proceedings involving us or our agents, which could result in material settlements, fines or penalties, revocation of required licenses or registrations, termination of contracts, other administrative actions or lawsuits and negative publicity;
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•
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possible uncertainties relating to compliance with and the impact of the DPA;
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•
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current and proposed regulations addressing consumer privacy and data use and security;
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•
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our ability to successfully develop and timely introduce new and enhanced products and services and our investments in new products, services or infrastructure changes;
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•
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our offering of money transfer services through agents in regions that are politically volatile or, in a limited number of cases, that may be subject to certain Office of Foreign Assets Control ("OFAC") restrictions;
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•
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changes in tax laws or unfavorable outcomes of tax positions we take, or a failure by us to establish adequate reserves for tax events;
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•
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our substantial debt service obligations, significant debt covenant requirements and credit rating and our ability to maintain sufficient capital;
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•
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our ability to manage risks associated with our international sales and operations, including risks associated with the United Kingdom's vote to withdraw from the European Union;
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•
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major bank failure or sustained financial market illiquidity, or illiquidity at our clearing, cash management and custodial financial institutions;
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•
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the ability of us and our agents to maintain adequate banking relationships;
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•
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a security or privacy breach in systems, networks or databases on which we rely;
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•
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disruptions to our computer systems and data centers and our ability to effectively operate and adapt our technology;
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•
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continued weakness in economic conditions, in both the U.S. and global markets;
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•
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a significant change, material slow down or complete disruption of international migration patterns;
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•
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the financial health of certain European countries or the secession of a country from the European Union, and the resulting impact on the sustainability of the euro;
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•
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our ability to manage credit risks from our agents and official check financial institution customers;
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•
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our ability to adequately protect our brand and intellectual property rights and to avoid infringing on the rights of others;
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•
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our ability to attract and retain key employees;
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•
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our ability to manage risks related to the operation of retail locations and the acquisition or start-up of businesses;
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•
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any restructuring actions and cost reduction initiatives that we undertake may not deliver the expected results and these actions may adversely affect our business;
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•
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our ability to maintain effective internal controls;
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•
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our capital structure and the special voting rights provided to designees of Thomas H. Lee Partners, L.P. on our Board of Directors;
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•
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risks relating to the proposed Merger, including the possibility that the consummation of the Merger could be delayed or not completed, and the effect of announcement or pendency of the Merger on our business; and
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•
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the risks and uncertainties described in the “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, 2016
, as well as any additional risk factors that may be described in our other filings with the Securities and Exchange Commission ("SEC") from time to time.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in our market risk since
December 31, 2016
. For further information on market risk, refer to Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016
.
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, 2017
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 matters.
Litigation Commenced Against the Company:
Class Action Securities Litigation
—
On April 15, 2015, a securities class action lawsuit was filed in the Superior Court of the State of Delaware, County of New Castle, against MoneyGram, all of its directors, certain of its executive officers, Thomas H. Lee Partners, L.P., Goldman, Sachs & Co. and the underwriters of the secondary public offering of the Company’s common stock that closed on April 2, 2014 (the “2014 Offering”). The lawsuit was brought by the Iron Workers District Council of New England Pension Fund seeking to represent a class consisting of all purchasers of the Company’s common stock issued pursuant and/or traceable to the Company’s registration statement and prospectus, and all documents incorporated by reference therein, for the 2014 Offering. The lawsuit alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, as amended, due to allegedly false and misleading statements in connection with the 2014 Offering and seeks unspecified damages and other relief. In May 2015, MoneyGram and the other defendants filed a notice of removal to the federal district court of the District of Delaware. In September 2016, the court denied plaintiffs' motion to remand. The Company believes that the claims are without merit and intends to vigorously defend against the lawsuit. The Company is unable to predict the outcome, or the possible loss or range of loss, if any, related to this matter.
Merger-Related Litigation
— On March 13, 2017 and March 17, 2017, respectively, putative securities class action lawsuits challenging the Merger were filed in the United States District Court for the District of Delaware and the United States District Court for the Northern District of Texas against MoneyGram and its directors. One of the lawsuits also named as defendants certain of our executive officers, Alipay and other parties to the Merger. The plaintiffs, our stockholders, challenged the Merger and the disclosures made in connection with the Merger. The lawsuits alleged violations of various securities laws and regulations due to allegedly material and misleading omissions in the preliminary proxy statement filed in connection with the Merger. Additionally, the lawsuits alleged that the merger agreement is unfair to our stockholders, resulted from an inadequate process, and contains terms that will supposedly deter third parties from making alternative offers. The plaintiffs sought to enjoin the Merger and to recover damages, costs and attorneys’ fees in unspecified amounts. On April 26, 2017 and April 28, 2017, the plaintiffs in the Delaware and Texas suits, respectively, filed notices of voluntary dismissal of those actions. See Note 1 —
Description of the Business and Basis of Presentation
of the Notes to the Condensed Consolidated Financial Statements for more information on the Merger.
Other Matters
— The Company is involved in various other 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:
The Company is involved in various government inquiries and other matters that arise from time to time. 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.
In 2015, we initiated an internal investigation to identify any payments processed by the Company that were violations of the U.S. Department of the Treasury's OFAC sanctions regulations. We notified OFAC of the ongoing internal investigation, which was conducted in conjunction with the Company's outside counsel. On March 28, 2017, we filed a Voluntary Self-Disclosure with OFAC regarding the findings of our internal investigation. OFAC is currently reviewing the results of the Company’s investigation. At this time, it is not possible to determine the outcome of this matter, or the significance, if any, to our business, financial condition or results of operations, and we cannot predict when OFAC will conclude their review of our Voluntary Self-Disclosure.
Actions Commenced by the Company:
Tax Litigation
— The IRS completed its examination of the Company’s consolidated income tax returns through 2013 and issued Notices of Deficiency for 2005-2007 and 2009 and an Examination Report for 2008. The Notices of Deficiency and Examination Report disallow, among other items, approximately
$900.0 million
of ordinary deductions on securities losses in the 2007, 2008 and 2009 tax returns. In May 2012 and December 2012, the Company filed petitions in the U.S. Tax Court challenging the 2005-2007 and 2009 Notices of Deficiency, respectively. In 2013, the Company reached a partial settlement with the IRS allowing ordinary loss treatment on
$186.9 million
of deductions in dispute. In January 2015, the U.S. Tax Court granted the IRS's motion for summary judgment upholding the remaining adjustments in the Notices of Deficiency. During 2015, the Company made payments to the IRS of
$61.0 million
for federal tax payments and associated interest related to the matter. The Company believes that it has substantive tax law arguments in favor of its position. The Company filed a notice of appeal with the U.S. Tax Court on July 27, 2015 for an appeal to the U.S. Court of Appeals for the Fifth Circuit. Oral arguments were held before the Fifth Circuit on June 7, 2016, and on November 15, 2016, the Fifth Circuit vacated the Tax Court’s decision and remanded the case to the Tax Court for further proceedings.
Pending the outcome of the appeal, the Company may be required to file amended state returns and make additional cash payments of up to
$17.8 million
on amounts that have previously been accrued.
ITEM 1A. RISK FACTORS
There have been no material changes in the Company's risk factors from those described in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2016
. For further information, refer to Part I. Item 1A. "Risk Factors," in the Company's Annual Report on Form 10-K for the year ended
December 31, 2016
.
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 as announced in our press releases issued on November 18, 2004, August 18, 2005 and May 9, 2007. 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, 2017
, the Company had repurchased
9,842,509
common shares under the terms of the repurchase authorization and has remaining authorization to repurchase up to
2,157,491
shares. During the
three months ended March 31, 2017
, the Company did not repurchase any common shares.
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.
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MoneyGram International, Inc.
|
|
|
(Registrant)
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|
May 4, 2017
|
By:
|
/s/ JOHN D. STONEHAM
|
|
|
|
John D. Stoneham
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Corporate Controller
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(Principal Accounting Officer)
|
EXHIBIT INDEX
|
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Exhibit
Number
|
Description
|
|
2.1
|
Agreement and Plan of Merger, dated January 26, 2017, by and among MoneyGram International, Inc., Alipay (UK) Limited, Matrix Acquisition Corp. and, solely for purposes of certain specified provisions thereof, Alipay (Hong Kong) Holding Limited (Incorporated by reference from Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed January 26, 2017).
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3.1
|
Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated June 28, 2004 (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 12, 2009 (Incorporated by reference from Exhibit 3.1 to Registrant’s
Annual Report on Form 10-K filed March 15, 2010).
|
|
3.3
|
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).
|
|
3.4
|
Certificate of Amendment of Amended and Restated Certificate of Incorporation of MoneyGram International, Inc., dated November 14, 2011 (Incorporated by reference from Exhibit 3.1 to Registrant's Current Report on Form 8-K filed November 14, 2011).
|
|
3.5
|
Amended and Restated Bylaws of MoneyGram International, Inc., as amended and restated October 28, 2015 (Incorporated by reference from Exhibit 3.5 to Registrant’s Quarterly Report on Form 10-Q filed on November 2, 2015).
|
|
3.6
|
Amendment to the Amended and Restated Bylaws of MoneyGram International, Inc., dated March 2, 2016 (Incorporated by reference from Exhibit 3.6 to Registrant’s Annual Report on Form 10-K filed on March 2, 2016).
|
|
3.7
|
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).
|
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10.1*†
|
Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2017 Global Time-Based Restricted Stock Unit Award Agreement.
|
|
10.2*†
|
Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2017 Global Performance-Based Restricted Stock Unit Award Agreement.
|
|
10.3*†
|
Form of MoneyGram International, Inc. 2005 Omnibus Incentive Plan 2017 Global Performance-Based Cash Award Agreement.
|
|
10.4*†
|
2017 Global Time-Based Restricted Stock Unit Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and Pamela H. Patsley.
|
|
10.5*†
|
2017 Global Performance-Based Restricted Stock Unit Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and Pamela H. Patsley.
|
|
10.6*†
|
2017 Global Performance-Based Cash Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and Pamela H. Patsley.
|
|
10.7*†
|
2017 Global Time-Based Restricted Stock Unit Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and W. Alexander Holmes.
|
|
10.8*†
|
2017 Global Performance-Based Restricted Stock Unit Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and W. Alexander Holmes.
|
|
10.9*†
|
2017 Global Performance-Based Cash Award Agreement, dated February 22, 2017, between MoneyGram International, Inc. and W. Alexander Holmes.
|
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10.10*†
|
Form of Amended and Restated Severance Agreement.
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10.11*
|
Amendment No. 4 to Amended and Restated Master Trust Agreement, dated January 25, 2017 by and between MoneyGram Payment Systems, Inc. and Wal-Mart Stores, Inc.
|
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10.12*
|
Amendment No. 5 to Amended and Restated Master Trust Agreement, dated January 1, 2017 by and between MoneyGram Payment Systems, Inc. and Wal-Mart Stores, Inc.
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10.13*+
|
Amendment No. 6 to Amended and Restated Master Trust Agreement, dated February 20, 2017 by and between MoneyGram Payment Systems, Inc. and Wal-Mart Stores, Inc.
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10.14*+
|
Amendment No. 1 to the Co-Branded MTaas Website Addendum to the Amended and Restated Master Trust Agreement, dated February 22, 2017 by and between MoneyGram Payment Systems, Inc. and Wal-Mart Stores, Inc.
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10.15
|
Voting and Support Agreement, dated January 26, 2017, by and among MoneyGram International, Inc., Alipay (UK) Limited and the affiliates and co-investors of Thomas H. Lee Partners, L.P. signatories thereto (Incorporated by reference from Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed January 26, 2017).
|
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10.16
|
Form of Voting and Support Agreement for the Management Stockholders (Incorporated by reference from Exhibit 10.2 to Registrant’s Current Report on Form 8-K filed January 26, 2017).
|
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31.1*
|
Section 302 Certification of Chief Executive Officer
|
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31.2*
|
Section 302 Certification of Chief Financial Officer
|
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32.1**
|
Section 906 Certification of Chief Executive Officer
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32.2**
|
Section 906 Certification of Chief Financial Officer
|
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101*
|
The following financial statements, formatted in Extensible Business Reporting Language (“XBRL”): (i) Condensed Consolidated Balance Sheets as of March 31, 2016 and December 31, 2016; (ii) Condensed Consolidated Statements of Operations for the three months ended March 31, 2017 and 2016; (iii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2017 and 2016; (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016; (v) Condensed Consolidated Statements of Stockholders' Deficit for the three months ended March 31, 2017 and 2016; and (vi) Notes to Condensed Consolidated Financial Statements.
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*
|
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 request under Rule 24b-2.
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†
|
Indicates management contract or compensatory plan or arrangement required to be filed as an exhibit to this report.
|
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
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, as amended and restated, effective May 8, 2015 (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) 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 stated date (each a “
Vesting Date
”):
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Vesting Date
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Cumulative 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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66.6
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%
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3rd Anniversary of Grant Date
|
|
100.0
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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)
To the extent permissible under applicable local law, if the Participant commences working on a part-time basis, then the vesting schedule specified in Section 2(a) may be adjusted by the Company in its sole discretion.
(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.
(e)
In the event the Participant would otherwise become vested in a fractional portion of an RSU (a “
Fractional RSU
”) based on the vesting terms set forth in Section 2(a), the Fractional RSU shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional RSU prior to the final Vesting Date for the RSUs and such Fractional RSU taken together with a previous Fractional RSU that remained unvested would equal a whole RSU, then such Fractional RSUs shall vest to the extent they equal a whole RSU. Upon the final Vesting Date, the value of any remaining Fractional RSUs shall be rounded up to the nearest whole RSU.
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 or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) 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 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 defined in Section 5(b) below) in each case within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then all unvested RSUs subject to this award will automatically accelerate and become vested upon such termination of employment.
(b)
“Good Reason” for purposes of this Agreement shall mean following a Change in Control: (i) 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; (ii) 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 (iii) 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 (i), (ii) and (iii) 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 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. 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.
(c)
“Change in Control” for the purposes of this Agreement 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.
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)
“Cause” for purposes of this Agreement shall mean: (i) 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 of 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 (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, (ii) fraud or material dishonesty in the performance of the Participant’s duties, (iii) 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 non-U.S. law for any non-U.S. Participant, (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 non-U.S. law for any non-U.S. Participant, (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (v) 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 or the Company, to the extent the Participant does not report to the Board, (vi) 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 the Company, to the extent the Participant does not report to the Board, or (vii) 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 Committee, if the Participant ceases to be an employee of the Company or any of its Subsidiaries prior to the final Vesting Date, 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 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 in Section 6(c) 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)
“Disability” for purposes of this Agreement 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 Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the RSUs have vested or have been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, 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(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
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 RSUs, 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, 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)
unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
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;
(ix)
the future value of the underlying Shares is unknown and cannot be predicted with certainty;
(x)
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 if 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
(xi)
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 (e.g., resident registration 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 (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(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 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 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(c) above, this Section 8(p) 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 or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the 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)
Foreign Asset/Account Reporting Requirements and Exchange Controls
. The Participant’s country may have certain foreign asset and/or account reporting requirements and exchange controls which may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends or Dividend Equivalents received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate sale proceeds or other funds received as a result of the Participant’s participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is the Participant's responsibility to be compliant with such regulations, and the Participant should consult his or her personal legal advisor for any details.
(aa)
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.
(ab)
Section 409A Provisions
. The payment of Shares under this Agreement is intended to be exempt from the application of Section 409A of the Code 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 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 as of the date set forth in the first paragraph.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
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, as amended and restated, effective May 8, 2015 (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) 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 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 each of the Vesting Dates (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, Sections 2 and 3) are attained, as determined in 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 each of the Vesting Dates. The number of Units that shall be eligible to vest on each of the Vesting Dates shall be equal to (i) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (ii) the number of Vesting Dates.
(b)
As soon as reasonably practicable after the completion of the Performance Period and no later than the first Vesting Date, 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 solely 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 Goals, the number of Units that are eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). 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 Goals 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 adjustments to the Performance Goals 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)
To the extent permissible under applicable local law, if the Participant commences working on a part-time basis, then the vesting schedule specified in Section 2(a) and on Schedule A may be adjusted by the Company in its sole discretion.
(e)
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.
(f)
In the event the Participant would otherwise become vested in a fractional portion of a Unit (a “
Fractional Unit
”) based on the vesting terms set forth in Section 2(a) and on Schedule A, the Fractional Unit shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional Unit prior to the final Vesting Date for the Units and such Fractional Unit taken together with a previous Fractional Unit that remained unvested would equal a whole Unit, then such Fractional Units shall vest to the extent they equal a whole Unit. Upon the final Vesting Date, the value of any remaining Fractional Units shall be rounded up to the nearest whole Unit.
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, 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 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 or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) 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 defined in Section 5(b) below) in each case within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then the Units subject to this award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to a number of Units that is the number of Target Units specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to all Units that are subject to any unvested installments for any subsequent Vesting Date(s).
(b)
“Good Reason” for purposes of this Agreement shall mean: (i) 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; (ii) 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 (iii) 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 (i), (ii) and (iii) 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 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. 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.
(c)
“Change in Control” for the purposes of this Agreement 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.
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)
“Cause” for purposes of this Agreement shall mean: (i) 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 of 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 (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, (ii) fraud or material dishonesty in the performance of the Participant’s duties, (iii) 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 non-U.S. law for any non-U.S. Participant, (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 non-U.S. law for any non-U.S. Participant, (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (v) 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 or the Company, to the extent the Participant does not report to the Board, (vi) 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 the Company, to the extent the Participant does not report to the Board, or (vii) 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 Committee, if the Participant ceases to be an employee of the Company or any of its Subsidiaries prior to the final Vesting Date, 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 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 Mid-Point 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 in Section 6(d) below) prior to the completion of the first six months of the Performance Period, all Units subject to this award shall be immediately forfeited as of the date of the Participant’s termination of employment.
(c)
Involuntary Termination/ Disability/Death Following Mid-Point 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:
(i)
after the completion of the first six months of the Performance Period but on or prior to the last day of the Performance Period, then (A) the total number of Units subject to this award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (B) a number of Units equal to (1) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (2) three, shall become vested as of the end of the Performance Period upon such determination, and any unvested Units shall be immediately forfeited for no consideration; or
(ii)
following the last day of the Performance Period but prior to the final Vesting Date, the Units subject to the installment for the next subsequent Vesting Date that are not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination;
provided
,
however
, that the Units subject to an installment for any remaining Vesting Dates that are not vested as of the date of the Participant’s termination of employment after giving effect to the foregoing shall be automatically forfeited as of the date of the Participant’s termination of employment.
(d)
“Disability” for purposes of this Agreement 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 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 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 Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement,
including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the Units have vested or have been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, 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(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
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 Units, 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, 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)
unless otherwise agreed with the Company, the Units and the Shares subject to the Units, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
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;
(ix)
the future value of the underlying Shares is unknown and cannot be predicted with certainty;
(x)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Units 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 if 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
(xi)
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 (e.g., resident registration 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 (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(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 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 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(c) above, this Section 8(p) 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 or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the 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)
Foreign Asset/Account Reporting Requirements and Exchange Controls
. The Participant’s country may have certain foreign asset and/or account reporting requirements and exchange controls which may affect the Participant’s ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends or Dividend Equivalents received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate sale proceeds or other funds received as a result of the Participant’s participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant acknowledges that it is the Participant's responsibility to be compliant with such regulations, and the Participant should consult his or her personal legal advisor for any details.
(aa)
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.
(ab)
Section 409A Provisions
. The payment of Shares under this Agreement is intended to be exempt from the application of Section 409A of the Code 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 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 as of the date set forth in the first paragraph.
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 Total Constant Currency Revenue Attainment Factor (as set forth below),
plus
(b) the Target Units x 50% x Adjusted EBITDA Attainment Factor (as set forth below). Combined achievement cannot exceed 100%.
2.
Performance Period
: January 1, 2017 - December 31, 2017.
3.
Performance Goals
:
The two Performance Goals applicable to the Units shall consist of (A) Total Constant Currency Revenue generated during the Performance Period as set forth in the table below and (B) Adjusted EBITDA over the Performance Period as set forth in the table below.
|
|
|
|
|
|
Total Constant Currency Revenue Performance Goal:
|
|
Attainment Level
|
Attainment Factor
|
|
Threshold: [ ]
|
[ ]
|
|
Target: [ ]
|
[ ]
|
|
|
|
|
|
|
Adjusted EBITDA Performance Goal:
|
|
Attainment Level
|
Attainment Factor
|
|
Threshold: [ ]
|
[ ]
|
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Target: [ ]
|
[ ]
|
Attainment between the Threshold and Target Performance Goals (for each Performance Goal) shall be subject to straight-line interpolation.
4.
Performance Goal Adjustments
: [ ]
5.
Performance Criteria
: [ ]
6.
Vesting Dates (assuming Performance Goals are attained)
:
First Vesting Date
: First anniversary of the Grant Date.
Second Vesting Date
: Second anniversary of the Grant Date.
Third Vesting Date
: Third anniversary of the Grant Date.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
GLOBAL performance-BASED cash
AWARD AGREEMENT
This
GLOBAL PERFORMANCE-BASED CASH 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 cash-settled performance award (the “
Award
”) 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, as amended and restated, effective May 8, 2015 (the “
Plan
”). The Award represents the opportunity to receive a maximum of
$________
subject to the vesting requirements of this Agreement and the terms of the Plan. The Award is granted as a Performance Award under Section 6(e) of the Plan. The Award is subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(b) 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 Awards granted under this Agreement to Covered Employees 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 Award granted under this Agreement shall vest and become payable in cash as of each of the Vesting Dates (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, Sections 2 and 3) are attained, as determined in 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 each of the Vesting Dates. The amount of the Award that shall be eligible to vest on each of the Vesting Dates shall be equal to (x) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (y) the number of Vesting Dates.
(b)
As soon as reasonably practicable after the completion of the Performance Period and no later than the first Vesting Date, the Committee shall determine the actual level of attainment of the Performance Goals;
provided
,
however
, that in the case of an Award 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 solely 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 Goals, the amount of the Award that is eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). In the case of an Award that is intended to constitute Qualified Performance-Based Compensation, the Committee may not increase the amount of the Award that becomes payable or pay any amount of the Award if the Performance Goals for the Performance Period are not attained, but it retains the sole discretion to reduce the amount of the Award that would otherwise be eligible to vest based on the attainment level of the Performance Goals. For Awards that are intended to constitute Qualified Performance-Based Compensation, the Performance Goals may not be adjusted except as specified in the attached Schedule A, Section 4 in accordance with the requirements of Code Section 162(m). If this Award is not intended to constitute Qualified Performance-Based Compensation, the Committee may make such adjustments to the Performance Goals or the amount of the Award as the Committee in its sole discretion deems appropriate.
(c)
The Participant shall have no rights to payment of the Award until the Committee determines and certifies in writing that the applicable Performance Goals have been attained and that the Award has vested. Prior to settlement, the Award represents an unfunded and unsecured obligation of the Company.
(d)
To the extent permissible under applicable local law, if the Participant commences working on a part-time basis, then the vesting schedule specified in Section 2(a) and on Schedule A may be adjusted by the Company in its sole discretion.
(e)
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 Award
. If the Award (or a portion thereof) vests, the applicable Award payment amount will be paid to the Participant in cash on, or as soon as practicable after, the date the Award (or a portion thereof) vests 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
. Except as otherwise provided by the Plan or by the Committee, the Award shall not be transferable other than by will or by the laws of descent and distribution. The Award may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Award shall be void and unenforceable against the Company or any Subsidiaries.
5.
Effect of Involuntary Termination Following Change in Control
. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) below) the following provisions shall apply:
(a)
Notwithstanding the other provisions of this Section 5, if 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 defined in Section 5(b) below) in each case within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then the Award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to the amount of the Award equal to the Target Award that is specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to the amount of the Award that is subject to any unvested installments for any subsequent Vesting Date(s).
(b)
“Good Reason” for purposes of this Agreement shall mean: (i) 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; (ii) 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 (iii) 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 (i), (ii) and (iii) 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 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. 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.
(c)
“Change in Control” for purposes of this Agreement 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.
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)
“Cause” for purposes of this Agreement shall mean: (i) 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 of 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 (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, (ii) fraud or material dishonesty in the performance of the Participant’s duties, (iii) 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 non-U.S. law for any non-U.S. Participant, (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 non-U.S. law for any non-U.S. Participant, (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof or similar act under non-U.S. law for any non-U.S. Participant, (v) 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 or the Company, to the extent the Participant does not report to the Board, (vi) 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 the Company, to the extent the Participant does not report to the Board, or (vii) 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 Committee, if the Participant ceases to be an employee of the Company or any of its Subsidiaries prior to the final Vesting Date, 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 or the Participant resigns for any reason, including as a result of the Participant’s retirement, any amount of the Award that is 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 Mid-Point 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 in Section 6(d) below) prior to
the completion of the first six months of the Performance Period, this Award in its totality shall be immediately forfeited as of the date of the Participant’s termination of employment.
(c)
Involuntary Termination/Disability/Death Following Mid-Point 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:
(i)
after the completion of the first six months of the Performance Period but on or prior to the last day of the Performance Period, then (A) the Award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (B) an amount of the Award equal to (1) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (2) the number three, shall become vested as of the end of the Performance Period upon such determination, and any unvested amount of the Award after giving effect to the foregoing shall be immediately forfeited for no consideration; or
(ii)
following the last day of the Performance Period but prior to the final Vesting Date, the portion of the Award subject to the installment for the next subsequent Vesting Date that is not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination;
provided
,
however
, that any portion of the Award subject to an installment for any remaining Vesting Date(s) that is not vested as of the date of the Participant’s termination of employment after giving effect to the foregoing shall be automatically forfeited as of the date of the Participant’s termination of employment.
(d)
“Disability” for purposes of this Agreement 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 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 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 Award) in a timely manner following the Grant Date may result in the forfeiture of the Award, as determined in the sole discretion of the Company.
(b)
The right to vest in the Award 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 Award prior to or after termination of employment if the Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the Award has vested or has been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, 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(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
8.
Miscellaneous.
(a)
Treatment as Wages
. Solely for tax purposes, amounts paid in settlement of a vested Award will be treated as wages subject to applicable tax withholding (as provided under Section 8(c) below).
(b)
Adjustments to Award
. Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of this Award by taking any of the actions permitted under this Agreement and in accordance with the Plan.
(c)
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 Award, including, but not limited to, the grant, vesting or settlement of the Award, or the payment of cash upon settlement of the Award; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award 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, 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 cash amounts to be issued upon vesting/settlement of the Award. 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.
(iii)
Finally, the Participant shall pay to the Company or the Employer, as applicable, 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 settle the award if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(d)
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.
(e)
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 Award is voluntary and occasional and does not create any contractual or other right to receive future grants of awards, or benefits in lieu of awards, even if awards have been granted repeatedly in the past;
(iii)
all decisions with respect to future award 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 Award is not intended to replace any pension rights or compensation;
(vii)
unless otherwise agreed with the Company, the Award, including the income and value of the Award, is not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
the Award, including the income and value of the Award, is 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;
(ix)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Award 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 if otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the Award 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 Participants providing services outside the United States, as determined by the Company:
(A)
the Award is 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 Award is 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 Award 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.
(f)
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. 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.
(g)
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 Award 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 (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all awards or entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(iii)
The Participant understands that Data will be transferred to E*Trade Financial Services, or such other plan service provider as may be selected by the Company in the future or other 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 consequence of refusing or withdrawing his or her consent is that the Company would not be able to grant certain 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.
(h)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(i)
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.
(j)
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.
(k)
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 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.
(l)
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
(m)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 8(b) above, this Section 8(m) 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 Award and any payments acquired upon vesting of the Award, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides to facilitate the administration of the Plan.
(n)
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.
(o)
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.
(p)
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 Award pursuant to the provisions of this Agreement.
(q)
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.
(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 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.
(s)
Language
. If the Participant has received this Agreement, or any other document related to the 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.
(t)
Appendix
. The 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 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 to facilitate the administration of the Plan. The Appendix constitutes part of this Agreement.
(u)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(v)
Foreign Asset/Account Reporting Requirements and Exchange Controls
. The Participant’s country may have certain foreign asset and/or account reporting requirements and exchange controls which may affect the Participant’s ability to acquire or hold cash received from participating in the Plan in a brokerage or bank account outside the Participant’s country. The Participant may be required to report such accounts, assets or transactions to the tax or other authorities in the Participant’s country. The Participant also may be required to repatriate funds received as a result of the Participant’s participation in the Plan to the Participant’s country through a designated bank or broker and/or within a certain time after receipt. The Participant
acknowledges that it is the Participant's responsibility to be compliant with such regulations, and the Participant should consult his or her personal legal advisor for any details.
(w)
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.
(x)
Section 409A Provisions
. The Award and the payment of cash in settlement of any portion of the Award under this Agreement are intended to be exempt from the application of Section 409A of the Code 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 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 as of the date set forth in the first paragraph.
SCHEDULE A
1.
Target Amount of Award (“
Target Award
”)
: $
The actual amount of the Award that is 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 Award x 50% x Total Constant Currency Revenue Attainment Factor (as set forth below),
plus
(b) the Target Award x 50% x Adjusted EBITDA Attainment Factor (as set forth below). Combined achievement cannot exceed 100%.
2.
Performance Period
: January 1, 2017 - December 31, 2017.
3.
Performance Goals
:
The two Performance Goals applicable to the Award shall consist of (A) Total Constant Currency Revenue generated during the Performance Period as set forth in the table below and (B) Adjusted EBITDA over the Performance Period as set forth in the table below.
|
|
|
|
|
|
Total Constant Currency Revenue Performance Goal:
|
|
Attainment Level
|
Attainment Factor
|
|
Threshold: [ ]
|
[ ]
|
|
Target: [ ]
|
[ ]
|
|
|
|
|
|
|
Adjusted EBITDA Performance Goal:
|
|
Attainment Level
|
Attainment Factor
|
|
Threshold: [ ]
|
[ ]
|
|
Target: [ ]
|
[ ]
|
Attainment between the Threshold and Target Performance Goals (for each Performance Goal) shall be subject to straight-line interpolation.
4.
Performance Goal Adjustments
: [ ]
5.
Performance Criteria
: [ ]
6.
Vesting Dates (assuming Performance Goals are attained)
:
First Vesting Date
: First anniversary of the Grant Date.
Second Vesting Date
: Second anniversary of the Grant Date.
Third Vesting Date
: Third anniversary of the Grant Date.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
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 22, 2017 (the “
Grant Date
”).
The Company hereby grants to the Participant a time-based Restricted Stock Unit (an “
RSU
”) award covering 76651 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
”), in the Employment Agreement dated July 30, 2015 by and among the Company and the Participant (the “
Employment Agreement
”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 8, 2015 (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) 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 7(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 stated date (each a “
Vesting Date
”):
|
|
|
|
|
|
|
|
Vesting Date
|
|
Cumulative Percentage Vested
|
|
|
1st Anniversary of Grant Date
|
|
33.3
|
%
|
|
2nd Anniversary of Grant Date
|
|
66.6
|
%
|
|
3rd Anniversary of Grant Date
|
|
100.0
|
%
|
(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.
(d)
In the event the Participant would otherwise become vested in a fractional portion of an RSU (a “
Fractional RSU
”) based on the vesting terms set forth in Section 2(a), the Fractional RSU shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional RSU prior to the final Vesting Date for the RSUs and such Fractional RSU taken together with a previous Fractional RSU that remained unvested would equal a whole RSU, then such Fractional RSUs shall vest to the extent they equal a whole RSU. Upon the final Vesting Date, the value of any remaining Fractional RSUs shall be rounded up to the nearest whole RSU.
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, Section 5 below), but in any event, no later than 90 days following the date 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 Termination of Employment
. Except as provided in this Section 5 or as otherwise may be determined by the Committee, if the Participant ceases to be an employee of the Company prior to the final Vesting Date, the following actions shall occur:
(a)
Termination for Cause; Resignation without Good Reason
. If the Participant’s employment with the Company is terminated for Cause (as defined in Section 5(e) below) or the Participant resigns other than for Good Reason (as defined in Section 5(c) below), 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/Resignation for Good Reason
. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to the Participant’s death or Disability (as defined in Section 5(f) below), in each case, irrespective of whether or not such termination occurs prior to, in connection with or at any time following a Change in Control, then all unvested RSUs subject to this award will automatically accelerate and become vested upon such termination of employment.
(c)
For purposes of this Agreement, “
Good Reason
” shall mean, without the Participant’s consent: (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those 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 senior executives of the Company; or (iii) 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 (i), (ii) and (iii) shall constitute Good Reason 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.
(d)
For purposes of this Agreement, “
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).
(e)
For purposes of this Agreement, “
Cause
” shall mean a good faith finding by the Board of: (i) 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 the Executive Chairman of the Board and her duties and responsibilities as set forth in the Employment Agreement (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; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) 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; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement, which is materially injurious to the financial condition or business reputation of the Company; (vi) the Participant’s failure to substantially perform her duties and responsibilities as set forth in Exhibit A of the Employment Agreement after being given written notice by the Company and a period of thirty (30) days to remedy such failure; (vii) 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 (viii) 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. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company.
(f)
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 the Employment 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.
(g)
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 Employment Agreement) 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 Employment Agreement); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the RSU award, and such determination shall be made in accordance with Code Section 409A.
(h)
The vesting benefits provided in this Section 5 are subject to satisfaction of the conditions set forth in Section 6.5 of the Employment Agreement.
6.
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 6, 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 Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c)
The Company is authorized to suspend or terminate this RSU award prior to or after termination of employment if the Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the RSUs have vested or have been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 6(c)(i) through 6(c)(iii) have occurred, 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 6(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
7.
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 7(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 7(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 RSUs, 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, 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)
unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
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;
(ix)
the future value of the underlying Shares is unknown and cannot be predicted with certainty; and
(x)
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 Employment Agreement or of any employment law in the country where the Participant resides and/or is employed, even if 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.
(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 (e.g., resident registration 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 (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(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 may have different data privacy laws and protections than the Participant’s country. 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. 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 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 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 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 7(c) above, this Section 7(p) 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)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(w)
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.
(x)
Section 409A Provisions
. This Agreement is intended to be exempt from or 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 as of the date set forth in the first paragraph.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
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 22, 2017 (the “
Grant Date
”).
The Company hereby grants to the Participant a performance-based Restricted Stock Unit (a “
Unit
”) award covering 38326 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
”), in the Employment Agreement dated July 30, 2015 by and among the Company and the Participant (the “
Employment Agreement
”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 8, 2015 (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) 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 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 each of the Vesting Dates (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, Sections 2 and 3) are attained, as determined in 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 each of the Vesting Dates. The number of Units that shall be eligible to vest on each of the Vesting Dates shall be equal to (i) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (ii) the number of Vesting Dates.
(b)
As soon as reasonably practicable after the completion of the Performance Period and no later than the first Vesting Date, 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 solely 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 Goals, the number of Units that are eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). 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 Goals 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 adjustments to the Performance Goals 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.
(e)
In the event the Participant would otherwise become vested in a fractional portion of a Unit (a “
Fractional Unit
”) based on the vesting terms set forth in Section 2(a) and on Schedule A, the Fractional Unit shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional Unit prior to the final Vesting Date for the Units and such Fractional Unit taken together with a previous Fractional Unit that remained unvested would equal a whole Unit, then such Fractional Units shall vest to the extent they equal a whole Unit. Upon the final Vesting Date, the value of any remaining Fractional Units shall be rounded up to the nearest whole Unit.
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, Sections 5 or 6 below), but in any event, no later than 90 days following the date 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 or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) 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 defined in Section 5(b) below) in each case within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then the Units subject to this award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to a number of Units that is the number of Target Units specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to all Units that are subject to any unvested installments for any subsequent Vesting Date(s).
(b)
For purposes of this Agreement, “
Good Reason
” shall mean, without the Participant’s consent: (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those 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 senior executives of the Company; or (iii) 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 (i), (ii) and (iii) shall constitute Good Reason 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, “
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: (i) 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 the Executive Chairman of the Board and her duties and responsibilities as set forth in the Employment Agreement (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; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) 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; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement, which is materially injurious to the financial condition or business reputation of the Company; (vi) the Participant’s failure to substantially perform her duties and responsibilities as set forth in Exhibit A of the Employment Agreement after being given written notice by the Company and a period of thirty (30) days to remedy such failure; (vii) 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 (viii) 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. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company.
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 Committee, if the Participant ceases to be an employee of the Company prior to the final Vesting Date, the following actions shall occur:
(a)
Termination for Cause; Resignation without Good Reason
. If the Participant’s employment with the Company is terminated for Cause 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/Disability/Death/Resignation for Good Reason Prior to End of Performance Period
. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to the Participant’s death or Disability (as defined in Section 6(d) below) on or prior to the last day of the Performance Period, then (i) all Units subject to this award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (ii) a number of Units equal to the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof shall become vested as of the end of the Performance Period upon such determination, and any unvested Units with respect to which performance is not attained after giving effect to the foregoing shall be immediately forfeited for no consideration;
provided
,
however
, that if the Participant breaches her obligations pursuant to Section 8 of the Employment Agreement, any unvested Units shall be immediately forfeited without consideration.
(c)
Involuntary Termination/Disability/Death/Resignation for Good Reason Prior to Vesting Date
. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to the Participant’s death or Disability following the last day of the Performance Period but prior to the final Vesting Date, then any and all Units subject to any installment for any remaining Vesting Date that are not vested as of the date of the Participant’s termination of employment will become immediately vested upon such termination of employment.
(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 the Employment 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 Employment Agreement) 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 Employment Agreement); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Unit award, and such determination shall be made in accordance with Code Section 409A.
(f)
The vesting benefits provided in Sections 5 and 6 are subject to satisfaction of the conditions set forth in Section 6.5 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 Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c)
The Company is authorized to suspend or terminate this Unit award prior to or after termination of employment if the Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the Units have vested or have been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections
7(c)(i) through 7(c)(iii) have occurred, 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(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
8.
Miscellaneous.
(a)
Issuance of Shares.
Upon any vesting of the Units, and subject to the payment of any Tax-Related Items (as defined in 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 Units, 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, 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)
unless otherwise agreed with the Company, the Units and the Shares subject to the Units, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
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;
(ix)
the future value of the underlying Shares is unknown and cannot be predicted with certainty; and
(x)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Units 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 Employment Agreement or of any employment law in the country where the Participant resides and/or is employed, even if 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.
(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 (e.g., resident registration 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 (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(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 may have different data privacy laws and protections than the Participant’s country. 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. 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 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 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 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(c) above, this Section 8(p) 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)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(w)
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.
(x)
Section 409A Provisions
. This Agreement is intended to be exempt from or to comply with Code Section 409A. Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that the payment of Units 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 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 as of the date set forth in the first paragraph.
SCHEDULE A
1.
Target Number of Restricted Stock Units (“
Target Units
”)
: 38326
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 Total Constant Currency Revenue Attainment Factor (as set forth below),
plus
(b) the Target Units x 50% x Adjusted EBITDA Attainment Factor (as set forth below). Combined achievement cannot exceed 100%.
2.
Performance Period
: January 1, 2017 - December 31, 2017.
3.
Performance Goals
:
The two Performance Goals applicable to the Units shall consist of (A) Total Constant Currency Revenue generated during the Performance Period as set forth in the table below and (B) Adjusted EBITDA over the Performance Period as set forth in the table below.
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Total Constant Currency Revenue Performance Goal:
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Attainment Level
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Attainment Factor
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Threshold: [ ]
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[ ]
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Target: [ ]
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[ ]
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Adjusted EBITDA Performance Goal:
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Attainment Level
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Attainment Factor
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Threshold: [ ]
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[ ]
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Target: [ ]
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[ ]
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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
: [ ]
5.
Performance Criteria
: [ ]
6.
Vesting Dates (assuming Performance Goals are attained)
:
First Vesting Date
: First anniversary of the Grant Date.
Second Vesting Date
: Second anniversary of the Grant Date.
Third Vesting Date
: Third anniversary of the Grant Date.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
GLOBAL performance-BASED cash
AWARD AGREEMENT
This
GLOBAL PERFORMANCE-BASED CASH 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 22, 2017 (the “
Grant Date
”).
The Company hereby grants to the Participant a cash-settled performance award (the “
Award
”) according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “
Appendix
”), in the Employment Agreement dated July 30, 2015 by and among the Company and the Participant (the “
Employment Agreement
”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 8, 2015 (the “
Plan
”). The Award represents the opportunity to receive a maximum of
$487,500.00
, subject to the vesting requirements of this Agreement and the terms of the Plan. The Award is granted as a Performance Award under Section 6(e) of the Plan. The Award is subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(b) 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 Awards granted under this Agreement to Covered Employees 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 Award granted under this Agreement shall vest and become payable in cash as of each of the Vesting Dates (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, Sections 2 and 3) are attained, as determined in 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 each of the Vesting Dates. The amount of the Award that shall be eligible to vest on each of the Vesting Dates shall be equal to (x) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (y) the number of Vesting Dates.
(b)
As soon as reasonably practicable after the completion of the Performance Period and no later than the first Vesting Date, the Committee shall determine the actual level of attainment of the Performance Goals;
provided
,
however
, that in the case of an Award 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 solely 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 Goals, the amount of the Award that is eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). In the case of an Award that is intended to constitute Qualified Performance-Based Compensation, the Committee may not increase the amount of the Award that becomes payable or pay any amount of the Award if the Performance Goals for the Performance Period are not attained, but it retains the sole discretion to reduce the amount of the Award that would otherwise be eligible to vest based on the attainment level of the Performance Goals. For Awards that are intended to constitute Qualified Performance-Based Compensation, the Performance Goals may not be adjusted except as specified in the attached Schedule A, Section 4 in accordance with the requirements of Code Section 162(m). If this Award is not intended to constitute Qualified Performance-Based Compensation, the Committee may make such adjustments to the Performance Goals or the amount of the Award as the Committee in its sole discretion deems appropriate.
(c)
The Participant shall have no rights to payment of the Award until the Committee determines and certifies in writing that the applicable Performance Goals have been attained and that the Award has vested. Prior to settlement, the Award represents 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 Award
. If the Award (or a portion thereof) vests, the applicable Award payment amount will be paid to the Participant in cash on, or as soon as practicable after, the date the Award (or a portion thereof) vests in accordance with Section 2 above (or, if sooner, Sections 5 or 6 below), but in any event, no later than 90 days following the date of vesting.
4.
Restrictions on Transfer
. Except as otherwise provided by the Plan or by the Committee, the Award shall not be transferable other than by will or by the laws of descent and distribution. The Award may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Award shall be void and unenforceable against the Company or any Subsidiaries.
5.
Effect of Involuntary Termination Following Change in Control
. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) below) the following provisions shall apply:
(a)
Notwithstanding the other provisions of this Section 5, if 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 defined in Section 5(b) below) in each case within 12 months following the occurrence of such
Change in Control but prior to the final Vesting Date, then the Award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to the amount of the Award equal to the Target Award that is specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to the amount of the Award that is subject to any unvested installments for any subsequent Vesting Date(s).
(b)
For purposes of this Agreement, “
Good Reason
” shall mean, without the Participant’s consent: (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those 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 senior executives of the Company; or (iii) 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 (i), (ii) and (iii) shall constitute Good Reason 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: (i) 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 the Executive Chairman of the Board and her duties and responsibilities as set forth in the Employment Agreement (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; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) 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; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement, which is materially injurious to the financial condition or business reputation of the Company; (vi) the Participant’s failure to substantially perform her duties and responsibilities as set forth in Exhibit A of the Employment Agreement after being given written notice by the Company and a period of thirty (30) days to remedy such failure; (vii) 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 (viii) 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. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company.
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 Committee, if the Participant ceases to be an employee of the Company prior to the final Vesting Date, the following actions shall occur:
(a)
Termination for Cause; Resignation without Good Reason
. If the Participant’s employment with the Company is terminated for Cause or the Participant resigns other than for
Good Reason, any amount of the Award that is 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/Resignation for Good Reason Prior to End of Performance Period
. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to the Participant’s death or Disability (as defined in Section 6(d) below) on or prior to the last day of the Performance Period, then (i) the Award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (ii) an amount of the Award equal to the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof shall become vested as of the end of the Performance Period upon such determination, and any unvested amount of the Award after giving effect to the foregoing shall be immediately forfeited for no consideration;
provided
,
however
, that if the Participant breaches her obligations pursuant to Section 8 of the Employment Agreement, any unvested amount of the Award shall be immediately forfeited without consideration.
(c)
Involuntary Termination/Disability/Death/Resignation for Good Reason Prior to Vesting Date
. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to the Participant’s death or Disability following the last day of the Performance Period but prior to the final Vesting Date, then the full amount of the Award that remains outstanding and eligible to vest shall become immediately vested on the date of termination.
(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 the Employment 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 Employment Agreement) 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 Employment Agreement; the Committee shall have the exclusive discretion to determine when the Participant is no longer
continuously employed for purposes of the Award, and such determination shall be made in accordance with Code Section 409A.
(f)
The vesting benefits provided in Sections 5 and 6 are subject to satisfaction of the conditions set forth in Section 6.5 of the Employment Agreement.
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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 Participant in connection with the Participant’s receipt of the Award) in a timely manner following the Grant Date may result in the forfeiture of the Award, as determined in the sole discretion of the Company.
(b)
The right to vest in the Award 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 Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c)
The Company is authorized to suspend or terminate this Award prior to or after termination of employment if the Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the Award has vested or has been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, 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(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
8.
Miscellaneous.
(a)
Treatment as Wages
. Solely for tax purposes, amounts paid in settlement of a vested Award will be treated as wages subject to applicable tax withholding (as provided under Section 8(c) below).
(b)
Adjustments to Award
. Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of this Award by taking any of the actions permitted under this Agreement and in accordance with the Plan.
(c)
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 Award, including, but not limited to, the grant, vesting or settlement of the Award, or the payment of cash upon settlement of the Award; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award 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, 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 cash amounts to be issued upon vesting/settlement of the Award. 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.
(iii)
Finally, the Participant shall pay to the Company or the Employer, as applicable, 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 settle the award if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(d)
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.
(e)
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 Award is voluntary and occasional and does not create any contractual or other right to receive future grants of awards, or benefits in lieu of awards, even if awards have been granted repeatedly in the past;
(iii)
all decisions with respect to future award 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 Award is not intended to replace any pension rights or compensation;
(vii)
unless otherwise agreed with the Company, the Award, including the income and value of the Award, is not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
the Award, including the income and value of the Award, is 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; and
(ix)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Award 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 Employment Agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the Award 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.
(f)
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. 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.
(g)
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 Award 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 (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all awards or entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(iii)
The Participant understands that Data will be transferred to E*Trade Financial Services, or such other plan service provider as may be selected by the Company in the future or other 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 may have different data privacy laws and protections than the Participant’s country. 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. 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 consequence of refusing or withdrawing her consent is that the Company would not be able to grant certain 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.
(h)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(i)
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.
(j)
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.
(k)
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 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.
(l)
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
(m)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 8(b) above, this Section 8(m) 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 Award and any payments acquired upon vesting of the Award, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides to facilitate the administration of the Plan.
(n)
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.
(o)
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.
(p)
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 Award pursuant to the provisions of this Agreement.
(q)
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.
(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 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.
(s)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(t)
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.
(u)
Section 409A Provisions
. This Agreement is intended to be exempt from or to comply with Code Section 409A. Notwithstanding anything in the Plan or this Agreement to the contrary, to the extent that the payment of the Award 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 the Award 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 Award 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 as of the date set forth in the first paragraph.
SCHEDULE A
1.
Target Amount of Award (“
Target Award
”)
: $487,500.00
The actual amount of the Award that is 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 Award x 50% x Total Constant Currency Revenue Attainment Factor (as set forth below),
plus
(b) the Target Award x 50% x Adjusted EBITDA Attainment Factor (as set forth below). Combined achievement cannot exceed 100%.
2.
Performance Period
: January 1, 2017 - December 31, 2017.
3.
Performance Goals
:
The two Performance Goals applicable to the Award shall consist of (A) Total Constant Currency Revenue generated during the Performance Period as set forth in the table below and (B) Adjusted EBITDA over the Performance Period as set forth in the table below.
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Total Constant Currency Revenue Performance Goal:
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Attainment Level
|
Attainment Factor
|
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Threshold: [ ]
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[ ]
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Target: [ ]
|
[ ]
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Adjusted EBITDA Performance Goal:
|
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Attainment Level
|
Attainment Factor
|
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Threshold: [ ]
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[ ]
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Target: [ ]
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[ ]
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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
: [ ]
5.
Performance Criteria
: [ ]
6.
Vesting Dates (assuming Performance Goals are attained)
:
First Vesting Date
: First anniversary of the Grant Date.
Second Vesting Date
: Second anniversary of the Grant Date.
Third Vesting Date
: Third anniversary of the Grant Date.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
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 Alexander Holmes (the “
Participant
”). The grant date of this award is February 22, 2017 (the “
Grant Date
”).
The Company hereby grants to the Participant a time-based Restricted Stock Unit (an “
RSU
”) award covering 113994 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
”), in the Employment Agreement dated July 30, 2015 by and among the Company and the Participant (the “
Employment Agreement
”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 8, 2015 (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) 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 stated date (each a “
Vesting Date
”):
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Vesting Date
|
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Cumulative Percentage Vested
|
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1st Anniversary of Grant Date
|
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33.3
|
%
|
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2nd Anniversary of Grant Date
|
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66.6
|
%
|
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3rd Anniversary of Grant Date
|
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100.0
|
%
|
(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.
(d)
In the event the Participant would otherwise become vested in a fractional portion of an RSU (a “
Fractional RSU
”) based on the vesting terms set forth in Section 2(a), the Fractional RSU shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional RSU prior to the final Vesting Date for the RSUs and such Fractional RSU taken together with a previous Fractional RSU that remained unvested would equal a whole RSU, then such Fractional RSUs shall vest to the extent they equal a whole RSU. Upon the final Vesting Date, the value of any remaining Fractional RSUs shall be rounded up to the nearest whole RSU.
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 or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) 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 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 employment for Good Reason (as defined in Section 5(b) below) in each case within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then all unvested RSUs subject to this award will automatically accelerate and become vested upon such termination of employment.
(b)
For purposes of this Agreement, “
Good Reason
” shall mean, without the Participant’s consent: (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those 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 senior executives of the Company; or (iii) 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 (i), (ii), and (iii) shall constitute Good Reason 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. 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 his 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 his 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 his 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.
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: (i) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the Executive Chairman of the Board or, if there is no such Executive Chairman, of the Board that are within the Participant’s control and consistent with the Participant’s status as the Chief Executive Officer and his duties and responsibilities as set forth in the Employment
Agreement (except for a failure that is attributable to the Participant’s illness, injury or Disability (as defined in Section 6(c) below)) for a period of 10 days following written notice by the Company to the Participant of such failure; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) 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; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement, which is materially injurious to the financial condition or business reputation of the Company; (vi) 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 (vii) 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. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company.
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 Committee, if the Participant ceases to be an employee of the Company prior to the final Vesting Date, the following actions shall occur:
(a)
Termination for Cause; Resignation without Good Reason
. If the Participant’s employment with the Company is terminated for Cause 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/Disability/Death/Resignation for Good Reason
. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to the Participant’s death or Disability, 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 Section 6, “
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 his duties under the Employment 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.
(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 Employment Agreement) 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 Employment Agreement); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the RSU award, and such determination shall be made in accordance with Code Section 409A.
(e)
The vesting benefits provided in Sections 5 and 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 Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c)
The Company is authorized to suspend or terminate this RSU award prior to or after termination of employment if the Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the RSUs have vested or have been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, 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(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
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 RSUs, 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, 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)
unless otherwise agreed with the Company, the RSUs and the Shares subject to the RSUs, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
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;
(ix)
the future value of the underlying Shares is unknown and cannot be predicted with certainty; and
(x)
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 Employment Agreement or of any employment law in the country where the Participant resides and/or is employed, even if 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 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.
(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 own personal tax, legal and financial advisors regarding his 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 (e.g., resident registration 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 (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(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 may have different data privacy laws and protections than the Participant’s country. The Participant understands that he may request a list with the names and addresses of any potential recipients of the Data by contacting his 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 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. The Participant understands that he 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 local human resources representative. Further, the Participant understands that he 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 consent, his status as an employee and career with the Employer will not be adversely affected; the only consequence of refusing or withdrawing his 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 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 may contact his 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 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(c) above, this Section 8(p) 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)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(w)
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.
(x)
Section 409A Provisions
. The payment of Shares under this Agreement is intended to be exempt from the application of Section 409A of the Code 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 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 as of the date set forth in the first paragraph.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
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 Alexander Holmes (the “
Participant
”). The grant date of this award is February 22, 2017 (the “
Grant Date
”).
The Company hereby grants to the Participant a performance-based Restricted Stock Unit (a “
Unit
”) award covering 56997 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
”), in the Employment Agreement dated July 30, 2015 by and among the Company and the Participant (the “
Employment Agreement
”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 8, 2015 (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) 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 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 each of the Vesting Dates (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, Sections 2 and 3) are attained, as determined in 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 each of the Vesting Dates. The number of Units that shall be eligible to vest on each of the Vesting Dates shall be equal to (i) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (ii) the number of Vesting Dates.
(b)
As soon as reasonably practicable after the completion of the Performance Period and no later than the first Vesting Date, 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 solely 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 Goals, the number of Units that are eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). 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 Goals 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 adjustments to the Performance Goals 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.
(e)
In the event the Participant would otherwise become vested in a fractional portion of a Unit (a “
Fractional Unit
”) based on the vesting terms set forth in Section 2(a) and on Schedule A, the Fractional Unit shall instead remain unvested until the final Vesting Date; provided, however, that if the Participant would otherwise vest in a subsequent Fractional Unit prior to the final Vesting Date for the Units and such Fractional Unit taken together with a previous Fractional Unit that remained unvested would equal a whole Unit, then such Fractional Units shall vest to the extent they equal a whole Unit. Upon the final Vesting Date, the value of any remaining Fractional Units shall be rounded up to the nearest whole Unit.
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, 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 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 or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) 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 employment for Good Reason (as defined in Section 5(b) below) in each case within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then the Units subject to this award will immediately vest upon such termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to a number of Units that is the number of Target Units specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to all Units that are subject to any unvested installments for any subsequent Vesting Date(s).
(b)
For purposes of this Agreement, “
Good Reason
” shall mean, without the Participant’s consent: (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those 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 senior executives of the Company; or (iii) 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 (i), (ii), and (iii) shall constitute Good Reason 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. 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 his 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 his 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 his 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.
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: (i) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the Executive Chairman of the Board or, if there is no such Executive Chairman, of the Board that are within the Participant’s control and consistent with the Participant’s status as the Chief Executive Officer and his duties and responsibilities as set forth in the Employment Agreement (except for a failure that is attributable to the Participant’s illness, injury or Disability (as defined in Section 6(e) below)) for a period of 10 days following written notice by the Company to the Participant of such failure; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) 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; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement, which is materially injurious to the financial condition or business reputation of the Company; (vi) 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 (vii) 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. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company.
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 Committee, if the Participant ceases to be an employee of the Company prior to the final Vesting Date, the following actions shall occur:
(a)
Termination for Cause; Resignation without Good Reason
. If the Participant’s employment with the Company is terminated for Cause 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)
Termination without Cause or for Good Reason Prior to Mid-Point of Performance Period
. If the Participant’s employment with the Company is terminated by the Company without Cause or by the Participant for Good Reason prior to the completion of the first six months of the Performance Period, then (i) the total number of Units subject to this award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above, and (ii) a number of the Units equal to (A) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b), multiplied by (B) a fraction, the numerator of which is the number of days during the Performance Period that the Participant is employed with the Company and the denominator of which is the total number of days in the Performance Period, shall become vested as of the end of the Performance Period upon such determination, and any unvested Units after giving effect to the foregoing shall be immediately forfeited for no consideration;
provided
,
however
, that if the Participant breaches his obligations pursuant to Section 8 of the Employment Agreement, any unvested Units shall be immediately forfeited without consideration.
(c)
Termination Due to Death or Disability Prior to Mid-Point of Performance Period
. If the Participant’s employment with the Company is terminated due to death or Disability (as defined in Section 6(e) below) prior to the completion of the first six months of the Performance Period, all Units subject to this award shall be immediately forfeited as of the date of the Participant’s termination of employment.
(d)
Involuntary Termination/Disability/Death/Resignation for Good Reason Following Mid-Point of the Performance Period
. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to death or Disability:
(i)
after the completion of the first six months of the Performance Period but on or prior to the last day of the Performance Period, then (A) the total number of Units subject to this award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (B) a number of Units equal to (1) the total number of Units that are determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (2) three, shall become vested as of the end of the Performance Period upon such determination, and any unvested Units shall be immediately forfeited for no consideration; or
(ii)
following the last day of the Performance Period but prior to the final Vesting Date, the Units subject to the installment for the next subsequent Vesting Date that are not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination;
provided
,
however
, that the Units subject
to an installment for any remaining Vesting Dates that are not vested as of the date of the Participant’s termination of employment after giving effect to the foregoing shall be automatically forfeited as of the date of the Participant’s termination of employment.
(e)
For purposes of this Section 6, “
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 his duties under the Employment 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.
(f)
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 Employment Agreement) 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 Employment Agreement); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Unit award, and such determination shall be made in accordance with Code Section 409A.
(g)
The vesting benefits provided in Sections 5 and 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 Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c)
The Company is authorized to suspend or terminate this Unit award prior to or after termination of employment if the Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the Units have vested or have been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, 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(d), provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
8.
Miscellaneous.
(a)
Issuance of Shares.
Upon any vesting of the Units, and subject to the payment of any Tax-Related Items (as defined in 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 Units, 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, 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)
unless otherwise agreed with the Company, the Units and the Shares subject to the Units, and the income and value of same, are not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
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;
(ix)
the future value of the underlying Shares is unknown and cannot be predicted with certainty; and
(x)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Units 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 Employment Agreement or of any employment law in the country where the Participant resides and/or is employed, even if 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 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.
(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 own personal tax, legal and financial advisors regarding his 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 (e.g., resident registration 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 (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(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 may have different data privacy laws and protections than the Participant’s country. The Participant understands that he may request a list with the names and addresses of any potential recipients of the Data by contacting his 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 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. The Participant understands that he 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 local human resources representative. Further, the Participant understands that he 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 consent, his status as an employee and career with the Employer will not be adversely affected; the only consequence of refusing or withdrawing his 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 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 may contact his 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 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(c) above, this Section 8(p) 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)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(w)
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.
(x)
Section 409A Provisions
. The payment of Shares under this Agreement is intended to be exempt from the application of Section 409A of the Code 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 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 as of the date set forth in the first paragraph.
SCHEDULE A
1.
Target Number of Restricted Stock Units (“
Target Units
”)
: 56997
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 Total Constant Currency Revenue Attainment Factor (as set forth below),
plus
(b) the Target Units x 50% x Adjusted EBITDA Attainment Factor (as set forth below). Combined achievement cannot exceed 100%.
2.
Performance Period
: January 1, 2017 - December 31, 2017.
3.
Performance Goals
:
The two Performance Goals applicable to the Units shall consist of (A) Total Constant Currency Revenue generated during the Performance Period as set forth in the table below and (B) Adjusted EBITDA over the Performance Period as set forth in the table below.
|
|
|
|
|
|
Total Constant Currency Revenue Performance Goal:
|
|
Attainment Level
|
Attainment Factor
|
|
Threshold: [ ]
|
[ ]
|
|
Target: [ ]
|
[ ]
|
|
|
|
|
|
|
Adjusted EBITDA Performance Goal:
|
|
Attainment Level
|
Attainment Factor
|
|
Threshold: [ ]
|
[ ]
|
|
Target: [ ]
|
[ ]
|
Attainment between the Threshold and Target Performance Goals (for each Performance Goal) shall be subject to straight-line interpolation.
4.
Performance Goal Adjustments
: [ ]
5.
Performance Criteria
: [ ]
6.
Vesting Dates (assuming Performance Goals are attained)
:
First Vesting Date
: First anniversary of the Grant Date.
Second Vesting Date
: Second anniversary of the Grant Date.
Third Vesting Date
: Third anniversary of the Grant Date.
MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN,
AS AMENDED AND RESTATED EFFECTIVE MAY 8, 2015
GLOBAL performance-BASED cash
AWARD AGREEMENT
This
GLOBAL PERFORMANCE-BASED CASH AWARD AGREEMENT
(the “
Agreement
”) is made by and between
MoneyGram International, Inc.
, a Delaware corporation (the “
Company
”), and Alexander Holmes (the “
Participant
”). The grant date of this award is February 22, 2017 (the “
Grant Date
”).
The Company hereby grants to the Participant a cash-settled performance award (the “
Award
”) according to the terms and conditions as provided in this Agreement, including any country-specific appendix thereto (the “
Appendix
”), in the Employment Agreement dated July 30, 2015 by and among the Company and the Participant (the “
Employment Agreement
”), and in the Company’s 2005 Omnibus Incentive Plan, as amended and restated, effective May 8, 2015 (the “
Plan
”). The Award represents the opportunity to receive a maximum of
$725,000.00
, subject to the vesting requirements of this Agreement and the terms of the Plan. The Award is granted as a Performance Award under Section 6(e) of the Plan. The Award is subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 8(b) 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 Awards granted under this Agreement to Covered Employees 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 Award granted under this Agreement shall vest and become payable in cash as of each of the Vesting Dates (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, Sections 2 and 3) are attained, as determined in 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 each of the Vesting Dates. The amount of the Award that shall be eligible to vest on each of the Vesting Dates shall be equal to (x) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (y) the number of Vesting Dates.
(b)
As soon as reasonably practicable after the completion of the Performance Period and no later than the first Vesting Date, the Committee shall determine the actual level of attainment of the Performance Goals;
provided
,
however
, that in the case of an Award 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 solely 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 Goals, the amount of the Award that is eligible to vest on each of the Vesting Dates shall be calculated as described in Section 2(a). In the case of an Award that is intended to constitute Qualified Performance-Based Compensation, the Committee may not increase the amount of the Award that becomes payable or pay any amount of the Award if the Performance Goals for the Performance Period are not attained, but it retains the sole discretion to reduce the amount of the Award that would otherwise be eligible to vest based on the attainment level of the Performance Goals. For Awards that are intended to constitute Qualified Performance-Based Compensation, the Performance Goals may not be adjusted except as specified in the attached Schedule A, Section 4 in accordance with the requirements of Code Section 162(m). If this Award is not intended to constitute Qualified Performance-Based Compensation, the Committee may make such adjustments to the Performance Goals or the amount of the Award as the Committee in its sole discretion deems appropriate.
(c)
The Participant shall have no rights to payment of the Award until the Committee determines and certifies in writing that the applicable Performance Goals have been attained and that the Award has vested. Prior to settlement, the Award represents 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 Award
. If the Award (or a portion thereof) vests, the applicable Award payment amount will be paid to the Participant in cash on, or as soon as practicable after, the date the Award (or a portion thereof) vests 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
. Except as otherwise provided by the Plan or by the Committee, the Award shall not be transferable other than by will or by the laws of descent and distribution. The Award may not be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance of the Award shall be void and unenforceable against the Company or any Subsidiaries.
5.
Effect of Involuntary Termination Following Change in Control
. Notwithstanding the vesting provisions contained in Section 2 above or Section 6 below, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined in Section 5(c) below) the following provisions shall apply:
(a)
Notwithstanding the other provisions of this Section 5, if 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 employment for Good Reason (as defined in Section 5(b) below) in each case within 12 months following the occurrence of such Change in Control but prior to the final Vesting Date, then the Award will immediately vest upon such
termination of employment as follows: (i) if the termination occurs on or prior to the last day of the Performance Period, with respect to the amount of the Award equal to the Target Award that is specified in the attached Schedule A, Section 1, and (ii) if the termination occurs following the last day of the Performance Period but prior to a Vesting Date, with respect to the amount of the Award that is subject to any unvested installments for any subsequent Vesting Date(s).
(b)
For purposes of this Agreement, “
Good Reason
” shall mean, without the Participant’s consent, (i) any material reduction in the Participant’s position or responsibilities, excluding an isolated, insubstantial or inadvertent action not taken in bad faith; (ii) a material reduction of the Participant’s Base Salary or Target Bonus (as those 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 senior executives of the Company; or (iii) 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 (i), (ii), and (iii) shall constitute Good Reason 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. 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 his 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 his 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 his 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.
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: (i) the Participant’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the Executive Chairman of the Board or, if there is no such Executive Chairman, of the Board that are within the Participant’s control and consistent with the Participant’s status as the Chief Executive Officer and his duties and responsibilities as set forth in the Employment Agreement (except for a failure that is attributable to the Participant’s illness, injury or Disability (as defined in Section 6(e) below)) for a period of 10 days following written notice by the Company to the Participant of such failure; (ii) fraud or material dishonesty in the performance of the Participant’s duties under the Employment Agreement; (iii) 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; (iv) an indictment of the Participant for a felony under the laws of the United States or any state thereof; (v) the Participant’s willful misconduct or gross negligence in connection with the Participant’s duties under the Employment Agreement which is materially injurious to the financial condition or business reputation of the Company; (vi) 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 (vii) 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. No act or failure to act on the Participant’s part shall be considered “willful” unless done, or omitted to be done, by the Participant in bad faith and without reasonable belief that the Participant’s action or omission was in the best interest of the Company.
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 Committee, if the Participant ceases to be an employee of the Company prior to the final Vesting Date, the following actions shall occur:
(a)
Termination for Cause; Resignation without Good Reason
. If the Participant’s employment with the Company is terminated for Cause or the Participant resigns other than for Good Reason, any portion of the Award that is not vested pursuant to Section 2 above as of the date of the Participant’s termination of employment shall be immediately forfeited.
(b)
Termination without Cause or for Good Reason Prior to Mid-Point of Performance Period
. If the Participant’s employment with the Company is terminated by the Company without Cause or by the Participant for Good Reason prior to the completion of the first six months of the Performance Period, then (i) the total amount of the Award granted under this Agreement shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (ii) an amount of the Award equal to (A) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b), multiplied by
(B) a fraction, the numerator of which is the number of days during the Performance Period that the Participant is employed by the Company and the denominator of which is the total number of days in the Performance Period, shall become vested as of the end of the Performance Period upon such determination, and any unvested amount of the Award after giving effect to the foregoing shall be immediately forfeited for no consideration;
provided
,
however
, that if the Participant breaches his obligations pursuant to Section 8 of the Employment Agreement, any unvested amount of the Award shall be immediately forfeited without consideration.
(c)
Termination Due to Death or Disability Prior to Mid-Point of Performance Period
. If the Participant’s employment with the Company is terminated due to death or Disability (as defined in Section 6(e) below) prior to the completion of the first six months of the Performance Period, this Award in its totality shall be immediately forfeited as of the date of the Participant’s termination of employment.
(d)
Involuntary Termination/Disability/Death/Resignation for Good Reason Following Mid-Point of the Performance Period
. If the Participant’s employment with the Company is terminated by the Company without Cause, by the Participant for Good Reason, or due to death or Disability:
(i)
after the completion of the first six months of the Performance Period but on or prior to the last day of the Performance Period, then (A) the Award shall remain outstanding subject to the level of attainment of the Performance Goals determined after completion of the Performance Period in accordance with Section 2 above; and (B) an amount of the Award equal to (1) the total amount of the Award that is determined to be eligible to vest based on the level of attainment of the Performance Goals in accordance with Section 2(b) hereof, divided by (2) the number three, shall become vested as of the end of the Performance Period upon such determination, and any unvested amount of the Award after giving effect to the foregoing shall be immediately forfeited for no consideration; or
(ii)
following the last day of the Performance Period but prior to the final Vesting Date, the portion of the Award subject to the installment for the next subsequent Vesting Date that is not otherwise vested pursuant to Section 2 as of the date of the Participant’s termination of employment shall become immediately vested on the date of termination;
provided
,
however
, that any portion of the Award subject to an installment for any remaining Vesting Date(s) that is not vested as of the date of the Participant’s termination of employment after giving effect to the foregoing shall be automatically forfeited as of the date of the Participant’s termination of employment.
(e)
For purposes of this Section 6, “
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 his duties under the Employment 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.
(f)
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 Employment Agreement) 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 Employment Agreement); the Committee shall have the exclusive discretion to determine when the Participant is no longer continuously employed for purposes of the Award, and such determination shall be made in accordance with Code Section 409A.
(g)
The vesting benefits provided in Sections 5 and 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 Award) in a timely manner following the Grant Date may result in the forfeiture of the Award, as determined in the sole discretion of the Company.
(b)
The right to vest in the Award 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 Sections 8.1, 8.2, 8.3 or 8.4 of the Employment Agreement.
(c)
The Company is authorized to suspend or terminate this Award prior to or after termination of employment if the Company reasonably determines that:
(i)
The Participant engaged in any conduct agreed to be avoided pursuant to the Post-Employment Restriction Agreement; or
(ii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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
(iii)
During the Participant’s employment with the Company or any of its Subsidiaries, 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; or
(iv)
Such suspension or termination is permitted or required by any written clawback or recoupment policies that the Company, with the approval of the Board, may adopt, either prior to or following the Grant Date, and determine should apply to this Agreement, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the Securities and Exchange Commission.
(d)
If, at any time after the Award has vested or has been settled, in whole or in part, the Company reasonably determines that any of the actions or inactions contemplated under Sections 7(c)(i) through 7(c)(iii) have occurred, 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(d) , provided, that no such deduction shall be made to the extent it would result in additional taxes under Section 409A of the Code.
8.
Miscellaneous.
(a)
Treatment as Wages
. Solely for tax purposes, amounts paid in settlement of a vested Award will be treated as wages subject to applicable tax withholding (as provided under Section 8(c) below).
(b)
Adjustments to Award
. Upon a Change in Control, the Committee may, in its sole discretion, adjust the terms of this Award by taking any of the actions permitted under this Agreement and in accordance with the Plan.
(c)
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 Award, including, but not limited to, the grant, vesting or settlement of the Award, or the payment of cash upon settlement of the Award; and (2) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Award 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, 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 cash amounts to be issued upon vesting/settlement of the Award. 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.
(iii)
Finally, the Participant shall pay to the Company or the Employer, as applicable, 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 settle the award if the Participant fails to comply with the Participant’s obligations in connection with the Tax-Related Items.
(d)
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.
(e)
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 Award is voluntary and occasional and does not create any contractual or other right to receive future grants of awards, or benefits in lieu of awards, even if awards have been granted repeatedly in the past;
(iii)
all decisions with respect to future award 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 Award is not intended to replace any pension rights or compensation;
(vii)
unless otherwise agreed with the Company, the Award, including the income and value of the Award, is not granted as consideration for, or in connection with, the service the Participant may provide as a director of a Subsidiary of the Company;
(viii)
the Award, including the income and value of the Award, is 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; and
(ix)
no claim or entitlement to compensation or damages shall arise from forfeiture of the Award 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 Employment Agreement, if any, or of any employment law in the country where the Participant resides and/or is employed, even if otherwise applicable to the Participant’s employment benefits from the Employer), and in consideration of the grant of the Award 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 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.
(f)
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. The Participant is hereby advised to consult with his own personal tax, legal and financial advisors regarding his participation in the Plan before taking any action related to the Plan.
(g)
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 Award 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 (e.g., resident registration number), salary, nationality, job title, any shares of stock or directorships held in the Company, details of all awards or entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
(iii)
The Participant understands that Data will be transferred to E*Trade Financial Services, or such other plan service provider as may be selected by the Company in the future or other 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 may have different data privacy laws and protections than the Participant’s country. The Participant understands that he 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 his 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. The Participant understands that he 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 local human resources representative. Further, the Participant understands that he 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 consent, his status as an employee and career with the Employer will not be adversely affected;
the only consequence of refusing or withdrawing his consent is that the Company would not be able to grant certain awards or administer or maintain such awards. Therefore, the Participant understands that refusing or withdrawing his 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 may contact his local human resources representative.
(h)
Assignment
. Neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by the Participant.
(i)
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.
(j)
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.
(k)
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 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.
(l)
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
(m)
Amendments
. The Company may amend this Agreement at any time; provided that, subject to Section 8(b) above, this Section 8(m) 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 Award and any payments acquired upon vesting of the Award, to the extent the Company determines it is necessary or advisable under the laws of the country in which the Participant resides to facilitate the administration of the Plan.
(n)
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.
(o)
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.
(p)
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 Award pursuant to the provisions of this Agreement.
(q)
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.
(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 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.
(s)
Waiver
. The Participant acknowledges that a waiver by the Company of any provision of this Agreement or of a breach by the Participant shall not operate or be construed as a waiver of any other provision of this Agreement or of any subsequent breach by the Participant.
(t)
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.
(u)
Section 409A Provisions
. The Award and the payment of cash in settlement of any portion of the Award under this Agreement are intended to be exempt from the application of Section 409A of the Code 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 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 as of the date set forth in the first paragraph.
SCHEDULE A
1.
Target Amount of Award (“
Target Award
”)
: $725,000.00
The actual amount of the Award that is 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 Award x 50% x Total Constant Currency Revenue Attainment Factor (as set forth below),
plus
(b) the Target Award x 50% x Adjusted EBITDA Attainment Factor (as set forth below). Combined achievement cannot exceed 100%.
2.
Performance Period
: January 1, 2017 - December 31, 2017.
3.
Performance Goals
:
The two Performance Goals applicable to the Award shall consist of (A) Total Constant Currency Revenue generated during the Performance Period as set forth in the table below and (B) Adjusted EBITDA over the Performance Period as set forth in the table below.
|
|
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|
|
Total Constant Currency Revenue Performance Goal:
|
|
Attainment Level
|
Attainment Factor
|
|
Threshold: [ ]
|
[ ]
|
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Target: $[ ]
|
[ ]
|
|
|
|
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|
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Adjusted EBITDA Performance Goal:
|
|
Attainment Level
|
Attainment Factor
|
|
Threshold: [ ]
|
[ ]
|
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Target: [ ]
|
[ ]
|
Attainment between the Threshold and Target Performance Goals (for each Performance Goal) shall be subject to straight-line interpolation.
4.
Performance Goal Adjustments
: [ ]
5.
Performance Criteria
: [ ]
6.
Vesting Dates (assuming Performance Goals are attained)
:
First Vesting Date
: First anniversary of the Grant Date.
Second Vesting Date
: Second anniversary of the Grant Date.
Third Vesting Date
: Third anniversary of the Grant Date.
AMENDED AND RESTATED SEVERANCE AGREEMENT
AMENDED AND RESTATED SEVERANCE AGREEMENT (this “
Agreement
”) dated as of [_________] (the “
Effective Date
”) by and between MoneyGram International, Inc., a Delaware corporation (together with its parent companies, direct and indirect subsidiaries, successors and permitted assigns under this Agreement, the “
Company
”) and [___________] (“
Executive
”).
WHEREAS
, the Company employs Executive as its [______________];
WHEREAS
, Executive’s employment with the Company is at-will;
WHEREAS
, the Company and Executive previously entered into a Severance Agreement (the “
Original Agreement
”);
WHEREAS
, and the Company and Executive desire to amend the Original Agreement in certain respects and to accordingly enter into this Agreement to amend and replace the Original Agreement in its entirety as set forth herein, effective as of the Effective Date;
WHEREAS
, the Company is willing to provide Executive with severance benefits described in this Agreement and the benefits provided by the MoneyGram International, Inc. 2005 Omnibus Incentive Plan Non-Qualified Stock Option Agreement (“
Option Agreement
”) as consideration for Executive’s agreement to continue providing services to the Company and Executive’s agreement to enter into an Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement; and
WHEREAS
, the Company entered into that certain Agreement and Plan of Merger by and between Alipay (UK) Limited, Matrix Acquisition Corp., Alipay (Hong Kong) Holding Limited and the Company, dated as of January 26, 2017 (the “
Merger Agreement
”), pursuant to which the Company desires to provide Executive additional protections in the event of certain terminations within the two-year period following the Effective Time (as defined in the Merger Agreement).
NOW, THEREFORE
, in consideration of the promises and mutual covenants herein and for other good and valuable consideration, the receipt and sufficiency of which is mutually acknowledged, the parties agree as follows:
a.
“
Cause
” shall mean (A) Executive’s willful refusal to carry out, in all material respects, the reasonable and lawful directions of the person or persons to whom the Executive reports or the Board that are within Executive’s control and consistent with Executive’s status with the Company and his or her duties and responsibilities hereunder (except for a failure that is attributable to Executive’s illness, injury or Disability) for a period of 10 days following written notice by the Company to Executive of such failure, (B) fraud or material dishonesty in the performance of Executive’s duties hereunder, (C) an act or acts on Executive’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 Executive for a felony under the laws of the United States or any state thereof, (E) Executive’s willful misconduct or gross negligence in connection with Executive’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) Executive’s material breach of the Company’s Code of Ethics, Always Honest policy or any other code of conduct in effect from time to time to the extent applicable to Executive, 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) Executive’s breach of the Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement which breach has an adverse effect on the Company.
b.
“
Disability
” shall exist if Executive 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 Executive’s duties. Any question as to the existence of the Disability of Executive as to which Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to Executive and the Company. If Executive 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 Executive shall be final and conclusive for all purposes of this Agreement.
c.
“
Good Reason
” shall mean, within the 24-month period following the Effective Time: (A) a material reduction in the Participant’s position or responsibilities from the Participant’s position or responsibilities in effect immediately prior to the Effective Time, 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 the Effective Time, 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 Effective Time; 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.
2.
At-Will Employment
. Executive’s employment is at-will and may be terminated by either Executive or Company at any time and for any reason.
3.
Termination by the Company without Cause
. If at any time on or after the first anniversary of the date Executive first became an employee of the Company Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability), Executive shall be entitled to receive the following payments, each of which shall at all times be made so as to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended:
a.
Salary Severance. A sum equal to Executive’s then current monthly base salary multiplied by twelve, which, subject to Section 6 hereof, shall be payable in equal monthly
installments on the last day of each month over the twelve month period following the date of termination of employment and in accordance with the Company’s normal payroll practices in effect as of the date of Executive’s termination of employment; and
b.
Bonus Severance. Provided that the Company actually achieves performance goals for the applicable performance period necessary for participants in the Company’s [Performance Bonus Plan] or any successor plan (the “
Bonus Plan
”) to receive cash bonuses pursuant to the Bonus Plan with respect to such performance period and that such cash bonuses are actually paid, a sum equal to a pro rata portion (based on the period between the beginning of the applicable performance period and the date of termination of Executive’s employment) of Executive’s cash bonus (up to Executive’s cash bonus at target level) under the Bonus Plan payable for the year in which the termination of employment occurs, which, subject to Section 6 hereof, shall be paid in a lump sum payable when such cash bonus under the Bonus Plan is regularly paid to other Bonus Plan participants for such year, and which amount shall in no event exceed a pro rata portion of Executive’s annual target incentive opportunity for such year under the Bonus Plan.
4.
Termination without Cause or for Good Reason following Effective Time
. Notwithstanding anything to the contrary herein, if, within the 24-month period commencing on and immediately following the Effective Time, Executive’s employment is terminated by the Company without Cause (other than by reason of death or Disability) or by Executive for Good Reason, Executive shall be entitled to receive the following payments, each of which shall at all times be made so as to satisfy the requirements of Section 409A of the Internal Revenue Code of 1986, as amended:
a.
Salary Severance. A sum equal to Executive’s then current monthly base salary multiplied by twelve, which, subject to Section 6 hereof, shall be payable in equal monthly installments on the last day of each month over the twelve month period following the date of termination of employment and in accordance with the Company’s normal payroll practices in effect as of the date of Executive’s termination of employment;
b.
Bonus Severance. Provided that the Company actually achieves performance goals for the applicable performance period necessary for participants in the Bonus Plan to receive cash bonuses pursuant to the Bonus Plan with respect to such performance period and that such cash bonuses are actually paid, a sum equal to a pro rata portion (based on the period between the beginning of the applicable performance period and the date of termination of Executive’s employment) of Executive’s cash bonus (up to Executive’s cash bonus at target level) under the Bonus Plan payable for the year in which the termination of employment occurs, which, subject to Section 6 hereof, shall be paid in a lump sum payable when such cash bonus under the Bonus Plan is regularly paid to other Bonus Plan participants for such year, and which amount shall in no event exceed a pro rata portion of Executive’s annual target incentive opportunity for such year under the Bonus Plan;
c.
Incentive Awards. Each restricted stock unit award and long-term performance-based cash award (including awards into which any such awards are converted in accordance with the Merger Agreement upon or otherwise in connection with the Effective Date)
held by Executive on the date of termination shall become immediately vested in full on the date of termination (at 100% of the applicable target level, in the case of any award then subject to performance-based vesting criteria if termination occurs on or prior to the last day of the performance period).
5.
Miscellaneous
.
a.
Acknowledgement. Executive acknowledges and agrees that Executive shall not be entitled to any payment or other benefit pursuant to this Agreement in the event Company terminates Executive’s employment for Cause or in the event Executive resigns his or her employment for any reason or in the event of Executive’s death or Disability. For the avoidance of doubt, in the event Executive’s employment is terminated under the circumstances described in Section 4, Executive shall be entitled to receive the greater of the payments and benefits provided under Section 4 or under Section 3 (but not both).
b.
Release. Executive acknowledges and agrees that as a condition precedent to receiving any payments pursuant to this Amended and Restated Severance Agreement, Executive shall have executed, within twenty-one (21) days, or if required for an effective release, forty-five (45) days, following Executive’s termination of employment, a waiver and release substantially in the form attached hereto as
Exhibit A
and the applicable revocation period set forth in such release shall have expired.
c.
No Duplication. Executive acknowledges and agrees that Executive shall not be entitled to receive any separation payments under any other Company severance or similar policies.
d.
Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to conflicts of laws principles thereof, to the extent Minnesota laws are not preempted by the Employee Retirement Income Security Act of 1974.
e.
Severance Pay Plan Statement. Subject to Section 6 hereof, this Agreement shall be administered and interpreted in accordance with the MoneyGram International, Inc. Severance Pay Plan Statement.
f.
Entire Agreement/Amendments. This Agreement and the other agreements, plans and documents referenced herein contain the entire understanding of the parties with respect to the provision of any severance rights, payments or benefits by Company to Executive. If any provision of any agreement, plan, program, policy, arrangement or other written document between or relating to the Company and Executive conflicts with any provision of this Agreement, the provision of this Agreement shall control and prevail. This Agreement may not be altered, modified, or amended except by written instrument signed by the parties hereto.
g.
No Waiver. The failure of a party to insist upon strict adherence to any term of this Agreement on any occasion shall not be considered a waiver of such party’s rights or deprive such party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.
h.
Severability. In the event that any one or more of the provisions of this Agreement shall be or become invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions of this Agreement shall not be affected thereby.
i.
Survivorship. The respective rights and obligations of the parties hereunder shall survive any termination of Executive’s employment to the extent necessary to preserve such rights and obligations.
j.
Successors; Binding Agreement. This Agreement shall inure to the benefit of and be binding upon personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.
k.
Notice. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered by hand or overnight courier or three days after it has been mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth below in this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.
If to the Company:
MoneyGram International, Inc.
2828 N. Harwood, 15
th
Floor
Dallas, Texas 75201
Attention: Chairman of the Human Resources and Nominating Committee of the Board
If to Executive:
To the most recent address of Executive set forth in the personnel records of the Company.
l.
Withholding Taxes. The Company may withhold from any amounts payable under this Agreement such Federal, state and local taxes as may be required to be withheld pursuant to any applicable law or regulation.
m.
Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.
6.
Code Section 409A
.
a.
The parties agree that this Agreement shall be interpreted to comply with or be exempt from Section 409A of the Internal Revenue Code of 1986 and the regulations and guidance promulgated thereunder to the extent applicable (collectively “
Code Section 409A
”), and all provisions of this Agreement shall be construed in a manner consistent with the requirements for avoiding taxes or penalties under Code Section 409A. In no event whatsoever will the Company be liable for any additional tax, interest or penalties that may be imposed on
Executive under Code Section 409A or any damages for failing to comply with Code Section 409A.
b.
A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits subject to Code Section 409A upon or following a termination of employment unless such termination is also a “separation from service” within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a “termination,” “termination of employment” or like terms shall mean “separation from service.” If Executive is deemed on the date of termination to be a “specified employee” within the meaning of that term under Code Section 409A(a)(2)(B), then with regard to any payment or the provision of any benefit that is otherwise considered deferred compensation under Code Section 409A payable on account of a “separation from service,” such payment or benefit shall be made or provided at the date which is the earlier of (i) the expiration of the six (6)-month period measured from the date of such “separation from service” of Executive, and (ii) the date of Executive’s death (the “
Delay Period
”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this
Section 6(b)
shall be paid or reimbursed to Executive in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.
c.
Notwithstanding anything to the contrary contained in this Agreement, all reimbursements for costs and expenses under this Agreement shall be paid in no event later than the end of the calendar year following the calendar year in which Executive incurs such expense. With regard to any provision herein that provides for reimbursement of costs and expenses or in-kind benefits, except as permitted by Code Section 409A, (i) all such expenses or reimbursements shall be made in any event on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by Executive, (ii) the right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit, and (iii) the amount of expenses eligible for reimbursements or in-kind benefits provided during any taxable year shall not affect the expenses eligible for reimbursement or in-kind benefits to be provided in any other taxable year, provided, however, that the foregoing clause (iii) shall not be violated with regard to expenses reimbursed under any arrangement covered by Section 105(b) of the Code solely because such expenses are subject to a limit related to the period the arrangement is in effect.
d.
For purposes of Code Section 409A, Executive’s right to receive any installment payments pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
MONEYGRAM INTERNATIONAL, INC.
By: ____________________________
Title: ____________________________
EXECUTIVE
Signature: ________________________
[SIGNATURE PAGE TO THE AMENDED AND RESTATED SEVERANCE AGREEMENT
BETWEEN THE ABOVE-REFERENCED PARTIES]
Exhibit A
RELEASE
This RELEASE (“
Release
”) is dated as of __________between MoneyGram International, Inc., a Delaware corporation (together with its parent companies, direct and indirect subsidiaries, successors and assigns, the “
Company
”), and [_____________________] (“
Executive
”).
WHEREAS, the Company and Executive previously entered into the Amended and Restated Severance Agreement dated [________], 20[__] (the “
Severance Agreement
”); and
WHEREAS, Executive’s employment with the Company (has been) (will be) terminated effective [_____________]; and
WHEREAS, pursuant to the Severance Agreement, Executive is entitled to certain compensation and benefits upon such termination, contingent upon the execution of this Release;
NOW, THEREFORE, in consideration of the premises and mutual agreements contained herein and in the Severance Agreement, to which Executive understands and acknowledges he or she may not otherwise be entitled without executing this Release, the Company and Executive agree as follows:
1.
Executive, on his or her own behalf and on behalf of his or her heirs, estate and beneficiaries, hereby releases and forever discharges the Company, its parent companies, predecessors, successors, affiliates, subsidiaries, related companies, shareholders, and their respective members, managers, partners, employees, officers, agents, and directors (individually a “
Released Party
” and collectively the “
Released Parties
”) from the following:
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a.
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All claims arising out of or relating to Executive’s employment with the Company and/or Executive’s separation from that employment.
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b.
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All claims arising out of or relating to the statements, actions, or omissions of the Released Parties.
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c.
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All claims for any alleged unlawful discrimination, harassment, retaliation or reprisal, or other alleged unlawful practices arising under any federal, state, or local statute, ordinance, or regulation, including without limitation, claims under Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Americans with Disabilities Act of 1990, as amended; the Family and Medical Leave Act of 1993; the Equal Pay Act of 1963; the Worker Adjustment and Retraining Notification Act; the Employee Retirement Income Security Act of 1974; the Fair Credit Reporting Act; the Minnesota Human Rights Act, any other federal, state or local anti-discrimination acts, state wage payment statutes and non-interference or non-retaliation statutes.
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d.
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All claims for alleged wrongful discharge; breach of contract; breach of implied contract; failure to keep any promise; breach of a covenant of good faith and fair
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dealing; breach of fiduciary duty; promissory estoppel; Executive’s activities, if any, as a “whistleblower”; defamation; infliction of emotional distress; fraud; misrepresentation; negligence; harassment; retaliation or reprisal; constructive discharge; assault; battery; false imprisonment; invasion of privacy; interference with contractual or business relationships; any other wrongful employment practices; and violation of any other principle of common law.
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e.
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All claims for compensation of any kind, including without limitation, commission payments, bonus payments, vacation pay, expense reimbursements, reimbursement for health and welfare benefits, and perquisites.
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f.
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All claims for back pay, front pay, reinstatement, other equitable relief, compensatory damages, damages for alleged personal injury, liquidated damages, and punitive damages.
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g.
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All claims for attorneys’ fees, costs, and interest.
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2. The Company acknowledges and agrees that Executive does not release any claims that the law does not allow to be waived by private agreement.
3.
Executive acknowledges and agrees that even though claims and facts in addition to those now known or believed by him or her to exist may subsequently be discovered, it is his or her intention to fully settle and release all claims he or she may have against the Company and the persons and entities described above, whether known, unknown or suspected.
4.
Executive relinquishes any right to future employment with the Company and the Company shall have the right to refuse to re-employ Executive, in each case without liability of Executive or the Company.
5.
Executive reaffirms his or her agreement to the Employee Trade Secret, Confidential Information and Post-Employment Restriction Agreement to which Executive is a party.
6.
Executive acknowledges that he or she has been provided at least twenty-one (21) days to review the Release and has been advised to review it with an attorney of his or her choice and at his or her own expense. In the event Executive elects to sign this Release Agreement prior to this twenty-one (21) day period, he or she agrees that it is a knowing and voluntary waiver of his or her right to wait the full twenty-one (21) days. Executive further understands that he or she has fifteen (15) days after the signing hereof to revoke it by so notifying the Company in writing, such notice to be received by [_______________] within the fifteen (15) day period. Executive further acknowledges that he or she has carefully read this Release, knows and understands its contents and its binding legal effect. Executive acknowledges that by signing this Release, he or she does so of his or her own free will and act and that it is his or her intention that he or she be legally bound by its terms. Executive acknowledges that in deciding whether to sign this Release, he or she has not relied upon any statements made by the Company or its agents. Executive further acknowledges that he or she
has not relied on any legal, tax or accounting advice from the Company or its agents in deciding whether to sign this Release.
7.
This Release shall be construed and enforced in accordance with, and governed by, the laws of the State of Minnesota, without regard to principles of conflict of laws. If any clause of this Release should ever be determined to be unenforceable, it is agreed that this will not affect the enforceability of any other clause or the remainder of this Release.
IN WITNESS WHEREOF, the parties have executed this Release on the date first above written.
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MONEYGRAM INTERNATIONAL, INC.
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By:
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Name:
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______________________________
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Title:
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______________________________
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AMENDMENT NO. 4
TO AMENDED AND RESTATED MASTER TRUST AGREEMENT
This Amendment No. 4 to the Amended and Restated Master Trust Agreement (this “Amendment No. 4) is entered into as of December 12, 2016 (the “Amendment No. 4 Effective Date”), by and between Wal-Mart Stores, Inc. (“Walmart”) located at 702 SW 8
th
Street, Bentonville, Arkansas 72716 on the one hand, and MoneyGram Payment Systems, Inc. (“MoneyGram”), a Delaware corporation with a place of business at 2828 N. Harwood, Dallas, TX 75201.
RECITALS:
WHEREAS
, the Parties on or about February 1, 2016, entered into that certain Amended And Restated Master Trust Agreement (“Agreement”) pursuant to which, among other things, MoneyGram agreed to offer certain Services at certain Walmart locations, and Walmart agreed to act as MoneyGram’s agent in providing such Services at such locations;
WHEREAS
, pursuant to the Agreement MoneyGram granted Walmart a royalty-free, non-exclusive, worldwide, irrevocable license to use, store, process, manipulate, reproduce and combine the MoneyGram Data as described in the Agreement and the Parties now wish to clarify and update their understanding of the ownership and permitted uses of data;
NOW THEREFORE
, in consideration of the following terms and conditions, and for good and valuable consideration, the receipt and sufficiency of which each Party hereby acknowledges, the Parties hereby agree as follows:
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1.
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The Agreement and all subsequent amendments are collectively referred to in this Amendment No. 4 as the “Agreement.”
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2.
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Except as otherwise indicated, capitalized terms used in this Amendment No. 4 have the same meanings as in the Agreement.
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3.
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Except as specifically amended hereby, the Agreement remains in full force and effect in accordance with the terms thereof.
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4.
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If there is any inconsistency between the terms of this Amendment No. 4 and the Agreement, the terms of Amendment No. 4 will govern.
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5.
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Section 7(d) of the Agreement is hereby amended and replaced in its entirety by the following:
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(d)
Data Sharing
: MoneyGram will share with and license to Walmart certain data that is created or arises from Walmart's offering of MoneyGram's Services pursuant and subject to the terms, conditions and provisions of Attachment J - Data Addendum.
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6.
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Attachment J, “Data Sharing, POCS Data and License Attachment,” is deleted in its entirety and replaced by Attachment J, “Data Addendum,” attached to this Amendment No. 4 and incorporated into the Agreement by reference. All references in the Agreement to “Attachment J, Data Sharing, POCS Data and License Attachment shall be amended to refer instead to “Attachment J, Data Addendum.”
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IN WITNESS WHEREOF, this Amendment No. 4 is entered into by and among MoneyGram and Walmart as of the Amendment No. 4 Effective Date.
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WAL-MART STORES, INC.
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MONEYGRAM PAYMENT
SYSTEMS, INC.
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By: /s/ Daniel J. Eckert
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By: /s/ W. Alexander Holmes
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Name: Daniel J. Eckert
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Name: W. Alexander Holmes
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Title: Senior Vice President, Walmart Services
Date: 1/25/2017
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Title: Chief Executive Officer
Date: 1/25/2017
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ATTACHMENT J
MoneyGram
DATA ADDENDUM
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A.
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Incorporation
. This Data Addendum by and between Walmart and MoneyGram (the “
Data Sharing Attachment
”) is part of, and incorporated into, that certain Amended and Restated Master Trust Agreement between Walmart and MoneyGram (the “
Agreement”).
This Data Sharing Attachment sets forth the terms and conditions regarding the ownership and use of certain data obtained or generated from or in connection with Walmart’s sale of MoneyGram’s Services at the Agent Locations as well as data collected or maintained in Walmart’s POCS System pursuant to the Agreement , pursuant to the February 1, 2005 Money Services Agreement between Walmart and MoneyGram (“
2005 Agreement
”), and pursuant to the April 1, 2013 Master Trust Agreement between Walmart and MoneyGram (“
2013 Agreement
”
).
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B.
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Certain Definitions
. The following capitalized terms shall have the meanings given below. Any other capitalized terms used but not defined in this Data Sharing Attachment shall have the meanings given to such terms in the Agreement.
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(i)
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“
Bill Payment Data
” means the following data and information, if available, obtained in connection with Walmart’s sale and offering of the Bill Payment Services: (i) the Agent Location where the applicable Bill Payment Service transaction originated; (ii) sender’s first and last name, address and telephone number; (iii) Bill Payment Service details surrounding the transaction (date/time, amount, price, and fees); and (iv) biller name.
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(ii)
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“
Commit Message
” means the message that Walmart sends to MoneyGram by or through websites, mobile applications, self-service kiosks, or Walmart-operated point of sale systems after a consumer agrees to purchase the Services that represents Walmart’s commitment to settle funds with MoneyGram.
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(iii)
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“
Competing Products and Services
” means any products or services offered by or through Walmart that are substantially similar to the Services.
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(iv)
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“
MoneyGram Data
” means collectively the Bill Payment Data, the Transfer Receive Data, the Transfer Send Data, and any data, other than Walmart Data, collected and obtained in connection with the sale of Bill Payment Services and the Transfer Send and Transfer Receive segments of Money Transfer Services. MoneyGram Data includes the 2010 Data and the 2013 Data.
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(v)
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“
Non-Competing Products and Services
” means any products or services offered by or through Walmart that are not Competing Products and Services.
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(vi)
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“
Staging Data
” means any information (i) collected by Walmart from a Walmart consumer or customer prior to the Commit Message being sent from Walmart to MoneyGram ; and (ii) previously collected by Walmart from a Walmart consumer or customer and displayed on or pre-populated to stage transactions prior to the Commit Message being sent.
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(vii)
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“
Transfer Receive Data
” means the following data and information, if available, obtained in connection with Walmart’s sale and offering of the Transfer Receive segment of Money Transfer Services: (i) the Agent Location where the respective Transfer Receive transaction was disbursed; (ii) the date and time the Transfer Receive was actually disbursed by the Agent Location; (iii) receiver’s first and last name, and depending on transaction amount, address and telephone number.
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(ix)
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“
Transfer Send Data
” means the following data and information, if available, obtained in connection with Walmart’s sale and offering of the Transfer Send segment of Money Transfer Services: (i) Agent Location where the respective Transfer Send transaction originated; (ii) sender’s first and last name, address and telephone number; (ii) Transfer Send transaction details (date/time, amount, price, consumer fee); (iv) name of intended recipient; (v) intended destination of the Transfer Send transaction (state and/or country).
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(x)
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“
Walmart Data
” shall mean (i) any contact or other personal information provided by a consumer or customer to Walmart outside of the purchase and/or use of the Services; and (ii) Staging Data.
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(xi)
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“
2010 Data”
means Bill Payment Data, Transfer Receive Data and Transfer Send Data with respect to transactions under the 2005 Agreement occurring from January 1, 2010 through March 31, 2013.
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(xii)
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“
2013 Data
” means Bill Payment Data, Transfer Receive Data and Transfer Send Data with respect to transactions under the 2013 Agreement occurring from April 1, 2013 through and including the day immediately preceding the Effective Date of the Agreement.
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C.
License Grants; Restrictions on Use; Additional Covenants of Parties
.
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(i)
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License to Walmart
. Subject to the terms and conditions set forth in the Agreement, MoneyGram hereby grants to Walmart a royalty-free, non-exclusive, worldwide, irrevocable license, during the Data Sharing Term (as defined in Section H), to use, store, process, manipulate, reproduce and combine the MoneyGram Data. Walmart may permit its subcontractors to exercise the rights granted above, provided that subcontractors shall only exercise such rights in the course of providing services to Walmart or its Affiliates. To the extent MoneyGram Data is also Walmart Data, Walmart’s use of such data in any way shall be regarded as use of Walmart Data not MoneyGram Data that is the subject of the license granted herein.
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(ii)
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Seller Use Restrictions
. Notwithstanding the license granted pursuant to Section (c)(i), Walmart may use the MoneyGram Data only for the following purposes:
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(1)
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to conduct internal statistical analyses on a personally identifiable basis;
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(2)
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to perform internal business modeling;
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(3)
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to add dimensionality to Walmart’s consumers and customers, including developing insights into consumer and customer behaviors, consumer and customer needs and demographics and creating, maintaining and updating consumer and customer profiles
on or through websites, mobile applications, self-service kiosks, or Walmart-operated point of sale systems; or
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(4)
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to provide or display consumer and customer transaction information
on or through websites, mobile applications, self-service kiosks, or Walmart-operated point of sale systems.
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Notwithstanding anything to the contrary contained in this Section C or this Data Addendum, MoneyGram may disclose to Walmart and Walmart may use MoneyGram Data as necessary to effect, administer, enforce or monitor (for regulatory, compliance or other purposes permitted by Applicable Law) a transaction requested or authorized by the consumer, or in connection with servicing or processing a financial product or service requested or authorized by the consumer.
(iii)
Additional Walmart Covenants
. Walmart hereby covenants and agrees:
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(1)
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not to disclose or use the MoneyGram Data in any way that would breach or otherwise be inconsistent with MoneyGram’s applicable privacy disclosures or that would conflict with or otherwise violate Applicable Law;
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(2)
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not to sell, resell, license, sublicense or distribute the MoneyGram Data to third parties other than Walmart’s subcontractors that are providing services to Walmart in connection with such data; and
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(3)
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not to use the MoneyGram Data to market Walmart’s or its affiliates’ Competing Products and Services. The maintenance, use or display of consumer or customer transaction information to populate data fields and facilitate consumer or customer transactions does not constitute the use of MoneyGram Data to market Walmart’s or its affiliate’s Competing Products and Services.
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(iv)
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Nothing herein shall restrict Walmart’s use or disclosure of any Walmart Data or shall restrict MoneyGram’s
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use or disclosure of MoneyGram Data.
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(v)
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Additional MoneyGram Covenants
. MoneyGram represents, warrants and covenants that MoneyGram Data provided pursuant to this Data Addendum will only include data that Walmart may use for each of the purposes identified in Section C(ii) of this Data Addendum, and that MoneyGram’s disclosure of MoneyGram Data provided pursuant to this Data Addendum is permitted by and consistent with MoneyGram’s applicable privacy policy and privacy disclosures. If any data included in MoneyGram Data provided pursuant to this Data Addendum may not be used for each of the purposes identified in Section C(ii), MoneyGram must specifically identify such data and such data may only be used by Walmart to offer and sell the Services.
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D.
Proprietary Rights.
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(i)
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General
. The parties recognize that the users of the Services at the Agent Locations are customers of both Walmart and MoneyGram. The parties further acknowledge that the same or similar information may be included in Walmart Data and MoneyGram Data. To the extent that the same information is included in both Walmart Data and MoneyGram Data: (1) Walmart shall retain its ownership and use rights in such Walmart Data and (2) MoneyGram shall retain its ownership and use rights in such MoneyGram Data, each subject to the limitations set forth in this Agreement.
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(ii)
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“Consumer Report” Information
. Notwithstanding anything to the contrary in this Agreement MoneyGram shall have no obligation to disclose any information contained in the MoneyGram Data which MoneyGram reasonably believes in good faith falls within the definition of a “consumer report” as set forth in the Fair Credit Reporting Act.
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E.
Delivery of Data.
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(i)
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Delivery of MoneyGram Data to Walmart
. MoneyGram shall deliver to Walmart at no additional charge to Walmart the MoneyGram Data in such format and by such method as the Parties shall mutually agree in writing.
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(ii)
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Third Party Data
. Neither MoneyGram nor Walmart shall have any obligation to provide the other with any information or data purchased by such party from a third party for purposes of analyzing, enhancing or otherwise using the MoneyGram Data, as the case may be; provided, however, that nothing in this Section E(ii) shall limit MoneyGram’s or Walmart’s delivery obligations under this Section E.
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F.
Treatment of Data.
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(i)
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For purposes of clarity, the MoneyGram Data and the Walmart Data shall be included in the definition of Confidential Information, as defined in the Agreement.
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(ii)
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Walmart accepts full responsibility for adequately securing any MoneyGram Data in its possession, and will hold MoneyGram harmless from any breach of such data from Walmart’s systems or any system of any service provider of Walmart.
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G.
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Disclaimer of Warranties.
NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED, ARISING FROM COURSE OF DEALING, USAGE OF TRADE, NOR STATUTORY, AS TO THE MONEYGRAM DATA, THE WALMART DATA OR ANY OTHER MATTER WHATSOEVER. EACH PARTY HEREBY DISCLAIMS ANY AND ALL WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. NEITHER PARTY MAKES ANY WARRANTY OF ANY KIND WITH RESPECT TO THE TIMELINESS, SEQUENCE, ACCURACY, COMPLETENESS, OR QUALITY OF THE MONEYGRAM DATA OR THE WALMART DATA.
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H.
Term; Effect of Expiration/Termination.
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(i)
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Term
. The term of this Data Sharing Attachment shall commence on the Effective Date and continue until the later of the expiration or termination of the Agreement (“
Data Sharing Term
”).
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(ii)
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Effect of Expiration or Termination
. Upon expiration or termination of this Data Sharing Attachment, Walmart shall cease all use of the MoneyGram Data, provided that Walmart may retain one complete copy of the MoneyGram Data solely for the purpose of complying with Applicable Law and internal corporate compliance policies and Walmart may continue to use any information or data resulting from Walmart’s or its third parties’ manipulation or analysis of such MoneyGram Data whether alone or in conjunction with other data such that the underlying MoneyGram Data is not discernable as being MoneyGram Data.
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AMENDMENT NO. 5 TO AMENDED AND RESTATED
MASTER TRUST AGREEMENT
This AMENDMENT NO. 5 TO AMENDED AND RESTATED MASTER TRUST AGREEMENT
(“Amendment No. 5”) is made effective as of January 1, 2017 (“Amendment Effective Date”) by and between MoneyGram Payment Systems, Inc. (“MoneyGram”), a Delaware corporation with a principal place of business at 2828 N. Harwood, Dallas, TX 75201 and Wal-Mart Stores, Inc. (“Walmart”), a Delaware corporation, with a principal place of business at 702 SW 8
th
Street, Bentonville, AR 72716. MoneyGram and Walmart are collectively referred to in this Amendment No. 1 as the “Parties” and each individually as a “Party.
WHEREAS, MoneyGram and Walmart effective February 1, 2016 entered into that certain Amended and Restated Master Trust Agreement (as amended, “Agreement”), pursuant to which, among other things, MoneyGram appointed Walmart as its limited agent and authorized delegate for the sole purpose of offering and selling Services;
WHEREAS, MoneyGram and Walmart now desire to amend the Agreement as of the Amendment Effective Date as set forth in this Amendment No. 5;
NOW THEREFORE,
in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the Parties agree as follows:
1.
Capitalized terms used in this Amendment No. 5 and not specifically defined in this Amendment No. 2 shall have the meaning set forth in the Agreement.
2.
Attachment E, “Multi-State Regulatory Addendum,” of the Agreement is deleted in its entirety and replaced by Attachment E, “Multi-State Regulatory Addendum to the Amended and Restated Master Trust Agreement,” that is attached to this Amendment No. 5 and incorporated into this Amendment No. 5 by this reference.
3.
Each Party acknowledges and agrees that each and every provision of this Amendment No. 5, including the recitals and any “whereas” clauses, is contractual in nature and binding on the Parties. Except as expressly set forth in this Amendment No. 5, nothing in this Amendment No. 2 will modify, alter or amend any provision or term of the Agreement.
IN WITNESS HEREOF, the Parties have caused this Amendment No. 5 to be executed by their fully authorized representatives as of the Amendment Effective Date.
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WAL-MART STORES, INC.
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MONEYGRAM PAYMENT SYSTEMS, INC.
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By: /s/ Daniel J. Eckert
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By: /s/ W. Alexander Holmes
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Name: Daniel J. Eckert
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Name: W. Alexander Holmes
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Title: Senior Vice President, Walmart Services
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Title: Chief Executive Officer
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ATTACHMENT E
[Multi-State Regulatory Addendum to Amended and Restated Master Trust Agreement - Attached]
MoneyGram
Last updated: 11/2016
Multi-State regulatory addendum TO the AMENDED AND RESTATED master trust agreement
This Multi-State Regulatory Addendum to the Amended and Restated Master Trust Agreement (the “
Regulatory Addendum
”) is hereby made a part of, and incorporated into, that certain Master Trust Agreement (the “
Agreement
”) by and between Trustee and MoneyGram Payment Systems, Inc. (“
Company
” or “
MoneyGram
”). This Regulatory Addendum updates and replaces any previous versions of a similar regulatory addendum executed by Trustee or otherwise made part of or incorporated into the Agreement. By performing money transfer transactions after the receipt of this Regulatory Addendum, Trustee and Company agree to be bound by its terms. In the event of any conflict between the Agreement and this Regulatory Addendum, the terms of this Regulatory Addendum shall control. Except as expressly amended, supplemented or modified by this Regulatory Addendum, the Agreement shall continue in full force and effect.
GENERAL
As required by the laws of the States and Territories in which Company is licensed to do business and as required by the Agreement, Trustee and Company expressly agree to the following:
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1.
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Trustee shall not authorize or appoint sub-agents or sub-delegates to sell or offer or perform money transfer services.
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2.
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Trustee acknowledges and agrees that it may be subject to supervision and regulation by certain state governmental authorities;
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3.
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Trustee hereby consents, with or without further prior notice, to examinations and/or inspections of its books, records and accounts by any authorized state governmental representative to the fullest extent allowed by law.
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4.
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Trustee acknowledges and agrees that state governmental authorities may suspend or revoke Trustee’s designation as an “authorized delegate”, “agent”,” authorized agent”, “authorized seller” or “authorized vendor”, or require Company to terminate Trustee’s designation as such;
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5.
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Trustee acknowledges and agrees that Trustee is under a duty to act only as authorized under the Agreement, and that if Trustee exceeds its authority under the Agreement the Agreement is subject to termination and Trustee may be subject to disciplinary action under applicable law;
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6.
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Trustee agrees to post any notice that is legally required
or provided by Company or any governmental authority in the manner required by law.
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By signing this Regulatory Addendum, Trustee acknowledges that it has received compliance information from Company; that it agrees to the terms set forth in this Regulatory Addendum as they apply to Trustee, regardless of the state in which it provides the Services; and that Trustee agrees to the individual regulatory requirements and additional terms set forth below of those states or territories in which Trustee operates as an authorized delegate of Company, but solely to the extent such regulatory requirements apply to an “Authorized Delegate”, “Agent”, “Authorized Agent”, “Authorized Seller”, or “Authorized Vendor”, as those terms are used in the applicable state statutes and regulations.
ALASKA REGULATORY RIDER
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1.
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The Authorized Delegate shall perform the Services in compliance with the Alaska Uniform Money Services Act, Alaska Statutes, Title 6, Chapter 55 (the “Act”), and any regulations adopted or orders issued thereunder, as amended from time to time.
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2.
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The Authorized Delegate certifies that it is familiar with, and agrees to operate in full compliance with, the Act and 3 Alaska Administrative Code Chapter 13 including the requirements of Alaska Statutes § 06.55.301(b) for remission of money, the trust and other requirements of Alaska Statutes § 06.55.301(d), and the record maintenance requirements of Alaska Stat. § 06.55.405 and 3 Alaska Administrative Code Chapter 13.
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3.
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The Authorized Delegate acknowledges receipt of the written policies and procedures required under Alaska Stat. § 06.55.301(a).
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CALIFORNIA REGULATORY RIDER
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1.
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The Agreement may contain a provision designating governing law as a state other than the State of California. Notwithstanding the terms of the Agreement, the provisions of the California Money Transmission Act shall apply to the Agreement for Agents or Agent locations in the State of California and in the event of a conflict of laws, the provisions of the California Money Transmission Act shall prevail.
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2.
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MoneyGram appoints the Agent as its agent with authority to sell on behalf of MoneyGram payment instruments issued by MoneyGram or to conduct money transmission on behalf of MoneyGram. The Authorized Delegate shall perform the services in compliance with the Money Transmission Act, California Financial Code, Division 1.2 (the “Act”) and any regulations adopted or orders issued thereunder, as amended from time to time.
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3.
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The Agent shall make and keep accounts, correspondence, memorandums, papers, books, and other records as the Department of Business Oversight by regulation or order requires and preserves the records for the time specified by the regulation or order.
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4.
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The Agent acknowledges and agrees that:
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(a)
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all money or monetary value, less fees due agents provided for and expressly set forth in the written agreement, received by the Agent for money transmission on behalf of MoneyGram shall be trust funds owned by and belonging to MoneyGram the time when the money or an equivalent amount are remitted by the agent to the MoneyGram in accordance with Section 2060 of Chapter 4 of the California Financial Code.
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(b)
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all money must be remitted in accordance with the provisions of Cal. Fin. Code § 2000
et seq
.
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(c)
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it agrees to be bound by any other provisions that the Commissioner may by regulation or order find to be necessary to carry out the
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provisions and purposes of this chapter.
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5.
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Agent agrees to update and amend its agreements with MoneyGram to accommodate any other provisions that the Commissioner may by regulation find to be necessary to carry out the provisions and purposes of the Act.
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FLORIDA REGULATORY RIDER
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1.
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The Authorized Vendor shall report to MoneyGram, immediately upon discovery, the theft or loss of currency received for a transmission or payment instrument.
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2.
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The Authorized Vendor shall hold in trust all currency or payment instruments received for transmissions or for the purchase of payment instruments from the time of receipt by MoneyGram or the Authorized Vendor until the time the transmission obligation is completed.
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3.
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The Authorized Vendor shall not commingle the money received for transmissions accepted or payment instruments sold on behalf of MoneyGram with the money or property of the Authorized Vendor, except for making change in the ordinary course of the Authorized Vendor’s business, and ensure that the money is accounted for at the end of the business day.
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HAWAII REGULATORY RIDER
The Authorized Delegate certifies that it is in compliance with the recordkeeping and reporting requirements under Title 31 United States Code Section 5311 et seq., 31 Code of Federal Regulations Part 1022, Section 1022.210, and other federal and state laws pertaining to money laundering.
ILLINOIS REGULATORY RIDER
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1.
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The Authorized Seller shall operate in full compliance with the laws of the State of Illinois and of the United States, including without limitation the Illinois Transmitters of Money Act (the “Act”), Illinois Compiled Statutes, Sections 657/1 - 657/105, and any rules and regulations issued thereunder, as amended from time to time.
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2.
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The Authorized Seller acknowledges and agrees that it holds in trust for MoneyGram from the moment of receipt the proceeds of any business transacted under the Act in an amount equal to the amount of proceeds due MoneyGram less the amount due the Authorized Seller. The funds shall remain the property of MoneyGram whether or not commingled by the Authorized Seller with its own funds. In the event MoneyGram’s license is revoked by the Director of Financial Institutions (the “Director”), all proceeds then held in trust by the Authorized Seller shall be deemed to have been assigned to the Director.
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3.
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The Authorized Seller shall upon discovery immediately report to MoneyGram the theft or loss of any payment instrument from MoneyGram or Authorized Seller in Illinois having a value in excess of $100 or an aggregate value of $1,000 in any 3 month period.
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IOWA REGULATORY RIDER
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1.
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The Authorized Delegate agrees to operate in full compliance with the Iowa Money Services Act, Iowa Code Chapter 533C (the “Act”), and any regulations and orders issued thereunder, as amended from time to time.
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2.
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The Authorized Delegate acknowledges and agrees that it shall not provide Money services outside the scope of activity permissible under the Agreement between MoneyGram and the Authorized Delegate, except activity in which the authorized delegate is authorized to engage under Article 2 or 3 of the Iowa Uniform Money Services Act, Iowa Code Chapter 533C.
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3.
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The Authorized Delegate acknowledges and agrees that it holds in trust for the benefit of MoneyGram all money net of fees received from money transmission.
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MICHIGAN REGULATORY RIDER
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•
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Authority to Conduct Examinations or Investigations (M.C.L.A. § 487.1021)
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The Michigan Commissioner of the Office of Financial and Insurance Services (“Commissioner”) may examine your Agent location at any time, without any notice. This examination may be conducted with representatives of other departments or agencies of Michigan, agencies of another state, or the federal government.
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•
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Filing of Changed Information (M.C.L.A. § 487.1023)
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You shall immediately contact MoneyGram if you or one of your employees is charged with or convicted of a felony.
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•
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Maintenance of Records (M.C.L.A. § 487.1025)
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MoneyGram or any person subject to the Michigan Money Transmission Services Act shall maintain a copy of the following records for at least three years:
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(a)
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A record of each payment instrument from the date it was created;
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(b)
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A general ledger posted at least monthly containing all asset, liability, capital, income and expense accounts;
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(c)
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Bank statements and bank reconciliation records;
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(d)
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Records of outstanding payment instruments;
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(e)
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Records of each payment instrument paid within the 3 year period;
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(f)
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A list of the last known name and addresses of all of the MoneyGram’s Authorized Delegates.
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(g)
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Any other records the commissioner reasonably requires.
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The records described above may be stored on any tangible medium or in any electronic or other medium that is immediately retrievable in perceivable form.
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•
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Agreements Between You and MoneyGram (M.C.L.A §§ 487.1033, 487.1034)
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1.
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As an Authorized Delegate of MoneyGram, you shall comply with the Michigan Money Transmission Services Act, Mich. Comp. Laws §§ 487.1001 - 1047, as amended and all other applicable law.
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2.
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You shall remit all monies owing to MoneyGram in accordance with the Agreement. “Remit” means to make direct payments of money to MoneyGram or its representative authorized to receive money or to deposit money in a depository financial institution in an amount specified by MoneyGram.
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3.
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If MoneyGram’s license is suspended or revoked you shall immediately cease providing money transmission services as an Authorized Delegate of MoneyGram upon notice of the suspension or revocation.
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4.
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You acknowledge and agree that you shall not provide money transmission services outside the scope of activity permissible under the Agreement, except activity in which you as an Authorized Delegate of MoneyGram is otherwise authorized to engage.
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5.
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You acknowledge and agree that, as an Authorized Delegate of MoneyGram, you hold all money received from providing money transmission services, reduced by any fees owed to you by MoneyGram, in trust for the benefit of MoneyGram.
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•
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Agent Conduct; Duties and Prohibited Activities (M.C.L.A. § 487.1034)
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You shall not make any fraudulent or false statement or misrepresentation to a customer or MoneyGram or to the Commissioner. You shall provide money transmission services lawfully and in full accordance with MoneyGram’s operating policies and procedures provided to you. All funds received from the sale of a payment instrument, less fees, shall be held in trust for MoneyGram from the time you receive the funds until the funds are remitted to MoneyGram. You shall report to MoneyGram the theft or loss of a payment instrument within 24 hours after the theft or loss.
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•
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Suspension or Revocation of Agents (M.C.L.A. § 487.1041)
|
The Commissioner may order MoneyGram to bar you from being an Authorized Delegate of MoneyGram, if:
(1) you are convicted of violating a state or federal anti-money laundering statute or if you violate a rule or order issued under the Michigan Money Transmission Services Act;
(2) your competence, experience, character, or general fitness indicates that it is not in the public interest to permit you to provide money services; or
(3) MoneyGram does not remove you as an Authorized Delegate after the Commissioner issues and serves MoneyGram with an order that you have violated state law.
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•
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Criminal Penalties (M.C.L.A § 487.1042)
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It is a felony to intentionally make a false statement, misrepresentation, or false certification in any record that you file or maintain under Michigan law, or intentionally make a false entry or omit a material entry in such a record. Such a felony may be punishable by imprisonment for not more than five years or a fine of not more than $100,000.00, or both.
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•
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Civil Penalties (M.C.L.A § 487.1046)
|
The Commissioner may assess a civil fine against any person that violates the Michigan Money Transmission Services Act, a related regulation or order issued by the Commissioner, or any other applicable state or federal law in an amount that does not exceed $10,000 per day for each day the violation continues, plus the state’s costs and expenses for the investigation and prosecution of the matter, including reasonable attorney fees.
Persons Engaged in Fraud or Money Laundering (M.C.L.A § 487.1047)
If the Commissioner determines that you have engaged in fraud or have been convicted of a criminal violation involving money laundering, the commissioner may serve you with an order prohibiting you from being an Authorized Delegate for MoneyGram. If the commissioner issues such an order, it will remain in effect until the order is stayed, modified, terminated or set aside by the Commissioner. If you are subjected to such an order, you may apply to the Commissioner after 5 years to terminate the order.
MASSACHUSETTES REGULATORY RIDER
All funds of clients deposited with a Licensee for transmittal to a foreign country shall be deposited in one or more trust accounts maintained at a federally insured bank. Said account(s) shall contain only those funds collected for transmittal.
Such Licensee may offset funds in the trust account(s), in order to effect the transmittal of funds to foreign countries in accordance with the directions of clients.
The Licensee shall maintain complete and accurate trust account records. The Licensee shall produce, upon request, all documents pertaining
to trust account activity, including, but not limited to, bank statements, check stubs, cancelled, voided or unused checks, deposit tickets, and reconciliations or other comparable account records.
No person licensed as a foreign transmittal agency shall commingle money collected for transmission abroad from clients with its own funds or use any part of a client’s money in the conduct of the Licensee’s business
MISSOURI REGULATORY RIDER
Money order accounts must be dedicated and no funds commingled with other funds of the agent.
NEVADA REGULATORY RIDER
Money received from the sale or issuance of checks or for the purpose of transmission must not be commingled with the other assets of the licensee or his or her agents.
NEW YORK REGULATORY RIDER
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1.
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MoneyGram is licensed by the Superintendent of Banks of the State of New York (the “Superintendent”) to engage in the business of issuing and selling money orders denominated in United States currency and receiving money for transmission within this country and abroad pursuant to the provisions of Article XIII-B of the Banking Law.
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2.
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The Agent shall not act on behalf of the consumer as a courier for the transmission of money which activity requires licensing as a money transmitter, and any money orders sold in the State of New York may not be retained by the Agent but must be given to the purchasers of the instruments for their own delivery to the beneficiary.
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3.
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The Agent acknowledges and agrees that the Superintendent reserves the right to inspect, with or without prior notice to MoneyGram or the Agent or subagent, if any, the books and records of the Agent of MoneyGram, and that the expenses incurred by the Superintendent in making any such inspection shall be borne by MoneyGram.
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4.
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The Agent shall not sell any travelers check, money order or other money transmission instrument in the State of New York unless MoneyGram’s name shall clearly appear on the face of the instrument and MoneyGram shall not condition its engagement as obligor under the payment instrument upon the remittance of proceeds of sale from the Agent and subagent, if any.
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5.
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The Agent shall not sell any travelers check, money order or other money transmission instrument in the State of New York unless the Agent has provided the Superintendent with a written and irrevocable consent to examine, have access to, and retain copies of all of its books and records, wherever maintained, relating to these activities.
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6.
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The Agent acknowledges and agrees that it is under a duty to act only as authorized under the Agreement between MoneyGram and the Agent, and the Agent who exceeds such authority is subject to cancellation of this Agreement and may result in further disciplinary action against MoneyGram by the Superintendent.
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7.
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The Agent shall not sell or deliver money orders over-the-counter to the public or engage in the business of receiving money for transmission in a manner that would require the Agent to be licensed under Article XIII-B, Section 648 of the Banking Law, New York State Consolidated Laws. Section 648 provides that: § 648. Agents and subagents
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A licensee may conduct its business at one or more locations within this state, as follows:
The business may be conducted through or by means of such agents and subagents as the licensee may from time to time designate or appoint, and in no event, shall the business of money transmission be conducted through a subagent.
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(a)
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No license under this article shall be required of any agent or subagent of a licensee except as provided in the following subsection.
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(b)
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An agent or subagent, other than a person expressly excepted from the application of this article, who sells or delivers the licensee`s checks over-the-counter to the public shall not be exempt from licensing under this article if such agent or subagent in the ordinary conduct of such business receives or at any time has access to (1) the licensee’s checks which, having been paid, are returned through banking channels or otherwise for verification or for reconciliation or accounting with respect thereto or (2) bank statements relating to checks so returned. No license under this article shall be required of an agent, including a general or managing agent, of a licensee who does not directly sell or deliver the licensee’s checks over-the-counter to the public.
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NORTH CAROLINA RIDER
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1.
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MoneyGram appoints the Authorized Delegate to engage with authority to conduct money transmission on behalf of MoneyGram in North Carolina.
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2.
|
Authorized delegates, in their capacity as agents of MoneyGram, are subject to the supervision and regulation by the Commissioner notwithstanding exemption from licensure.
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3.
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MoneyGram shall issue a certificate of authority for each location at which Trustee conducts licensed activities in the State of North Carolina and Trustee shall post such certificate in public view at each location. Each certificate shall state as follows: "Money transmission on behalf of MoneyGram Payment Systems, Inc. is conducted at this location pursuant to the North Carolina Money Transmitters Act, N.C.G.S. § 53-208.41”
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PENNSYLVANIA RIDER
The Agent and MoneyGram agree to the following provisions as specified in Section 12 of 2015 PA H 850 (P.L. 2016-129, eff. Jan. 2, 2017) that:
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1.
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The Agent is acting on behalf of MoneyGram in providing money transmission services.
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2.
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The Agent and MoneyGram agree that the Agent is subject to the control of MoneyGram meaning that MoneyGram takes complete responsibility for the money being transmitted from the moment that an individual initiates the transmission of money with the Agent until the intended recipient receives the transmitted money,
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3.
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There is no risk of loss to the individual initiating the transaction if the Agent fails to remit the funds to MoneyGram.
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4.
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Receipt of funds by the Agent for MoneyGram products or services is deemed receipt of funds by MoneyGram.
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5.
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The Agent may not provide money transmission services outside the scope of activity permissible under the written agreement between the Agent and MoneyGram except to the extent that the Agent is licensed itself or acting as an agent for another person.
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6.
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Individuals doing business with the Agent are aware that the Agent is working on behalf of MoneyGram.
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PUERTO RICO RIDER
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1.
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The Authorized Delegate certifies that it is familiar with and agrees to fully comply with all applicable state and federal laws, rules, and regulations pertaining to money transmission, including the Puerto Rico Act to Regulate Money Services Business, P.R. Laws, (Act No. 136 of 2010), the Bank Secrecy Act, the USA PATRIOT ACT and other money services laws and agrees to comply fully with such requirements.
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2.
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The Authorized Delegate shall remit all money owing to MoneyGram in accordance with the terms of the Agreement between MoneyGram and the Authorized Delegate and in accordance with § 3.7 of the Puerto Rico Act to Regulate Money Services Business.
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3.
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The Authorized Delegate shall prepare and maintain records as required by the Puerto Rico Act to Regulate Money Services Business or any rules adopted or orders issued thereunder or as reasonably requested by the Commissioner of Financial Institutions of Puerto Rico (‘Commissioner”).
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4.
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The Authorized Delegate acknowledges and consents to examination or investigation by the Commissioner.
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5.
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The Authorized Agent acknowledges and agrees that it is under a duty to act only as authorized under this Agreement, and that if the Authorized Agent exceeds such authority this Agreement is subject to cancellation by MoneyGram and the Authorized Agent is subject to disciplinary action by the Commissioner.
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6.
|
The Authorized Delegate acknowledges receipt of the written rules and procedures required under § 3.8 of the Puerto Rico Act to Regulate Money Services Business.
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TEXAS REGULATORY RIDER
|
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1.
|
MoneyGram appoints the Authorized Delegate as MoneyGram's authorized delegate with the authority to conduct money transmission on behalf of MoneyGram in compliance with the Texas Regulation of Money Services Business, Chapter 151 of the Texas Finance Code, and any rules adopted or orders issued thereunder, as amended from time to time.
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2.
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MoneyGram and the Authorized Delegate acknowledge that the contract between them sets forth the nature and scope of the relationship between MoneyGram and the Authorized Delegate and the respective rights and responsibilities of the parties.
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3.
|
The Authorized Delegate certifies that it is familiar with and agrees to fully comply with all applicable state and federal laws, rules, and regulations pertaining to money transmission, including the Texas Regulation of Money Services Business, Chapter 151 of the Texas Finance Code and any rules adopted or orders issued thereunder, relevant provisions of the Bank Secrecy Act and the USA PATRIOT ACT, and Chapter 271 and Chapter 278 of the Texas Finance Code.
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4.
|
The Authorized Delegate shall remit all money owed to MoneyGram: (1) not later than the 10th business day after the date the Authorized Delegate receives the money; (2) in accordance with the contract between MoneyGram and the Authorized Delegate; or (3) as directed by the commissioner. The Authorized Delegate may remit the money at a later date if the Authorized Delegate maintains on deposit with an office of a federally insured financial institution located in the United States an amount that: (1) is in an account solely in the name of MoneyGram; and (2) for each day by which the period before the remittance exceeds 10 business days, is not less than the outstanding obligations of MoneyGram routinely incurred by the Authorized Delegate on a daily basis.
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5.
|
MoneyGram shall hold in trust all money received for transmission directly or from the Authorized Delegate from the time of receipt until the time the transmission obligation is discharged. A trust resulting from MoneyGram's actions is in favor of the persons to whom the related money transmission obligations are owed. The Authorized Delegate shall hold in trust all money received for transmission by or for MoneyGram from the time of receipt until the time the money is remitted by the Authorized Delegate to MoneyGram. A trust resulting from the Authorized Delegate's actions is in favor of MoneyGram. The Authorized Delegate may not commingle the money received for transmission by or for MoneyGram with the Authorized Delegate's own money or other property, except to use in the ordinary course of the Authorized Delegate's business for the purpose of making change, if the money is accounted for at the end of each business day. If MoneyGram or the Authorized Delegate commingles any money received for transmission with money or other property owned or controlled by MoneyGram or the Authorized Delegate, all commingled money and other property are impressed with a trust as provided by section 151.404 of the Texas Finance Code in an amount equal to the amount of money received for transmission, less the amount of fees paid for the transmission. If the commissioner revokes MoneyGram’s license under section 151.703 of the Texas Finance Code, all money held in trust by MoneyGram and the Authorized Delegates is assigned to the commissioner for the benefit of the persons to whom the related money transmission obligations are owed. Money of MoneyGram or the Authorized Delegate impressed with a trust under section 151.404 of the Texas Finance Code may not be considered
|
an asset or property of MoneyGram or Authorized Delegate in the event of bankruptcy, receivership, or a claim against MoneyGram or Authorized Delegate unrelated to MoneyGram’s or Authorized Delegate's obligations under Chapter 151 of the Texas Finance Code.
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6.
|
The Authorized Delegate shall prepare and maintain records as required by Chapter 151 of the Texas Finance Code or any rules adopted or orders issued thereunder or as reasonably requested by the commissioner.
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7.
|
MoneyGram and the Authorized Delegate acknowledge that the Authorized Delegate consents to examination or investigation by the commissioner.
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8.
|
MoneyGram is subject to regulation by the commissioner and that, as part of that regulation, the commissioner may suspend or revoke an authorized delegate designation or require MoneyGram to terminate an authorized delegate designation.
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9.
|
The Authorized Delegate acknowledges receipt of the written policies and procedures adopted by MoneyGram to ensure that the Authorized Delegate complies with applicable state and federal law.
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10.
|
The Authorized Delegate acknowledge that it has been provided regulatory website addresses through which the Authorized Delegate can access Chapters 151 and 271 of the Texas Finance Code and rules adopted under those chapters (
www.dob.texas.gov
) and the Bank Secrecy Act (
https://www.fincen.gov/resources/statutes-regulations/fincens-mandate-congress
)
and the USA PATRIOT ACT and (
https://www.fincen.gov/resources/statutes-regulations/usa-patriot-act
)
|
WASHINGTON RIDER
|
|
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1.
|
The Authorized Delegate shall operate in full compliance with the State of “Washington Uniform Money Services Act,” Rev. Code Wash. §§ 19.230.005 to 19.230.905 and any rules adopted, or orders issued thereunder, as amended from time to time.
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2.
|
The Authorized Delegate acknowledges and agrees that it may not provide money services outside the scope of activity permissible under the Agreement between MoneyGram and the Authorized Delegate, except activity in which the Authorized Delegate is authorized to engage under Rev. Code Wash. §§ 19.230.030 or 19.230.080.
|
In addition to the individual regulatory requirements and additional terms set forth for the states above, if any of Trustee’s locations are in the following states or territories, Trustee further agrees to operate in full compliance with the laws of such state, including but not limited to those laws referenced in the chart below for such state, and any rules and orders adopted thereunder, as amended from time to time:
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|
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Arkansas
|
Arkansas Uniform Money Services Act, Ark. Code §§ 23-55-101 to 23-55-1005, including Ark. Money Service Rule, §§ 102-1006.
|
|
Connecticut
|
Connecticut General Statutes Title 36a, Sections 595 to 610, inclusive, as amended by Public Act No. 13-253 (“Act’), and sections 18 and 19 of this Act.
|
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Georgia
|
Article 4 of title 7 of the Official Code of Georgia Annotated, the rules and regulations promulgated under Article 4, and any applicable order issued by the Georgia Commissioner of Banking and Finance.
|
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Kansas
|
Kansas Money Transmitters Act, Kan. Stat. §§ 9-508 through 9-513, and amendments thereto, and Kan. Stat. 2012 Supp. §§ 9-513a through 9-513d.
|
|
Kentucky
|
Kentucky Money Transmitters Act and rules promulgated under the Act and any order issued by the Executive Director of the Kentucky Office of Financial Institutions.
|
|
Minnesota
|
MoneyGram is subject to supervision and regulation by the Commissioner and that as a part of that supervision and regulation, the Commissioner may require MoneyGram to cancel the Agreement as a result of a violation of section 53B.21 of the Minnesota Money Transmitters Act, Minn. Stat. §§ 53B.01 - 53B.26.
|
|
Nebraska
|
MoneyGram is subject to supervision and regulation by the Nebraska Director of Banking and Finance.
|
|
New Mexico
|
New Mexico Uniform Money Services Act and rules promulgated under the Act and any order issued by the Director of the Financial Institutions Division of the Regulation and Licensing Department for the State of New Mexico.
|
|
Ohio
|
Ohio Revised Code Sections 1315.01 to 1315.18, and any regulations adopted or issues ordered thereunder, as amended from time to time.
|
|
Oklahoma
|
Oklahoma Financial Transaction Reporting Act, Oklahoma Statutes Title 6, Sections 1511
et seq
., Oklahoma Sale of Checks Act, Title 6, Sections 2101
et seq
., and any regulations adopted or orders issued thereunder, as amended from time to time.
|
|
South Carolina
|
South Carolina Ant-Money Laundering Act and rules promulgated under the Act and any order issued by the South Carolina Attorney General.
|
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US Virgin Islands
|
U.S. Virgin Islands Uniform Money Services Act, V.1. Code Title 9, § 501 to 592 (the "Act"), and any regulations adopted or orders issued thereunder, as amended from time to time.
|
|
Utah
|
MoneyGram is subject to supervision and regulation by the Commissioner of Financial Institutions.
|
|
Vermont
|
Chapter 79, Title 8 of the Vermont Statutes (Money Services)
|
|
Virginia
|
Virginia Code Title 6.2-1900
et seq
. and any regulations adopted or orders issued thereunder, as amended from time to time, and all other applicable state and federal laws and regulations.
|
|
West Virginia
|
The laws of the State of West Virginia and of the United States. The Authorized Delegate acknowledges and agrees that it holds in trust for MoneyGram from the moment of receipt of the proceeds of any business transacted under West Virginia Code §§ 32A-2-1 to 32-A-28 in an amount equal to the amount of proceeds due MoneyGram less the amount due the Authorized Delegate.
|
AMENDMENT NO. 6
TO AMENDED AND RESTATED MASTER TRUST AGREEMENT
This Amendment No. 6 to the Amended and Restated Master Trust Agreement (this “Amendment No. 6) is entered into as of December 12, 2016 (the “Amendment No. 6 Effective Date”), by and between Wal-Mart Stores, Inc. (“Walmart”) located at 702 SW 8
th
Street, Bentonville, Arkansas 72716 on the one hand, and MoneyGram Payment Systems, Inc. (“MoneyGram”), a Delaware corporation with a place of business at 2828 N. Harwood, Dallas, TX 75201.
RECITALS:
WHEREAS
, the Parties on or about February 1, 2016, entered into that certain Amended And Restated Master Trust Agreement (“Agreement”) pursuant to which, among other things, MoneyGram agreed to offer certain Services at certain Walmart locations, and Walmart agreed to act as MoneyGram’s agent in providing such Services at such locations;
NOW THEREFORE
, in consideration of the following terms and conditions, and for good and valuable consideration, the receipt and sufficiency of which each Party hereby acknowledges, the Parties hereby agree as follows:
|
|
|
|
1.
|
Except as otherwise indicated, capitalized terms used in this Amendment No. 6 have the same meanings as in the Agreement.
|
|
|
|
|
2.
|
Except as specifically amended hereby, the Agreement remains in full force and effect in accordance with the terms thereof.
|
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|
|
3.
|
If there is any inconsistency between the terms of this Amendment No. 6 and the Agreement, the terms of Amendment No. 6 will govern.
|
|
|
|
|
4.
|
The following paragraph shall be added as a second paragraph to Section N(ii) of Attachment C:
|
Notwithstanding the above, for the 2016 Contract Year which ends on February 1, 2017, the Parties acknowledge that MoneyGram has only spent [*] of the IGD Allowance. The remaining balance of [*] (the “Rollover IGD Allowance”) shall be rolled over to and added to the IDG Allowance for Contract Year 2017 which shall commence on February 1, 2017 and end on January 31, 2018. MoneyGram shall expend the Rollover IGD Allowance for mutually agreeable endeavors during Contract Year 2017 and shall pay any unused portion of the Rollover IGD Allowance to Walmart within 30 days following the end of Contract Year 2017.
________________________
1
The appearance of [*] denotes confidential information that has been omitted from this Exhibit 10.13 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, as amended.
IN WITNESS WHEREOF, this Amendment No. 6 is entered into by and among MoneyGram and Walmart as of the Amendment No. 6 Effective Date.
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|
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|
|
WAL-MART STORES, INC.
|
MONEYGRAM PAYMENT
SYSTEMS, INC.
|
|
By: /s/ Daniel J. Eckert
|
By: /s/ W. Alexander Holmes
|
|
Name: Daniel J. Eckert
|
Name: W. Alexander Holmes
|
|
Title: Senior Vice President, Walmart Services
Date: 2/20/2017
|
Title: Chief Executive Officer
Date: 2/6/2017
|
MoneyGram
bringing you closer
Amendment 1 to the
CO-BRANDED MTaaS WEBSITE ADDENDUM
Legal Dept.
MGI 1100 (03/10)
This Amendment 1 to the CO-BRANDED MTaaS WEBSITE ADDENDUM (this “Amendment”) is entered into by and between
MoneyGram Payment Systems, Inc.
(“MoneyGram”) and
Wal-Mart Stores, Inc.
(“Walmart”) and shall modify and supplement the terms of the Attachment M, CO-BRANDED MTaaS WEBSITE ADDENDUM (the “MTaaS Attachment”) to the
Amended and Restated Master Trust Agreement
, dated as of February 1, 2016, as amended by the Amendment No. 1 to the Amended and Restated Master Trust Agreement, dated as of August 26, 2016, as amended by Amendment 2 to the Amended and Restated Master Trust Agreement dated as of October 25, 2016, and as further amended by Amendment No. 5 to Amended and Restated Master Trust Agreement dated as of January 1, 2017, as amended (the “Agreement”) between MoneyGram and Walmart. The terms used herein and not defined herein shall have the meaning ascribed to them in the Agreement.
WHEREAS, Walmart and MoneyGram desire to amend the terms of Attachment M -Co-Branded MTaaS Website Addendum (the “Addendum”) which was made effective August 26, 2016 (the “MTaaS Attachment”).
NOW THEREFORE, in consideration of the promises and the mutual covenants of the Parties hereinafter set forth, the Parties hereto agree as follows
|
|
|
|
1.
|
Incorporation.
MoneyGram will offer the MTaaS Bill Payment Services, as defined in the Amendment , through the MTaaS Co-Branded Site.
|
|
|
|
|
2.
|
Additional Definitions.
|
(a)
Terms not defined in this Amendment are as defined in the Agreement. As used in this Amendment, the following terms have the meaning ascribed to such terms below:
“Bill Pay Transaction” means a transaction by a Co-branded Customer using the MTaaS Bill Payment Services.
“Biller” is a third party business entity provider of certain products and/or services to whom payments are being made by Co-branded Customer on the MTaaS Co-Branded Site.
“Completed Bill Pay Transaction” means a valid and fully funded Bill Pay Transaction by a Co-branded Customer on the MTaaS Co-Branded Site.
“MTaaS Bill Payment Services” means MoneyGram’s MTaaS Bill Payment Services pursuant to which Co-branded Customer may make payments on the MTaaS Co-Branded Site to Billers, including, but not limited to, the payment of bills, prepaid services and corrections services.
“MTaaS BP Transfer Amount” means the funds collected by MoneyGram from a consumer for the purposes of being remitted or transferred to a Biller .
(b)
The MTaaS Bill Payment Services shall be added to the definition of MTaaS Co-Branded Services as defined in the MTaaS Attachment. Except as expressly set forth in this Amendment, all terms, conditions and provisions of the Agreement and the MTaaS Attachment apply to the MTaaS Bill Payment Services. Except with respect to Section 12(f) of the MTaaS Attachment and as expressly set forth in this Amendment, Bill Pay Transactions constitute “Transactions” for the purposes of the MTaaS Attachment and Completed Bill Pay Transactions constitute Completed Transactions for the purposes of the MTaaS Attachment.
|
|
|
|
3.
|
Term and Termination.
This Amendment shall commence on the Amendment Effective Date and continue for the Term of the Agreement, unless the Agreement is terminated prior to the end of the Term in accordance with Section 9 of the Agreement.
|
1
The appearance of [*] denotes confidential information that has been omitted from this Exhibit 10.14 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, as amended.
|
|
|
|
4.
|
MTaaS Bill Payment Service Compensation.
MoneyGram will pay Walmart a commission for each completed Bill Pay Transaction (the “BP MTaaS Commission”) in accordance with Section 12 of the MTaaS Attachment, including without limitation Sections 12(c), (d) and (e) as follows: [*] of the per transaction BP Commission rate set forth in Attachment B -Bill Payment Service Attachment, Section I. In the event Walmart is able to assume full responsibility for funding and payment authentication/authorization, the BP MTaaS Commission under this Section for each completed Bill Pay Transaction shall be [*]% of the per transaction BP Commission rate set forth in Attachment B -Bill Payment Services Attachment, Section I.
MoneyGram and Walmart may agree from time to time to implement special initiatives for certain transactions. For those special initiatives, the Parties may agree to a modified MTaaS BP Commission for such transactions.
|
|
|
|
|
5.
|
Marketing Fund. For the purposes of the first two sentences of Section 12(f) of the MTaaS Attachment, completed Bill Pay Transactions do not constitute “Completed Transactions,” and neither Walmart nor MoneyGram shall be obligated to allocate any amounts to the Marketing Fund with respect to any completed Bill Pay Transactions. Subject to the mutual agreement of the Parties, funds in the Marketing Fund may be used for the promotion and marketing of the Bill Pay Transactions.
|
|
|
|
|
6.
|
Reporting. Section 6, "Reporting," of Exhibit A of the MTaaS Attachment is deleted in its entirety and replaced by the following:
|
“6.
Reporting - MoneyGram will provide Walmart with certain reporting relating to the Transactions. Such reporting shall be provided in a format and delivered to Walmart in a manner mutually agreed to by the Parties. MoneyGram shall provide Walmart with the following reporting based on the applicable frequency noted:
Reports to be provided on a weekly basis:
*
Total Transaction Amounts of Money Transfer Transactions;
*
Total number of Money Transfer Transactions;
*
Total Bill Payment Transaction Amounts;
*
Total number of Completed Bill Pay Transactions;
*
Estimated total Walmart Commission as a dollar value;
*
Total Bill Pay Transactions by biller vertical;
*
Top 30 billers by Bill Pay Transaction volume;
*
Total visits and unique visitors to MTaaS Co-Branded Site;
*
Percentage of customer visits to the MTaaS Co-Branded Site that performed Transactions;
*
Average money transfer transaction amount as a dollar value;
*
The Parties agree to key conversion rates e.g. % of sign-up, % of successful transactions;
*
Traffic data report (sessions and conversion rate by channel);
*
any other key reports and metrics that the Parties agree.
Reports to be provided on a monthly basis (based on a calendar month):
*
Monthly scorecard & actual commission reports;
*
Total Commission Fees as a dollar value;
|
|
|
|
*
|
The number of cancelled Transactions, the dollar amount of cancelled Transactions, and any amounts deducted from Walmart Commissions due to cancelled Transactions;
|
|
|
|
|
7.
|
Binding Effect
. This Amendment shall bind and inure to the benefit of the parties hereto and their respective heirs, successors and assigns.
|
|
|
|
|
8.
|
Interpretation
. In the event of any conflict between the terms of this Amendment and the terms of the Agreement and any other amendment or addendum thereto with respect to the subject matter hereof, the terms of this Amendment shall control.
|
|
|
|
|
9.
|
Entire Agreement
. This Amendment supplements, amends, modifies and is made a part of the Agreement and together therewith, shall constitute the entire agreement between the parties hereto with respect to the subject matter hereof. This Amendment supersedes all prior understandings, arrangements or agreements, whether verbal or written, between the parties hereto with respect to the subject matter hereof. Except as expressly amended, supplemented or modified by this Amendment, the Agreement and any addendum or amendment thereto shall continue in full force and effect.
|
|
|
|
|
10.
|
Effective Date
. This Amendment shall be effective on the date of the last signature below. (the “Amendment Effective Date”).
|
|
|
|
|
|
|
AGREED:
|
|
|
MoneyGram Payment Systems, Inc.
|
Wal-Mart Stores, Inc.
|
|
(MoneyGram)
|
(Walmart)
|
|
By: /s/ W. Alexander Holmes
|
By: /s/ Daniel Eckert
|
|
Name: W. Alexander Holmes
|
Name: Daniel Eckert
|
|
Title: Chief Executive Officer
|
Title: SVP
|
|
Date: February 22, 2017
|
Date: February 22, 2017
|
Exhibit 31.1
Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, W. Alexander Holmes, certify that:
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of MoneyGram International, Inc. for the period ended
March 31, 2017
;
|
|
|
|
|
2.
|
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;
|
|
|
|
|
3.
|
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;
|
|
|
|
|
4.
|
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:
|
|
|
|
|
a.
|
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;
|
|
|
|
|
b.
|
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;
|
|
|
|
|
c.
|
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
|
|
|
|
|
d.
|
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
|
|
|
|
|
5.
|
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):
|
|
|
|
|
a.
|
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
|
|
|
|
|
b.
|
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.
|
|
|
|
|
|
|
|
|
Date:
|
May 4, 2017
|
|
/s/ W. Alexander Holmes
|
|
|
|
|
W. Alexander Holmes
|
|
|
|
|
Director and Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
Exhibit 31.2
Certification Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
I, Lawrence Angelilli, certify that:
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of MoneyGram International, Inc. for the period ended
March 31, 2017
;
|
|
|
|
|
2.
|
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;
|
|
|
|
|
3.
|
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;
|
|
|
|
|
4.
|
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:
|
|
|
|
|
a.
|
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;
|
|
|
|
|
b.
|
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;
|
|
|
|
|
c.
|
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
|
|
|
|
|
d.
|
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
|
|
|
|
|
5.
|
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):
|
|
|
|
|
a.
|
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
|
|
|
|
|
b.
|
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.
|
|
|
|
|
|
|
|
|
Date:
|
May 4, 2017
|
|
/s/ Lawrence Angelilli
|
|
|
|
|
Lawrence Angelilli
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
Exhibit 32.1
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, 2017
, as filed with the Securities and Exchange Commission on the date hereof I, W. Alexander Holmes, Director 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:
|
|
|
|
1.
|
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
|
|
|
|
|
2.
|
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:
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May 4, 2017
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/s/ W. Alexander Holmes
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W. Alexander Holmes
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Director and Chief Executive Officer
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(Principal Executive Officer)
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Exhibit 32.2
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, 2017
, as filed with the Securities and Exchange Commission on the date hereof I, Lawrence Angelilli, Chief Financial 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:
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May 4, 2017
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/s/ Lawrence Angelilli
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Lawrence Angelilli
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Chief Financial Officer
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(Principal Financial Officer)
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