Money Order Agreement - Travelers Express Co. Inc. and Ace Cash Express Inc.
MONEY ORDER AGREEMENT This Money Order Agreement ("Agreement') is between Travelers Express Company, Inc. ("Company") and Ace Cash Express, Inc. ("Ace"). 1. PURPOSE AND EFFECTIVENESS. a. The purpose of this Agreement is to authorize Ace to dispense and sell Company's money orders. Company issues money orders, which are drafts drawn by Company on Company ("Money Orders"). Company is liable under the law to pay the Money Orders when they are presented for payment unless Company has a legal defense. Company requires Ace to hold the proceeds of Money Order sales and unissued Money Orders in trust for Company as set forth in this Agreement. b. This Agreement is signed by Company and Ace (collectively "Parties") on the Signature Date (as defined in Section 26). This Section 1 .b. and paragraphs 6 and 8 of Exhibit A attached to this Agreement ("Exhibit A"), together with any other provision of this Agreement necessary for a Party to enforce its rights under this Agreement provided by this Section 1 .b and paragraphs 6 and 8 of Exhibit A ("Immediately Effective Provisions"), are effective from and after the Signature Date. From the Signature Date through December 31, 1998, the Parties will negotiate in good faith between themselves and with potential lenders and collateral trustees or agents selected by Ace for the purpose of entering into various 66 <PAGE> agreements and documents other than this Agreement ("Ace Financing- related Documents") on or before December 31, 1998, that will allow Ace thereafter to obtain debt financing with collateral agreements substantially and structurally similar to Ace's existing collateral arrangements with First Data Corporation, Principal Mutual Life Insurance Company, and Wilmington Trust Company. The Ace Financing- related Documents must: (i) be ancillary to one or more loan agreements that make available to Ace committed debt financing sufficient, when taken together with Money Order proceeds, to provide for ongoing business operations of Ace; (ii) grant to such lender(s), Company (as to all moneys owed to Company by Ace under this Agreement) and a collateral trustee or agent perfected security interests in substantially all of Ace's then existing and after-acquired property; (iii) provide that the collateral trustee or agent shall have rights, powers and obligations substantially similar to those of Wilmington Trust Company under the Collateral Trust Agreement dated as of November 15, 1996, between Ace, First Data Corporation, Principal Mutual Life Insurance Company, and Wilmington Trust Company and the "Security Documents," as that term is defined in such Collateral Trust Agreement; (iv) provide that, upon enforcement of the security interests granted under the Ace Financing-related Documents, the payment priority of the security interest proceeds granted to Company shall be subordinate to the payment priority of the security interest proceeds granted to such lender(s) and to Principal Mutual Life Insurance Company; and (v) be otherwise mutually acceptable to the Parties. In negotiation of the Ace Financing-related Documents, neither Party need agree to any change to this Agreement, and failure or refusal by either Party to agree to any change to this Agreement shall not be deemed to be negotiations not in good faith. If the Parties, such lender(s), and the collateral trustee or agent enter into the Ace Financing-related Documents 67 <PAGE> on or before December 31, 1998, the provisions of this Agreement, other than the Immediately Effective Provisions, shall become effective as between the Parties on January 1, 1999, unless on that date (A) either Party is entitled to terminate, and has given notice of termination of, this Agreement under Section 18.b., because of the other Party's nonperformance of its obligations under the Immediately Effective Provisions, or (B) Ace does not have a sound financial position, as defined in Section 9. 68 <PAGE> 2. APPOINTMENT AND RELATIONSHIP. a. Company appoints Ace to dispense and sell Money Orders only as provided in this Agreement. Ace accepts the appointment only under the terms of this Agreement and agrees not to sell any other money orders in any of its locations while this Agreement is in effect (except that Ace may perform existing contracts at locations acquired by Ace, provided that Ace shall terminate any such contract as soon as is reasonably practicable if there is no economic penalty in the contract and such termination would not be a breach of the contract). Ace agrees also that it will not permit any other person to sell any other money orders in space leased or provided by Ace in its locations. Ace may not create a subagency to sell Money Orders. Except for the limited purpose set forth in paragraph 5 of Exhibit A, this Agreement does not include or relate to any of the franchisees of Ace or any of Ace's subsidiaries or any location of any such franchisees. b. "Sales Proceeds" are the face amount of all Money Orders dispensed or sold by Ace along with any fee Company may be entitled to from Ace, except any amount that Ace collects (and may retain) from purchasers or recipients of Money Orders over and above the face amount of the Money Orders. To the extent required by applicable law, (i) Ace shall hold all Sales Proceeds as "trust funds" and unissued Money Orders in trust for Company and (ii) if Ace 69 <PAGE> commingles the Sales Proceeds with any funds of Ace, the commingled funds are impressed with a trust in favor of Company to the extent of the Sales Proceeds due Company. Except as provided in this Agreement and in any Ace Financing-related Documents to which Company agrees, (A) Ace does not acquire any right, title, or interest in the Sales Proceeds or the unissued Money Orders, and (B) all such Sales Proceeds and unissued Money Orders remain the property of Company. c. The Parties are independent. This Agreement does not create or evidence a partnership or joint venture between the Parties. Each Party is solely responsible for its own employees, including the actions or omissions and the compensation of those employees, and neither Party has any authority with respect to the other Party's employees. 3. SUPPLIES AND EQUIPMENT. Ace agrees to use only Company's Money Order dispensers. Company shall provide Ace with Money Order forms (with one format customized for Ace at no charge to Ace) and other materials, which include Company's Money Order dispensers (collectively, "Money Order Materials"). Money Order Materials may be used by Ace only as permitted by this Agreement, and shall remain the property of Company. Ace agrees to maintain a live connection continuously between the Money Order dispensers, a telephone jack and a long-distance telephone service that is of standard voice grade with low interference level. This may be a shared line. Ace is responsible to Company for any damage, theft or loss to dispensers, except for normal wear and tear. Ace will notify Company if any dispenser is not properly dispensing Money Orders. Each dispenser will be programmed to call daily to Company's toll free number. Company will 70 <PAGE> promptly perform, at its expense, all service and repair (or, if necessary, replacement) of Company dispensers. Company agrees to replace dispensers needing servicing by overnight delivery to the Ace location at which the dispenser is to be replaced. Company agrees to maintain an inventory of dispensers sufficient to meet Ace's needs for servicing and replacement. The dispensers contain technology protected by patents and trade secrets. Ace may not disassemble or reverse engineer the Money Order dispensers or decompile the software. Because Ace restricts access in its locations for security purposes, Company shall notify Ace at least two business days in advance of any desired access to a dispenser (except when the service call has been requested by Ace). Notwithstanding the foregoing, no advance notice shall be necessary in order for Company to have access to and remove the Money Order Materials if this Agreement has been terminated. 4. SALES. Ace agrees to sell Money Orders for cash or for another form of payment; however, if Ace issues or sells a Money Order for other than cash, Ace will nevertheless be liable to Company for an amount of cash equal to the Sales Proceeds. Ace agrees to imprint each Money Order sold with the amount thereof. Ace will not issue a Money Order for more than $500 (or such greater amount as may be allowed and established in writing by Company). Ace agrees to furnish all personnel, space and utilities necessary and appropriate, in Ace's good-faith judgment, for selling Money Orders at Ace's locations at which Money Orders are offered and sold. To the extent that Company may, upon advice of counsel, reasonably deem it necessary in order to avoid any violation of law or of any order, judgment, or decree of any court or request of any other governmental authority or agency having authority over Company, Company may, by prior written notice to Ace, (i) limit the number or dollar amount of Money Orders that Ace may sell or (ii) suspend Ace's right under this 7 <PAGE> Agreement to sell any Money Orders. If Company takes action under the preceding sentence due to Company's receipt of any notice or communication from any agency or other governmental authority, Company shall provide Ace with a copy of such notice or communication within one business day after Company's receipt of it, unless prohibited from doing so. In addition, Company will give Ace prompt written notice if Company learns of any pending or overtly threatened action or proceeding or investigation that is reasonably likely to result in such a notice or communication. Ace will immediately stop selling Money Orders if a governmental agency or authority specifically orders that Ace stop selling Money Orders. 72 <PAGE> 4A. SELF-USE MONEY ORDERS. a. Ace is not authorized to use Money Orders to pay its own obligations or to obtain any benefit for itself or for any affiliate, except as expressly authorized in this Section 4A. The Money Orders that Ace is authorized to so use in this Section 4A are "Self-use Money Orders." If Ace wishes to make any other use of Money Orders not expressly permitted by this Agreement, Ace shall request such use in writing and such use shall be subject to Company's written consent, which shall not be unreasonably withheld or delayed. b. Ace may issue Money Orders as the remittance instrument for loans made to consumers ("Payday Loans") provided Ace complies with the provisions of Section 4A. Money Orders may only be issued in connection with Payday Loans: (i) at locations designated by Ace upon advance notice to Company as exclusively Payday Loan locations and where Money Orders will not be issued or sold for any other purpose; or (ii) if Ace uses only Company dispensers and Ace uses features designed by Company to identify Payday Loans separately from other Money Order sales. c. Ace may issue Money Orders to pay utility bills on behalf of utility customers provided Ace uses only Company dispensers and Ace uses features designed by Company to identify utility payment dispensing separately from other Money Order sales. 73 <PAGE> d. The pricing and remittance schedules for Self-use Money Orders shall be as provided in paragraph I .b of Exhibit A. 5. CARE OF COMPANY'S PROPERTY. Ace agrees to safeguard Sales Proceeds and Money Order Materials (including blank Money Orders) with the same degree of care that a normally prudent person would give to his own property. Ace will remain liable to Company for the Sales Proceeds to be remitted until Company has received collected funds in the full amount of the Sales Proceeds. 6. RESPONSIBILITIES -- ACE. a. Ace is responsible for, and agrees to indemnify Company against, any and all losses, damages, and expenses (including attorneys' fees) which Company may sustain or incur resulting from any act or failure to act (whether negligent, dishonest, or otherwise) by Ace or any of Ace's employees or other representatives (not including any franchisees) (whether or not acting within the scope of employment) relating to this Agreement. b. Ace agrees to indemnify Company against any loss of blank Money Orders or Money Order Materials that may occur by crime or mysterious disappearance, except as stated in Section 7.a. 74 <PAGE> c. Ace has no legal right to stop payment of a Money Order. Ace may, however, request that Company refuse payment of a Money Order sold by Ace. If Company stops payment of a Money Order at Ace's request (which may be oral, followed by a prompt written confirmation), Ace agrees to indemnify Company against claims of a holder of that Money Order and, at Ace's expense, defend any legal action that results. 7. RESPONSIBILITIES -- COMPANY. a. Company (and not Ace) will be responsible for loss of a blank Money Order only when all of the following conditions occur: (i) The loss is not the result of Ace's intentional misconduct or breach of this Agreement; (ii) Ace has given the same protection to the blank Money Order that a prudent person would give to his own cash; (iii) Company receives a report of the loss, including the serial number of the missing blank Money Order, by telephone at least twenty four (24) hours before the Money Order is presented to Company for payment; and 75 <PAGE> (iv) Ace promptly submits to Company, by notice in accordance with Section 22, a report describing the loss and listing the serial number of the lost blank Money Order. b. Ace is not responsible to Company for counterfeited items resembling Money Orders, except to the extent that Ace's act or failure to act contributed to or permitted the counterfeiting. c. Company will provide assistance to Ace, upon reasonable request, in tracing lost, stolen, or missing Money Orders. Company will act as quickly as possible on any report from Ace made pursuant to subsection a.(iii) above. d. Company is responsible for, and agrees to indemnify Ace against, any and all losses, damages, and expenses (including attorneys' fees) which Ace may sustain or incur resulting from any act or failure to act (whether negligent, dishonest, or otherwise) by Company or any of Company's employees or other representatives (whether or not acting within the scope of employment) relating to this Agreement. e. Company will, at its expense, provide training of Ace's personnel on all aspects of dispenser use; that training will be provided at Ace's regional locations and corporate office, as agreed by the Parties. 76 <PAGE> 8. NO PUNITIVE OR CONSEQUENTIAL DAMAGES. Under no circumstances shall a Party be liable under this Agreement for any punitive or exemplary damages (however described) or for any consequential, indirect, special, or incidental damages (however described), even if the possibility of those damages was disclosed or otherwise known to that Party. 9. FINANCIAL RESPONSIBILITY. Each Party agrees to maintain a sound financial condition. In this Agreement, Ace's "sound financial condition" means that Ace meets both of the following credit criteria: (1) Each day Ace shall maintain Liquid Assets (as defined below) at least equal to Ace Working Indebtedness (as defined below). For this purpose, "Liquid Assets" means the sum (without duplication) of (i) the ledger balances of all bank accounts of Ace, (ii) the balances of all investment accounts of Ace, (iii) checks and other liquid instruments held by Ace pending deposit, (iv) cash in each of Ace's locations, (v) cash, checks, and other instruments in transit to bank accounts or to Ace's locations, and (vi) cash, instruments, or other liquid assets of Ace held by Company. For this purpose "Ace Working Indebtedness" means the sum (without duplication) of (A) the outstanding principal balance of Ace's indebtedness to lenders under its revolving (working capital) credit facilities and (B) the aggregate amount of Sales Proceeds pending remittance to Company under this Agreement. 77 <PAGE> (2) The most recent quarterly or annual financial statements of Ace reflect a positive amount after deducting from EBITDA (as defined below) the sum of Ace's taxes and interest expense. For this purpose, EBITDA~~ means Ace's earnings before interest, taxes, depreciation and amortization. Ace agrees to provide to Company by autofax business daily reports showing its compliance with credit criterion (1) above. Ace agrees that its 10K and IOQ reports will support its compliance with credit criterion (2) above. Ace further agrees that its annual audited financial statements will include an "unqualified" opinion by its outside auditors. Company will maintain funds sufficient to pay Money Orders when they are presented for payment. As a publicly held company, Ace is required by applicable securities laws to make publicly available its annual and quarterly financial statements and related information; if Company is unable to obtain those financial statements and information through other sources, Ace will provide Company copies of those publicly available financial statements and information promptly upon Company's written request. 10. REMITTANCES AND REPORTS. a. Ace shall remit to Company by fed wire to an account designated by Company no later than 1:00 p.m. Central Time all Sales Proceeds, or an amount of cash equal to all Sales Proceeds, as stated in Exhibit A; except that Sales Proceeds for this purpose do not include the fees payable to Company for Self-use Money Orders ("Self-use Fees"). If Company does not receive Ace's entire remittance by 1:00 p.m. Central Time, it shall provide Ace with written notice via facsimile to that effect by 2:00 p.m. Central Time, and Ace shall then have until 78 <PAGE> 3:30 p.m. Central Time to remit the Sales Proceeds (excluding Self-use Fees), or interest will accrue on the due date in accordance with Section 1 2.a. If the Sales Proceeds (excluding Self-use Fees) have not been received by Company by 5:00 p.m. Central Time on the due date, then Company may declare Ace to be in default as provided in Section 18.b. The Fax numbers for the notice are: (972) 582-1430 (Vice President and Chief Financial Officer) and (972) 582-1425 (Vice President Cash Management). Company will also attempt to contact Ace's Chief Financial Officer by telephone about the non-payment before 2:00 p.m. on the due date. b. When a remittance day (as described in Exhibit A) falls on a bank holiday, Ace will remit on the next banking day after that holiday. c. Ace agrees to allow Company continuous access to the information in Money Order dispensers at Ace's locations. 11. SECURITY AGREEMENT. To secure its obligations under this Agreement, Ace grants to Company a security interest to the extent of Ace's right and title to and interest in all existing or hereafter acquired Sales Proceeds, Money Order Materials, 79 <PAGE> money, instruments and documents at any time in the possession of Company, this Agreement, and all proceeds of the foregoing. Upon any termination of this Agreement by Company under Section 1 8.b because of a default by Ace under this Agreement, Company shall have all of the rights and remedies of a secured creditor under the Uniform Commercial Code. In the event of any conflict between the provisions of this Section 11 and the provisions of the Ace Financing-related Documents, the provisions of the Ace Financing-related Documents shall prevail. 12. INTEREST. a. Any amount (except adjustments) not paid by a Party when due to the other Party under this Agreement will bear interest (unless waived by the Party entitled to payment) until paid at an annual rate equal to the prime rate as that prime rate may be established from day to day. Sales Proceeds (excluding Self-use Fees) due to, but not received by, Company by 3:30 p.m. Central Time on any banking day will be subject to interest for that day. Any annual incentive bonus described in paragraph 7 of Exhibit A that is due to, but not received by, Ace by 3:30 p.m. Central Time on the banking day on which it is due will be subject to interest for that day. "Prime rate" means the prime commercial rate of interest published by The Wall Street Journal for corporate loans by large U.S. money-center commercial banks. No interest will accrue on any adjustments. 80 <PAGE> b. Interest will not exceed the amount or rate that may lawfully be charged under applicable Texas law, and any amount contracted for, charged, or taken in excess of the amount or rate allowed by law will be credited or refunded to the Party that has been charged or has paid. This Section 12.b overrides any other provision in this Agreement or in any document between the Parties related to this Agreement. 13. LOCATIONS AND DELIVERY. Ace is authorized to sell Money Orders only at Ace locations. Ace agrees to give Company a list, before January 1, 1999, of the locations of Ace at which Money Orders will be offered and sold under this Agreement beginning on or as of January 1, 1999, and to keep Company informed of the locations where Ace sells Money Orders. Ace authorizes Company to ship Money Order Materials to the locations at the addresses Ace provides. 14. CHANGE OF OWNERSHIP OR CONTROL. Each Party agrees to notify the other Party if the first Party's board of directors votes or consents to change, or to recommend to that Party's shareholders that they vote or consent to change, the ownership or control of that Party or its business. Regardless of any change and any notice thereof in accordance with the preceding sentence, the Parties will remain obligated under this Agreement until this Agreement expires or is terminated according to its terms. 81 <PAGE> 15. REFUNDS TO PURCHASER. Ace acts at its own risk if it makes a refund to any purchaser of a Money Order. 16. CONFIDENTIALITY. The Parties shall perform the Confidentiality Agreement that is set forth in the attached Exhibit B to this Agreement (the "Confidentiality Agreement"). 17. DISPUTE RESOLUTION. Except for the right to exercise termination pursuant to any of subsections (i) through (viii) of Section 1 8.b (including the other provisions of this Agreement referred to therein) and except as provided in Exhibit C, the Parties will resolve any dispute, disagreement, claim, or controversy between them arising in connection with or relating to this Agreement, or the validity, interpretation, performance, breach, default, or termination of this Agreement ("Dispute"), in accordance with the attached Exhibit C to this Agreement ("Dispute Resolution"). 18. TERM AND TERMINATION. a. Either Party may terminate this Agreement as of the end of the initial term or at any time as of the end of a calendar month thereafter by giving the other Party written notice at least six (6) months prior to the termination date. The initial term of this Agreement expires or ends at 11:59:59 p.m., Central Time, on December 31, 2003. The term will automatically continue thereafter until terminated as provided in the first sentence of this Section 18.a. The foregoing shall be subject to the right of either Party to terminate this Agreement in accordance with Section 18.b. b. A Party may terminate this Agreement as follows: 82 <PAGE> (i) Company may declare Ace to be in default and terminate this Agreement immediately upon notice if Ace shall fail to remit the Sales Proceeds (excluding Self-use Fees) by 5:00 p.m. Central Time on the due date; (ii) Company may declare Ace to be in default and terminate this Agreement immediately upon notice if Ace shall fail to maintain a sound financial position; * (iv) Either Party may terminate this Agreement on five (5) days' notice upon the occurrence of a payment-related breach or default (other than as provided in subsections (i) through (iii) of this Section 18.b.) which is not cured within such five (5) day period; -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 83 <PAGE> (v) Either Party may terminate this Agreement immediately upon notice if: (A) the other Party makes a general assignment of all or substantially all of its assets for the benefit of creditors; (B) the other Party applies for, consents to, or acquiesces in the appointment of a receiver, trustee, custodian, or liquidator for its business or all or substantially all of its assets; or (C) the other Party files a voluntary or petition for relief under the Federal Bankruptcy Code or other bankruptcy or insolvency laws or (D) an involuntary bankruptcy or insolvency petition filed against the other Party is not dismissed within ninety (90) days; (vi) Ace may terminate this Agreement immediately upon notice in accordance with Section 1 8A; (vii) Ace may terminate this Agreement immediately upon notice in accordance with paragraph 4 of Exhibit A; (viii) Either Party may terminate this Agreement immediately upon notice if the other Party breaches any of its obligations under the loan agreements referred to in subsection (i) of Section 1 .b. or under the Ace Financing-related Documents, after giving effect to any applicable notice and cure period provided in those loan agreements or in the Ace Financing-related Documents; or (ix) Either Party may terminate this Agreement upon thirty (30) days' written notice upon the occurrence of any material breach or default by the other 84 <PAGE> Party not covered by subsections (i) through (viii) of this Section 1 8.b. which is not cured within such thirty (30) day period. In the case of default under subsection (ii) of this Section 18.b., Company shall have five (5) business days to declare the default and terminate this Agreement by written notice to Ace, and if Company does not declare the default within five (5) business days, it is waived. c. A Party may not terminate this Agreement if the event or the circumstance described in Section 18.b., upon which that Party would rely in so terminating, was caused by that Party's breach of or default under this Agreement. The termination rights of a Party under Section 18.b. are not exclusive of any other right or remedy available to or granted to a nonbreaching or nondefaulting Party under this Agreement. d. Upon the expiration or termination of this Agreement, Ace will remit to Company, in accordance with Exhibit A, all Sales Proceeds and any other amounts it then owes to Company, and Company will pay to Ace all amounts it then owes to Ace. Each Party will also remain liable until it has fulfilled all of its obligations to the other Party that arose or accrued before the expiration or termination. Ace will pay the cost to return the Money Order Materials to Company if Company has terminated this Agreement because of any breach or default by Ace; otherwise, Company will pay that cost. e. The Parties' respective rights and obligations under this Agreement will survive the expiration or termination of this Agreement to the extent necessary to give full effect to this 85 <PAGE> Agreement. Without limiting the preceding sentence, the Parties' respective rights and obligations under Sections 5, 6, 7, 8,11,12, 16, 17,18,19, 21, and 24 and under the Confidentiality Agreement and Exhibit C will survive the expiration or termination of this Agreement. 18A. TERMINATION UPON LIMITATION OR SUSPENSION. If (i) Company exercises its rights under Section 4 to limit the number or dollar amount of Money Orders that Ace may sell, or to suspend Ace's right to sell Money Orders, (ii) the limitation or suspension is longer than thirty (30) consecutive days, and (iii) the number of Money Orders that Ace is permitted to sell during the limitation or suspension period is less than ninety percent (90%) of the number that Ace sold before the limitation or suspension was imposed, or the effect of the limitation or suspension is to reduce the number of Money Orders that Ace sells during the limitation or suspension period to ninety percent (90%) of the highest number that Ace sold during any thirty (30)-consecutive-day period before the limitation or suspension, then Ace may terminate this Agreement by giving written notice to Company within 90 days after the 30th day of the limitation or suspension or after the ten percent (10%) or more decrease in Ace's Money Order volume occurs, whichever is later. 19. REMEDIES AND WAIVERS. All remedies for any breach or default of this Agreement are cumulative. Except as provided in this Agreement, Party's delay or failure to enforce a right or pursue a remedy is not a waiver. A Party's waiver (not otherwise set forth in this Agreement) must be in writing and signed by it. A waiver of a Party's rights or remedies regarding a particular breach of or default under this Agreement is not a waiver of those rights or remedies, or any other 86 <PAGE> rights or remedies, regarding any other breach of or default under this Agreement. 20. COMPLIANCE WITH LAW. Each Party agrees to comply in all material respects with all laws and regulations applicable to its activities under this Agreement, including laws and regulations that relate to money laundering. Ace agrees that it will sell Money Orders only at locations where such sales may legally be made. 21. GOVERNING LAW. TEXAS LAW GOVERNS THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT, INCLUDING THE VALIDITY OR ENFORCEMENT AND THE CONSTRUCTION OR INTERPRETATION OF THIS AGREEMENT. 22. NOTICES. Except as otherwise provided in this Agreement, all notices, requests, and other communications from one Party to the other under this Agreement must be in writing and sent by facsimile, certified mail, overnight mail, or courier or delivered in person, in any case prepaid by the notifying Party, and must be addressed as follows: IF TO ACE: IF TO COMPANY: Ace Cash Express, Inc. Travelers Express Company, Inc. Attention: Chief Financial Officer Attention: Contracts Administration 1231 Greenway Drive, Suite 800 1550 Utica Avenue South Irving, Texas 75038 Minneapolis, Minnesota 55416 Facsimile: (972) 582-1430 Facsimile: (612) 591-3325 87 <PAGE> Copy to: Richard A. Tulli, Esq. Copy to: Chief Legal Counsel Gardere & Wynne, L.L.P. Facsimile: (612) 591-3859 1601 Elm Street, Suite 3000 Dallas, TX 75201 Facsimile: (214) 999-4667 A Party may change its address for this purpose by giving written notice of that change to the other Party in accordance with this Section 22. Each notice, request, or other communication sent or delivered as provided above in this Section 22 will be deemed given, received, and effective on the date of actual receipt (or refusal) by the addressee. 88 <PAGE> 23. ASSIGNMENT. This Agreement shall be binding on each of the Parties and their respective permitted successors and permitted assigns. Neither Party may assign its rights or obligations hereunder without the prior written consent of the other Party, except that (i) the consent may not be unreasonably withheld or delayed if the proposed assignment is to a person or entity that is capable of performing the assigning Party's obligations under this Agreement and is not a competitor of the non-assigning Party, and (ii) this restriction on assignment will not apply to a merger, consolidation, or share exchange by a Party or the transfer of the capital stock of a Party unless such transaction will render the assigning Party incapable of performing its obligations under this Agreement or result in ownership or control by a competitor of the non-assigning Party. Notwithstanding the foregoing, nothing in this Agreement prohibits the assignment of a Party's right to receive Sales Proceeds or other amounts due under this Agreement or Ace's grant of a security interest or lien in its rights as permitted by this Agreement to its secured creditors. Any purported assignment in violation of this Section 23 is void and ineffective. 24. INTERPRETATION AND DEFINITIONS. This Agreement is the result of the Parties' negotiations, and no provision of this Agreement is to be construed for or against either Party because of the authorship of that provision. In the interpretation of this Agreement, except where otherwise stated or the context otherwise requires: 89 <PAGE> a. "business day" or "banking day" means any Monday through Friday, excluding any such day on which the Federal Reserve Bank of Minneapolis is authorized to be closed; b. "including" or "include" does not denote or imply any limitation; c. "Section" refers to a Section of this Agreement; and d. each Exhibit is an integral part of this Agreement. 25. MISCELLANEOUS. This Agreement, together with its Exhibits and the Ace Financing-related Documents (when entered into by the Parties), is the entire agreement between the Parties relating to the subject matter of this Agreement. This Agreement can be amended or changed only by a writing signed by the Parties. Section headings are not part of this Agreement. If any part of this Agreement is or becomes invalid, it is or will be severed from the rest of this Agreement, and the rest of this Agreement remains or will remain in effect so long as (i) the continued effectiveness of the rest of this Agreement will not impose or result in any substantial economic detriment to either Party or (ii) the Parties amend this Agreement as necessary to preserve their underlying economic or financial arrangements. This Agreement may be signed in counterparts, with the same effect as if both Parties had signed the same paper; all counterparts are to be construed together to be one, and the same, document. 25A. AUDITS. Each Party has the right, once per calendar quarter, exercisable by reasonable prior notice to the other Party, to examine the books and records of the other Party relating to the performance of this Agreement. Such audits shall be conducted at the office of the 90 <PAGE> Party being audited. Each Party shall bear the expenses of conducting an audit of the other Party's books and records. A Party's examination of the other Party's books and records may be conducted only during the other Party's normal business hours or at any other reasonable tine to which the other Party may consent. An audit shall be performed in a manner that does not unreasonably disrupt the other Party's normal business operations. The Party conducting an audit may make and take away copies of any or all of the other Party's books and records being examined. 26. SIGNATURE DATE. This Agreement is signed by the Parties on April 16,1998 (the "Signature Date"). 91 <PAGE> SIGNATURES ACE: COMPANY: ACE CASH EXPRESS, INC. TRAVELERS EXPRESS COMPANY, INC. By: _________________________ By: ___________________________ Name: _________________________ Name: __________________________ Title: __________________________ Title: _________________________ 92 <PAGE> EXHIBIT A TO MONEY ORDER AGREEMENT Payments, Remittance, and Reporting ----------------------------------- 1. FEES AND PAYMENT. * b. SELF-USE MONEY ORDER FEE. For each Self-use Money Order issued under Section 4A of the Agreement, Company shall be entitled to receive a base fee of * per Money Order. * Company shall submit an invoice to Ace for the amount due within ten (10) days after the end of the calendar month, and Ace shall make payment within ten (10) days after receipt of that invoice. If Company exercises its right to offset, it will provide to Ace, with (or in lieu of) the payment to Ace under paragraph I .a. of this Exhibit A, the calculations and other information sufficient to reasonably indicate to Ace the -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 93 <PAGE> amount offset and the basis or bases for that offset. The per-item fee payable by Ace for Self-use Money Orders will be adjusted quarterly, as of the first day of each calendar quarter, based on the average dollar amount and average life of Self-use Money Orders dispensed during the preceding quarter in accordance with the following: Per Money Order Fee Average Dollar Amount Increase (Decrease) (from a base per Self-Use Money Order fee of * /Money Order) ------------------------ -------------------------- * * The quarterly adjustment to the fee payable by Ace for each Self-use Money Order based on the average life of Self-use Money Orders shall be calculated as follows: (i) A * increase for each one-half day the average life of Self-use Money Orders is less than * days, to be counted from the day following issuance to and including the day paid by Company. -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 94 <PAGE> (ii) A * decrease for each one-half day the average life of Self-use Money Orders is greater than * days, to be counted from the day following issuance to and including the day paid by Company. Ace shall pay no fee, nor shall there be any fee adjustments, in connection with Self-use Money Orders until * or more Self-use Money Orders have been dispensed in a calendar month. Payment will commence with that month and continue thereafter, subject to a quarterly review. If the issuance of Self-use Money Orders decreases to fewer than an average of * in a calendar month thereafter, Ace shall again have no obligation to pay any fee, and there shall be no fee adjustment, until the level of Self-use Money Orders issued again equals or exceeds an average of * in a calendar month. Company shall submit to Ace, with the first invoice that reflects each fee adjustment in accordance with this paragraph I .b., the calculations and other information sufficient to reasonably indicate to Ace the basis or bases for that fee adjustment. c. DISPENSER FEE. For each Money Order dispenser provided by Company, Ace will pay Company * monthly for use and maintenance of the Delta electronic system. Company may offset the amount due against the payments due from Company to Ace for the same calendar month for sales of Money Orders under paragraph I .a. of this Exhibit A. If Company does not offset or if no payments are due to Ace under paragraph I .a., then -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 95 <PAGE> Company shall submit an invoice to Ace for the amount due within ten (10) days after the end of the calendar month, and Ace shall make payment within ten (10) days after receipt of that invoice. If Company exercises its right to offset, it will provide to Ace, with (or in lieu of) the payment to Ace under paragraph I .a. of this Exhibit A, the calculations and other information sufficient to reasonably indicate to Ace the amount offset and the basis or bases for that offset. d. DISPUTE. Ace may dispute in good faith the amount of any invoice submitted or offset reported to it under this Exhibit A by notice to Company. Ace may withhold payment of any invoiced amount that it disputes in good faith; Ace shall, however, timely pay all of any invoiced amount that is not disputed. The notice of any dispute must reasonably describe the basis for the dispute. The dispute shall be a Dispute to be resolved in accordance with Exhibit C. Ace's withholding of a good-faith disputed amount shall not be deemed a breach or default under this Agreement, and no interest under Section 12.a. shall accrue on such amount. If it determined in accordance with Exhibit C that some or all of the disputed amount is due to Company, Ace shall pay the amount due within two (2) business days after resolution of the dispute. If it is determined in accordance with Exhibit C that an amount offset by Company in good faith is due to Ace, Company shall pay or credit the amount due within two (2) business days after resolution of the dispute. Any such amount that is determined to be due to either Party shall be paid with interest as provided in Section 12.a. e. MANNER OF PAYMENT. Each amount due to a Party under this paragraph I shall be paid by fed wire to an account designated by that Party. 96 <PAGE> 2. SALES REPORTING. Ace agrees to report Money Order sales to Company through Company's dispensers. 3. REMITTANCE METHOD AND SCHEDULE. a. Ace shall remit by fed wire, as more fully provided in the Agreement, as follows: SALES DAY WIRE DAY --------- -------- * * b. If any day on which funds are to be remitted is not a banking day, the remittance will be on the next banking day. c. Company will provide adjustment information to Ace daily and will make adjustments daily. -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 97 <PAGE> 4. PRICING AND REMITTANCE MATRIX. Ace may request Company to change the per item fee and remittance schedule for Money Orders (other than Self-use Money Orders) provided in paragraph 3.a. of this Exhibit A during the term of this Agreement by selecting a new option from the following Matrix, and if such change becomes effective, the provisions of paragraphs I .a. and 3.a. of this Exhibit A shall be amended accordingly. Only * changes may be made during the term of this Agreement. Ace will make any such request for change in writing at least ninety (90) days in advance of the proposed effectiveness of the change, specifying the date on which the change shall be implemented, which must be the first day of a calendar month. Company will give Ace notice within sixty (60) days after receipt of Ace's request as to whether it approves the requested change, which approval shall be in Company's sole and absolute discretion; * and Ace has a sound financial condition and has maintained a sound financial condition consistently during the 90 days prior to the request, Company's approval will not be withheld unreasonably. If Ace selects an option which * and Ace has maintained a sound financial condition consistently during the 90 days prior to the request, and Company's right to Sales Proceeds would be fully secured with a security interest having priority over the security interests of Ace's other creditors, but Company denies the request, then Ace shall have the right to terminate this Agreement by giving Company written notice within thirty (30) days after Ace received the notice of disapproval or after the expiration of Company's sixty (60) day response period without approval from Company. -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 98 <PAGE> Pricing Option Matrix (Money Orders): * ------------------------------------------------------------------------------ (1) All remittances are made by fed wire. (2) Next banking day payment. Friday, Saturday, and Sunday sales remitted on Monday (or next banking day if Monday is not a banking day). (3) Payment of one-fifth of one week's average sales made each day beginning Monday of the first sales week. Weekly adjustments made (+/-) on a specified day following each sales week. (4) Ace shall include the fees with the appropriate remittance of Sales Proceeds by fed wire. (5) Ace shall pay the fees by fed wire by the 10th day after receipt of Company's monthly invoice therefor. -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 99 <PAGE> 5. REPRICING. Company may adjust the per item fee for Money Orders (other than Self-use Money Orders) as follows: If less than the Store Minimum (as defined below) dispenses or sells Money Orders in any calendar quarter, the per-item fee under paragraph I a. of this Exhibit A for each Money Order sold by Ace shall be adjusted as set forth below for Money Orders sold in the next calendar quarter: For each decrease in the number of Stores (as defined below) dispensing or selling Money Orders to a Level (as defined below) or a new Level, the per-item fee will be adjusted by * per Money Order sold in favor of Company. * -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 100 <PAGE> For each increase in the number of Stores dispensing or selling Money Orders to a Level or a new Level or to a number equal to or above the Store Minimum, the per item fee will be adjusted by * per Money Order sold in favor of Ace. 6. SIGNING BONUSES. Company will pay Ace a Money Order Signing Bonus of $2,000,000, no later than May 1,1998. Company will pay Ace an additional bonus of $500,000 no later than May 1,1998 as consideration for Ace entering into both this Agreement and the Bill Payment Processing and Funds Transfer Services Agreement ("Bill Payment Agreement"). Ace acknowledges that it is also entitled to receive an additional signing bonus of $500,000 under the Bill Payment Agreement as consideration for Ace entering into both this Agreement and the Bill Payment Agreement; both such additional signing bonuses (an aggregate of $1,000,000) are herein referred to as the "Dual Signing Bonuses". The additional payment under the Bill Payment Agreement will be made no later than May 1, 1998. All such payments will be made by fed wire to an account designed by Ace. If this Agreement or the Bill Payment Agreement is terminated before its expiration date wrongfully by Ace, or by Company as permitted by Section 18.b. for default by Ace, or by Ace as permitted by Sections 18.b. (vi) and 18A, Ace agrees to refund the pro-rata portion of (i) the Signing Bonus related to the terminated agreement and (ii) the Dual Signing Bonuses. In each case, the "pro-rata portion" will be the number of full weeks remaining after the termination date under the terminated agreement multiplied by one-two hundred sixtieth (1/260) of the Signing Bonus to be repaid. -------------- * Confidential information deleted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2. 101 <PAGE> 7. ANNUAL INCENTIVE BONUSES. Company will pay Ace an Annual Incentive Bonus of $300,000, by fed wire to an account designated by Ace, on the first banking day after January 1,1999 and on the first banking day after each subsequent January 1 during the term of this Agreement. Company will pay Ace an additional Annual Incentive Bonus of $50,000, at the same time (and in the same manner) as each Annual Incentive Bonus is paid as set forth in the preceding sentence, while both this Agreement and the Bill Payment Agreement remain in effect. If this Agreement is terminated before its expiration date wrongfully by Ace, or by Company as permitted by Section 18.b. for default by Ace, or by Ace as permitted by Sections 18.b. (vi) and 18A, then Ace will refund to Company the pro rata portion of the Annual Incentive Bonuses received under this paragraph 7 in the year of termination. The "pro-rata portion" will be the number of full weeks in the calendar year remaining after the termination date multiplied by one- fifty-second (1/52) of the Annual Incentive Bonuses paid for that year. 102 <PAGE> 8. NON-EFFECTIVENESS. If the Parties do not enter into the Ace Financing- related Documents on or before January 1,1999, 50 that this Agreement does not then become effective, Ace agrees to immediately repay Company the entire amount of the Money Order Signing Bonus and the Dual Signing Bonuses paid to Ace, plus interest on the entire amount, at the annual rate set forth in Section 12.a., from the date of Company's payment of the Signing Bonuses. 103 <PAGE> EXHIBIT B TO MONEY ORDER AGREEMENT CONFIDENTIALITY AGREEMENT ------------------------- 1. CONFIDENTIAL INFORMATION. During the effectiveness of this Agreement, a Party may disclose confidential and proprietary information and materials, including information about its customers, businesses, third-party relationships, and intellectual property, to the other Party. (That disclosure may include granting the other Party access to books and records in accordance with Section 25A.) All of this information is Confidential Information of the disclosing Party, except as specifically excluded below. 2. RESTRICTIONS ON USE OR DISCLOSURE. A Party shall not use or disclose any Confidential Information of the other Party except as necessary or appropriate to perform, implement, or exercise (or defend) rights or remedies under this Agreement. 3. INFORMATION EXCLUDED. A Party need not treat any of the following as Confidential Information of the other Party under this Agreement; a. Information which is or becomes publicly available or available in the industry or is in the possession of a third party without any violation of this Agreement. 104 <PAGE> b. Information which the Party can show was in its possession prior to receipt from the other Party. c. Information which is received by the Party from a third party knowledge of that Party) any obligation of confidentiality to the without (to the other Party. 4. COURT ORDERS, SUBPOENAS AND OTHER LEGAL REQUIREMENTS. A Party may disclose the other Party's Confidential Information to the extent required by court order or subpoena, without violating this Agreement; in this circumstance, the Party required to disclose must notify the other Party immediately and, at the reasonable request of the other Party, cooperate in any lawful effort to contest the subpoena or other legal process or to limit the scope of the disclosure. In addition, if a Party reasonably believes that (based on advice of counsel) it has any other legal obligation to disclose Confidential Information of the other Party, then the disclosure may be made, to the extent required, without the consent of the other Party. 5. PRESS RELEASE. The Parties will, on or promptly after the Signature Date, jointly prepare and make a press release or public announcement about their entering into this Agreement. Neither Party may (unless legally required) make any other press release or public announcement about this Agreement without the prior consent of the other Party (which may not be unreasonably withheld or delayed). 105 <PAGE> 6. MATERIALS. Materials in any medium containing Confidential Information, whether furnished to a Party by the other Party or prepared by a Party, are the sole property of the Party whose Confidential Information is contained in the materials and must be kept confidential in accordance with this Agreement, and must be delivered to the owning Party upon its request and, in any event, upon the expiration or termination of this Agreement. 7. REMEDIES. A Party's breach of the provisions of this Confidentiality Agreement may cause irreparable harm to the other Party. Each Party agrees that in the event of a breach or a threatened breach by it1 the other Party may seek injunctive relief in addition to other remedies available to it. 106 <PAGE> EXHIBIT C TO MONEY ORDER AGREEMENT Dispute Resolution ------------------ 1. NOTICE AND CURE. Except as otherwise specified in this Agreement, in the event of an actual or alleged non-payment-related breach of or default under this Agreement, the nonbreaching or nondefaulting Party shall give the breaching or defaulting Party written notice of the breach or default. The breaching or defaulting Party shall then have 30 days after that notice in which to cure the specified non-payment-related breach or default (unless that breachor default is not capable of being cured, in which case there will be no cure period). 2. NEGOTIATION. If a Dispute (including any Dispute about any remittance or payment to or by a Party under this Agreement) arises or if a non-payment- related breach or default has not been cured within the 30-day cure period set forth in Section 1 of this Exhibit C (if applicable), a Party may submit the Dispute (which, for the purposes of this and the following provisions of Exhibit C, shall include an uncured actual or alleged non-payment-related breach or default) in writing to the other Party in accordance with Section 22 of the Agreement. Upon the other Party's receipt of that notice, the Parties agree to use their reasonable best efforts to negotiate a resolution of the Dispute. If the Parties are unable to resolve the Dispute by agreement within 30 days after receipt of that notice, each Party will promptly designate in writing one executive representative to, and they will use their respective reasonable best efforts to, negotiate a resolution of the Dispute within ten days after the expiration of that 30-day period. 107 <PAGE> 3. MEDIATION. a. If the Parties' representatives are unable to resolve the Dispute as provided above, either Party may, by notice to the other Party, require the Dispute to be submitted to nonbinding mediation. b. The Parties will attempt to agree upon and appoint a neutral mediator promptly after notice of mediation is given. If the Parties are unable to agree upon a mediator within five days after that notice, either Party may request the American Arbitration Association ("AAA") to appoint a neutral mediator, who will conduct the mediation. The mediation will be conducted, within 15 days after the mediator is appointed, in St. Louis, Missouri. c. Each Party will pay its own expenses, and the Parties will share equally the fees and expenses of the mediator, in connection with the mediation. 108 <PAGE> 4. ARBITRATION. a. If mediation fails to resolve the Dispute within 30 days after the date of submission, either Party may, by notice to the other Party, require the Dispute to be submitted to binding arbitration. When filing the demand for arbitration with AAA, the filing Party shall request the AAA to appoint a panel or board of three neutral arbitrators who are experienced in or knowledgeable about the money-order or check-cashing business. b. The board of arbitrators shall conduct the arbitration in accordance with the Commercial Arbitration Rules of the AAA then in effect, except as such rules may be modified for the purpose of the arbitration proceeding by all or a majority of the arbitrators or by written agreement of the Parties. The arbitration shall be conducted in St. Louis, Missouri. The arbitrators may, however, call and conduct hearings or meetings at such other places as the Parties may agree or as the arbitrators may, on the motion of a Party, determine to be necessary to obtain significant testimony or evidence. c. All statutes of limitations that would otherwise be applicable shall apply to any arbitration hereunder. The Federal Rules of Evidence and Procedure shall apply to the arbitration. The arbitrators may authorize all forms of discovery, including depositions, interrogatories and document production, on a showing of particularized need that the requested discovery is likely to lead to material 109 <PAGE> evidence needed to resolve the Dispute and is not excessive in scope, timing or cost. d. The arbitration hearing shall be held within 30 days after the appointment of the arbitrators, unless the Parties otherwise agree. The final decision or award of the arbitrators shall be rendered within 15 days after the hearing. That final decision or award shall be made by unanimous or majority vote or consent of the arbitrators and shall be deemed issued at the place of arbitration. The arbitrators' decision shall be based upon this Agreement and applicable law. e. The final decision or award of the arbitrators shall be binding upon the Parties, and judgment thereon may be entered in any court having jurisdiction over one or both of the Parties or any of their respective assets. The Parties waive any right they may have to apply or appeal to any court for relief from the preceding sentence or from any decision of the board of arbitrators made, or any question of law arising, before the final decision or award. The final decision or award may include injunctive relief (other than temporary or provisional relief) in response to any actual or threatened breach of this Agreement. 110 <PAGE> f. The arbitrators shall award reasonable attorneys' fees and costs to the prevailing Party in the arbitration. Otherwise, each Party shall bear its own expenses, and one-half of the fees and expenses of the arbitrators, in connection with the arbitration proceedings. 5. TERMINATION AND OTHER REMEDIES. Except as provided in Section 18.b. (i) through (viii), neither Party may terminate this Agreement or exercise any other remedy until the Parties have worked through this dispute resolution procedure or one Party has failed to cooperate or perform its obligations under this Exhibit C; however, nothing in this Exhibit C prevents (i) a Party from applying to a court having jurisdiction to (A) enforce the dispute resolution procedure in this Exhibit C, (B) seek temporary or provisional injunctive relief, in response to an actual or threatened breach of this Agreement or otherwise so as to avoid irrevocable damage or maintain the status quo, until a final arbitration decision or award is rendered or the Dispute is otherwise resolved, or (C) challenge or vacate any final arbitration decision or award that does not comply with this dispute resolution procedure, as may have been modified by the Parties' agreement (if applicable), or (ii) the Parties from resolving any Dispute by written agreement. 111