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
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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
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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.
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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
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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
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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
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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.
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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.
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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.
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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
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(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.
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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.
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(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
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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,
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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.
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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.
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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:
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(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.
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(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
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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
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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
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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
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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.
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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:
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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
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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").
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SIGNATURES
ACE: COMPANY:
ACE CASH EXPRESS, INC. TRAVELERS EXPRESS COMPANY, INC.
By: _________________________ By: ___________________________
Name: _________________________ Name: __________________________
Title: __________________________ Title: _________________________
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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.
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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.
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(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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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).
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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.
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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.
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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.
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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
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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.
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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