MoneyGram 2009 Annual Report Download - page 675

loss of approximately $350 million, which was an incremental loss of approximately $1.2 billion in other than temporary impairments recorded in
December of 2007.
9. Holdco sought and obtained a waiver under the agreement described in Section 4.9(i)(A)(2) of this Holdco Disclosure Schedule of certain financial
covenant defaults. The waiver remains effective until May 1, 2008.
10. Holdco sought and obtained a waiver under the agreement described in Sections 4.5(10 and 4.5(2) of this Holdco Disclosure Schedule of certain
financial covenant defaults. The waivers remain effective until May 1, 2008, subject to certain other termination events as set forth therein. In exchange
for the waivers, Holdco has granted collateral in its non-financial assets and stock of its subsidiaries to the banks.
11. Holdco maintains approximately $59 million in surety bonds in connection with licensing requirements in 47 states, plus Puerto Rico and the Virgin
Islands. Holdco's primary surety bond company, travelers Casualty & Surety of America, requested, and Holdco did execute, a new indemnity
agreement providing for collateralization of the surety, effective February 11, 2008, and Holdco has provided approximately $45 million in cash
collateral for the bonds. Holdco's other surety bond company, Zurich American Insurance Co., asked Holdco to rectify technical execution faults in the
original agreement between the companies, and Holdco did so effective February 7, 2008.
12. Credit rating agencies have previously downgraded Holdco and placed it on negative watch for further ratings downgrades.
13. In December of 2007, Holdco wrote-down approximately $6.5 million dollars for a decline in value of the goodwill of FSMC, Inc.
14. In January 2008, CVS Stores indicated to Holdco that CVS is putting the roll out of money transfer services in additional stores on hold, citing Holdco's
financial position. CVS has indicated to Holdco that an escrow of the upfront payments associated with the rollout and signage ([ * ]) may allow CVS
to continue with the rollout.
15. Bank Pekao is merging with another bank in Poland that has a contract with Western Union. Holdco has pre-funded Bank Pekao approximately $1.5
million.
16. Holdco has learned that Wal-Mart is developing a contingency plan if Holdco is unable to meet its obligations to consumers. Pursuant to Amendment 2
to the Money Services Agreement between Wal-Mart and MoneyGram Payment Systems, Inc., beginning on February 11, 2008, and on certain agreed
upon dates, Wal-Mart will withhold certain money order proceeds from its remittance of funds to MPSI to accumulate a total amount of $160 million.
Holdco had established a trust for the benefit of Wal-Mart in order to maintain funds for the payment of money orders.
17. Holdco and ACE have executed an extension of Ace's contract with MoneyGram Payment Systems, Inc. The extension is for a total of seven years (five
years fixed plus a two year store expansion extension). The extension also calls for a [ * ].
[ * ] Please refer to footnote on page 1 of this Section 4.8. 11