MONEYGRAM INTERNATIONAL, INC. 2005 OMNIBUS INCENTIVE PLAN NON-QUALIFIED STOCK OPTION AGREEMENT

Exhibit 10.01

MONEYGRAM INTERNATIONAL, INC.
2005 OMNIBUS INCENTIVE PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

This Non-Qualified Stock Option Agreement (this “ Agreement ”) is made effective as of August 11, 2009 (the “ Grant Date ”) between MoneyGram International, Inc., a Delaware corporation (the “ Company ”), and Jeffrey Woods (the “ Optionee ”).

WHEREAS, in connection with the Optionee’s employment with the Company, the Company desires to grant to the Optionee an option to purchase shares of the Company’s Common Stock, par value $0.01 per share (the “ Common Stock ”) on the date hereof pursuant to the terms and conditions of this Agreement and the Company’s 2005 Omnibus Incentive Plan (the “ Plan ”);

WHEREAS, the Human Resources and Nominating Committee (the “ Committee ”) has determined that it would be to the advantage, and in the best interest, of the Company and its shareholders to grant the option provided for herein to the Optionee as an incentive for Optionee’s increased efforts during Optionee’s employment with the Company;

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1.  Grant of Option.

Subject to the terms and conditions of the Plan and this Agreement, the Company hereby grants to the Optionee on the Grant Date, an option to purchase up to four million two hundred fifty thousand (4,250,000) shares of Common Stock at the option price set forth in Section 2 (the “ Option ”).

The foregoing award is a Non-qualified Stock Option granted under the Plan, which is incorporated herein by this reference and made part of this Agreement. The Option is not an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”).

2.  Option Price.

The per share purchase price of the shares subject to the Option shall be the higher of $1.50 or the Fair Market Value of the Common Stock as of the Grant Date (the “ Option Price ”), subject to appropriate adjustment as may be determined by the Committee from time to time in accordance with Section 9.

3.  Term of Option and Exercisability.

The term of the Option shall be for a period of ten years from the Grant Date, terminating at the close of business on August 11, 2019 (the “ Expiration Date ”) or such shorter period as is prescribed in Sections 5 and 6 of this Agreement. Subject to the provisions of Sections 4, 5 and 6 of this Agreement, 50% of the Option shall vest and become exercisable based on a time-vesting schedule (the “ Time-Based Option ”) and the remaining 50% of the Option shall vest and become exercisable based on performance-based vesting criteria (the “ Performance-Based Option ”).

(a)  Time-Based Option : Subject to the Optionee’s continued employment with the Company or any of its Subsidiaries on the applicable “Time-Vesting Date” set forth in the table below, the Time-Based-Option shall vest as follows:

There shall be no partial vesting during any period. Except as set forth in Section 5 hereof, if the Optionee’s employment with the Company or any of its Subsidiaries is terminated on or prior to the fifth anniversary of the Grant Date, the unvested portion of the Time-Based Option shall be forfeited as described in Section 5 hereof.

(b)  Performance-Based Option : Subject to the Optionee’s continued employment with the Company or any of its Subsidiaries on the applicable Performance-Vesting Date (as defined below), the Performance-Based Option shall vest as follows:

(i) 50% of the Performance-Based Option (“ Tranche 1 Performance-Based Option ”) shall vest in full (A) so long as the Common Stock trades on a United States securities exchange or trading market (which, for the purpose of Section 3(b), shall include an over-the-counter market on the OTC Bulletin Board or Pink Sheets), on the earlier of (x) the date that the daily closing price of the Common Stock on the principal United States securities exchange or trading market on which the Common Stock is traded (the “ Applicable Market ”) equals or exceeds $3.50 for any period of twenty (20) consecutive trading days during the five-year period following the Grant Date or (y) if there is a Change in Control (as defined below) during the five-year period following the Grant Date, on the date of such Change in Control, in the event the per share consideration in such Change in Control equals or exceeds $3.50, or (B) in the event the Common Stock does not trade on a United States securities exchange or trading market (such cessation, a “ Going Private Event ”), on the earlier of (x) following a Subsequent Public Offering (as defined below), the date during the five-year period following the Grant Date on which the Equity Value (as defined below) of a share of Common Stock would result in the Investors (as defined below) having value in their equity securities of the Company (assuming conversion into Common Stock of all convertible securities then held by the Investors) equal to or exceeding two (2) times the aggregate amount invested by the Investors in such securities or (y) if there is a Change in Control during the five-year period following the Grant Date, on the date of such Change in Control if the aggregate value of the cash, marketable securities and other consideration received by the Investors pursuant to such Change in Control, together with any distributions or proceeds previously received by the Investors, in each case, in connection with the equity securities of the Company held by the Investors, is equal to or exceeds two (2) times the aggregate amount invested by the Investors in securities of the Company (any of such dates, a “ Tranche 1 Performance Vesting Date ”); and

(ii) the remaining 50% of the Performance-Based Option (“ Tranche 2 Performance-Based Option ”) shall vest in full (A) so long as the Common Stock trades on a United States securities exchange or trading market, on the earlier of (x) the date that the daily closing price of the Common Stock on the Applicable Market equals or exceeds $5.25 for any period of twenty (20) consecutive trading days during the five-year period following the Grant Date or (y) if there is a Change in Control during the five-year period following the Grant Date, on the date of such Change in Control, in the event the per share consideration in such Change in Control equals or exceeds $5.25, or (B) in the event of a Going Private Event, on the earlier of (x) following a Subsequent Public Offering, the date during the five-year period following the Grant Date on which the Equity Value of a share of Common Stock would result in the Investors having value in their equity securities of the Company (assuming conversion into Common Stock of all convertible securities then held by the Investors) equal to or exceeding three (3) times the aggregate amount invested by the Investors in such securities or (y) if there is a Change in Control during the five-year period following the Grant Date, on the date of such Change in Control if the aggregate value of the cash, marketable securities and other consideration received by the Investors pursuant to such Change in Control, together with any distributions or proceeds previously received by the Investors, in each case, in connection with the equity securities of the Company held by the Investors, is equal to or exceeds three (3) times the aggregate amount invested by the Investors in securities of the Company (any of such dates, a “ Tranche 2 Performance Vesting Date ”). The Tranche 1 Performance Vesting Date and the Tranche 2 Performance Vesting Date are each referred to as a “ Performance-Vesting Date .”

Notwithstanding anything herein to the contrary, if the Tranche 1 Performance Vesting Date and/or the Tranche 2 Performance Vesting Date does not occur on or prior to the earlier of the fifth anniversary of the Grant Date and a Change in Control (absent a substitution of the applicable Options), the Tranche 1 Performance-Based Option and/or Tranche 2 Performance-Based Option, as applicable, shall be forfeited on such earlier date. Except as set forth in Section 5 hereof, if the Optionee’s employment with the Company or any of its Subsidiaries is terminated prior to the Tranche 1 Performance Vesting Date and/or the Tranche 2 Performance Vesting Date, the Tranche 1 Performance-Based Option and/or Tranche 2 Performance-Based Option, as applicable, shall be forfeited, as described in Section 5 hereof.

For purposes hereof, the “ Equity Value ” shall mean the average daily closing price of the Common Stock over a consecutive twenty (20) day trading period.

For purposes hereof, “ Subsequent Public Offering ” shall mean a firm commitment underwritten public offering of shares of the Company or other event the result of which is that shares of the Company are tradable on the New York Stock Exchange, American Stock Exchange, NASDAQ National Market or similar market system, in each case, after a Going Private Event.

For purposes hereof, “ Investors ” shall mean the “Investors” as defined in that certain Amended and Restated Purchase Agreement, dated March 17, 2008, by and between the Company and the other parties thereto, and their respective affiliates (not including the Company).

4.  Effect of Change in Control.

Notwithstanding the vesting provisions contained in Section 3 above, but subject to the other terms and conditions contained in this Agreement, from and after a Change in Control (as defined below) the following provisions shall apply:

(a) If at the time of the Change in Control, the per share Fair Market Value of the Common Stock does not exceed the per share Option Price, then this Option, whether vested or unvested, shall immediately terminate in full and be of no further force or effect; and

(b) If at the time of the Change in Control, the per share Fair Market Value of the Common Stock exceeds the Option Price, then the Committee, in its sole discretion, may:

(i) provide the Optionee a reasonable amount of time (such period of time to be determined by the Committee in its sole discretion) to exercise the vested and unexercised portion of this Option that is outstanding at the time of the Change in Control and, if not exercised within such period, have this Option terminate in full and be of no further force or effect with respect to any unexercised portion of such Option (and the unvested portion of this Option shall be forfeited);

(ii) provide for the termination of this Option in exchange for payment to the Optionee of the excess of (x) the aggregate Fair Market Value of the Common Stock issuable pursuant to the vested portion of the Option that is outstanding and unexercised at the time of the Change in Control over (y) the aggregate Option Price for such vested portion of the Option (and the unvested portion of this Option shall be forfeited); or

(iii) if the Change in Control involves the merger or consolidation of the Company with or into another entity, provide for the substitution by the surviving entity or its direct or indirect parent of awards with substantially the same terms as this Option in accordance with Section 409A of the Code and Section 4(c) of the Plan.

(c) Notwithstanding the other provisions of this Section 4, if a Change in Control occurs, and after giving effect thereto (i) the Common Stock no longer trades on a United States securities exchange or trading market, and (ii) the Optionee’s employment is terminated by the Company or any of its Subsidiaries without Cause (as defined in Section 5 below) or the Optionee terminates his employment with “Good Reason” (as such term is defined below) in connection with the Change in Control, then any portion of Time-Based Options outstanding as of the termination of employment but not previously vested shall automatically accelerate and become vested. “ Good Reason ” with respect to the Optionee shall mean: (A) any material reduction in the Optionee’s position (including status, offices, titles or reporting requirements), authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial or inadvertent action not taken in bad faith; (B) any reduction of the Optionee’s base salary, or annual bonus opportunity then in effect, unless such reduction is consistent with similar reductions applied to other senior management of the Company, or (C) requiring the Optionee to relocate to any office or location that is more than forty (40) miles from the Company’s corporate offices in Minneapolis, other than to any other office or location that is within (40) miles from the location of the Company’s corporate offices, if the Company’s corporate offices are moved (or being moved) from Minneapolis to another location; provided that none of the events described in clauses (A), (B) and (C) shall constitute Good Reason hereunder unless (x) the Optionee shall have given written notice to the Company of the Optionee’s intent to terminate his employment with Good Reason within ninety (90) days following the occurrence of any such event and (y) the Company shall have failed to remedy such event within thirty (30) days of the Company’s receipt of such notice.

(d) For purposes of this Agreement, notwithstanding the definition of Change in Control in any other agreement or plan that may be applicable to the Optionee, “ Change in Control ” shall mean (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets, (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “ Exchange Act ”)), or (iii) the merger, consolidation reorganization, recapitalization or share exchange of the Company with another entity, in each case in clauses (ii) and (iii) above under circumstances in which the holders of the voting power of the outstanding securities of the Company, as the case may be, immediately prior to such transaction, together with such holders’ affiliates and related parties, hold less than 50% in voting power of the outstanding securities of the Company or the surviving entity or resulting entity, as the case may be, immediately following such transaction; provided , however , that the issuance of securities by the Company shall not, in any event, constitute a Change in Control, and for the avoidance of doubt a sale or other transfer or series of transfers of all or any portion of the securities of the Company held by the Investors and their affiliates and related parties shall not constitute a Change in Control unless such sale or transfer or series of transfers results in a entity or group (as defined in the Exchange Act) other than the Investors and their affiliates and related parties holding more than 50% in voting power of the outstanding securities of the Company.

5.  Effect of Termination of Employment.

If the Optionee’s employment is terminated, the following shall apply:

(a) if the Optionee’s employment with the Company or any of its Subsidiaries is terminated for Cause (as defined below), any portion of the Option that has not been exercised on the date of the Optionee’s termination of employment, whether vested or unvested, shall be immediately forfeited;

(b) if the Optionee’s employment with the Company or any of its Subsidiaries is terminated by the Company without Cause or the Optionee terminates his employment with Good Reason, any portion of the Option that has not vested on the date of Optionee’s termination of employment shall be forfeited, and any portion of the Option that has vested may be exercised until the earlier of (i) the Expiration Date and (ii) the date that is one hundred eighty (180) days after the date of the Optionee’s termination of employment;

(c) if the Optionee resigns without Good Reason or for any reason other than death or Disability (as defined below), any portion of the Option that has not vested on the date of the Optionee’s termination of employment shall be immediately forfeited, and any portion of the Option that has vested may be exercised until the earlier of (i) the Expiration Date, or (ii) the date that is thirty (30) days after the date of the Optionee’s termination of employment;

(d) if the Optionee’s employment with the Company or any of its Subsidiaries is terminated due to a Disability (as defined below), any portion of the Option that has not vested on the date of Optionee’s termination of employment and that does not vest pursuant to Section 5(f) shall be forfeited, and any portion of the Optio