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 31, 2009 (the “Grant Date”) between MoneyGram International, Inc., a Delaware corporation (the “Company”), and Pamela H. Patsley who is an employee of the Company (the “Optionee”).

WHEREAS, in connection with the Optionee’s employment with the Company or one of its Subsidiaries, 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 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 her increased efforts during her employment with the Company or one of its Subsidiaries;

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 six million three hundred thousand (6,300,000) 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 30, 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, or as otherwise set forth in the Amended and Restated Employment Agreement substantially in the form attached hereto to be effective September 1, 2009, between the Company and Optionee (the “Employment Agreement”), the Time-Based-Option shall vest as follows:

Except as set forth in the Employment Agreement, if the Optionee’s employment with the Company or any of its Subsidiaries is terminated on or prior to the fourth 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), or as otherwise set forth in the Employment Agreement, 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 and (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 and (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 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 and (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 and (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 Vesting Date”). The Tranche 1 Vesting Date and the Tranche 2 Vesting Date are each referred to as a “Performance-Vesting Date.”

Notwithstanding anything herein to the contrary, if the Tranche 1 Vesting Date and/or the Tranche 2 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 is terminated prior to the Tranche 1 Vesting Date and/or the Tranche 2 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 the Optionee is employed by the Company or any of its Subsidiaries on the date of a “Change in Control”, or the Optionee is eligible for further vesting pursuant to the terms of the Employment Agreement, the Committee, in its sole discretion, may vest immediately prior to the consummation of the Change in Control all or any portion of the Time-Based Option not previously vested, unless the Time-Based Option or any such portion thereof shall have been previously terminated in accordance with the terms of the Plan and this Agreement.

(b) 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

(c) 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 (including any portion that may have vested pursuant to Section 4(a)) 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;

(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; 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 422 of the Code and Section 12.2 of the Plan.

(d) 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 under the Employment Agreement either is terminated by the Company without Cause or is terminated by the Optionee for Good Reason (as those terms are defined in the Employment Agreement), then the Committee shall accelerate any portion of the Time-Based Options not previously vested.

(e) For purposes of this Agreement, “Change in Control” shall mean (i) a sale, transfer or other conveyance or disposition, in any single transaction or series of transactions, of all or substantially all of the Company’s assets, (ii) the transfer of more than 50% of the outstanding securities of the Company, calculated on a fully-diluted basis, to an entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the 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, 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 ceases to be employed by the Company or any of its Subsidiaries, any portion of the Option that was not vested on the date of the Optionee’s termination of employment and that does not vest pursuant to the terms of the Employment Agreement shall be forfeited, and any portion of the Time-Based Option and the Performance-Based Option that vests may be exercised until the earlier of (i) the Expiration Date and (ii)&n