AMENDMENT NO. 3 TO FORM 10
 

As filed with the Securities and Exchange Commission on June 3, 2004
File No. 001-31950


SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10

Amendment No. 3

GENERAL FORM FOR REGISTRATION OF SECURITIES

PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934


MoneyGram International, Inc.

(Exact Name of Registrant as Specified in Its Charter)


     
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)
  16-1690064
(I.R.S. Employer
Identification No.)
 
1550 Utica Avenue South
Minneapolis, Minnesota
(Address of Principal Executive Offices)
 
55416
(Zip Code)

(952) 591-3000

(Registrant’s Telephone Number, Including Area Code)

Securities to be registered

pursuant to Section 12(b) of the Act:
     
Title of each class Name of each exchange on which
to be so registered each class is to be registered


Common Stock, par value $0.01 per share
  The New York Stock Exchange
Preferred Share Purchase Rights
  The New York Stock Exchange

Securities to be registered

pursuant to Section 12(g) of the Act:

None




 

INFORMATION REQUIRED IN REGISTRATION STATEMENT

CROSS-REFERENCE SHEET BETWEEN INFORMATION STATEMENT AND
ITEMS OF FORM 10
 
Item 1. Business

      The information required by this item is contained under the sections “Summary,” “Risk Factors,” “Unaudited Pro Forma Consolidated Financial Information of MoneyGram International, Inc.,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp,” “Business of MoneyGram” and “Relationship between New Viad and MoneyGram” of this information statement. Those sections are incorporated herein by reference.

 
Item 2. Financial Information

      The information required by this item is contained under the sections “Summary,” “Risk Factors,” “Capitalization of Viad Corp,” “Unaudited Pro Forma Consolidated Financial Information of MoneyGram International, Inc.,” “Selected Historical Consolidated Financial and Other Data of Viad Corp,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp” and “Viad Corp Consolidated Financial Statements” of this information statement. Those sections are incorporated herein by reference.

 
Item 3. Properties

      The information required by this item is contained under the section “Business of MoneyGram — Facilities” of this information statement. That section is incorporated herein by reference.

 
Item 4. Security Ownership of Certain Beneficial Owners and Management

      The information required by this item is contained under the sections “Management of MoneyGram — Stock Ownership of Directors and Executive Officers” and “Security Ownership of Certain Beneficial Owners and Management of MoneyGram” of this information statement. Those sections are incorporated herein by reference.

 
Item 5. Directors and Executive Officers

      The information required by this item is contained under the section “Management of MoneyGram” of this information statement. That section is incorporated herein by reference.

 
Item 6. Executive Compensation

      The information required by this item is contained under the section “Management of MoneyGram” of this information statement. That section is incorporated herein by reference.

 
Item 7. Certain Relationships and Related Transactions

      The information required by this item is contained under the sections “Management of MoneyGram” and “Relationship between New Viad and MoneyGram” of this information statement. Those sections are incorporated herein by reference.

 
Item 8. Legal Proceedings

      The information required by this item is contained under the section “Business of MoneyGram — Legal Proceedings” of this information statement. That section is incorporated herein by reference.


 

 
Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

      The information required by this item is contained under the sections “Summary,” “Risk Factors,” “The Spin-Off,” “Capitalization of Viad Corp,” “Dividend Policy of MoneyGram,” “Business of MoneyGram,” “Management of MoneyGram” and “Description of Capital Stock of MoneyGram” of this information statement. Those sections are incorporated herein by reference.

 
Item 10. Recent Sales of Unregistered Securities

      None.

 
Item 11. Description of Registrant’s Securities to Be Registered

      The information required by this item is contained under the sections “Management of MoneyGram” and “Description of Capital Stock of MoneyGram” of this information statement. Those sections are incorporated herein by reference.

 
Item 12. Indemnification of Directors and Officers

      The information required by this item is contained under the section “Indemnification of Directors and Officers of MoneyGram and New Viad” of this information statement. That section is incorporated herein by reference.

 
Item 13. Financial Statements and Supplementary Data

      The information required by this item is contained under the sections “Capitalization of Viad Corp,” “Unaudited Pro Forma Consolidated Financial Information of MoneyGram International, Inc.,” “Selected Historical and Consolidated Financial and Other Data of Viad Corp,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp” and “Viad Corp Consolidated Financial Statements” of this information statement. Those sections are incorporated herein by reference.

 
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

      The information required by this item is contained under the section “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp” of this information statement. This section is incorporated herein by reference.

 
Item 15. Financial Statements and Exhibits

      (a) Financial Statements

      The information required by this item is contained under the section “Viad Corp Consolidated Financial Statements,” beginning on page

F-1 of this information statement. That section is incorporated herein by reference.


 

      (b) Exhibits

      The following documents are filed as exhibits hereto:

         
Exhibit
Number Description


  2.1     Form of Separation and Distribution Agreement.+
  3.1     Form of Amended and Restated Certificate of Incorporation.+
  3.2     Form of Amended and Restated By-laws.+
  4.1     Form of Specimen Certificate for MoneyGram Common Stock.*
  4.2     Form of Preferred Share Purchase Rights Agreement between MoneyGram International, Inc. and Wells Fargo Bank, N.A. as Rights Agent.+
  4.3     Form of Certificate of Designations of Series A Junior Participating Preferred Stock.+
  10.1     Form of Employee Benefits Agreement.+
  10.2     Form of Tax Sharing Agreement.+
  10.3     Form of Interim Services Agreement.+
  10.4     Form of MoneyGram International, Inc. 2004 Omnibus Incentive Plan.
  10.5     Form of Indemnification Agreement between MoneyGram International, Inc. and Directors of MoneyGram International, Inc.
  10.6     MoneyGram International, Inc. Management Incentive Plan.
  10.7     Travelers Express Company, Inc. Deferred Compensation Plan.
  10.8     MoneyGram International, Inc. Tier I Executive Severance Plan.
  10.9     MoneyGram International, Inc. Tier II Executive Severance Plan.
  10.10     MoneyGram International, Inc. Supplemental 401(k) Plan.
  10.11     Travelers Express Company, Inc. Supplemental Pension Plan.
  10.12     MoneyGram International, Inc. Deferred Compensation Plan for Directors.
  10.13     Description of MoneyGram International, Inc. Director’s Matching Gift Program.
  10.14     Viad Corp Director’s Charitable Award Program.
  10.15     Amended and Restated Employment Agreement, dated as of June 1, 2004, by and between Robert H. Bohannon and Viad Corp.
  10.16     $350,000,000 Credit Agreement, dated as of June   , 2004, among MoneyGram International, Inc., the Lenders, Bank One, NA, as agent, Wachovia Bank, National Association and Bank of America, N.A., as co-syndication agents, and Key Bank, NA and U.S. Bank National Association, as co-documentation agents.*
  14.1     MoneyGram International, Inc. Code of Ethics.
  21.1     Subsidiaries of MoneyGram International, Inc.+
  99.1     Information Statement.


To be filed by amendment.

Previously filed.


 

SIGNATURE

      Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

  MONEYGRAM INTERNATIONAL, INC.

  By:  /s/ PHILIP W. MILNE
______________________________________
Name: Philip W. Milne
Title: President and Chief Executive Officer

June 3, 2004

OMNIBUS INCENTIVE PLAN
 

Exhibit 10.4

MONEYGRAM OMNIBUS INCENTIVE PLAN,
AS ADOPTED ____, 2004

SECTION 1. PURPOSE; DEFINITIONS.

     The purpose of the Plan is to give the Company a significant advantage in attracting, retaining and motivating officers, employees and directors and to provide the Company and its subsidiaries with the ability to provide incentives more directly linked to the profitability of the Company’s businesses and increases in stockholder value. It is the current intent of the Committee that the Plan shall replace the 1992 Stock Incentive Plan for purposes of new Awards and that the MoneyGram Management Incentive Plan, the MoneyGram Performance Unit Incentive Plan, and the MoneyGram Performance-Based Stock Plan continue under the auspices of Sections 7 and 8 hereof subject to the discretion of the Committee under the terms and conditions of this Plan.

     For purposes of the Plan, the following terms are defined as set forth below:

     (a) “AFFILIATE” means a corporation or other entity controlled by the Company and designated by the Committee as such.

     (b) “AWARD” means an award of Stock Appreciation Rights, Stock Options, Restricted Stock or Performance-Based Awards.

     (c) “AWARD CYCLE” will mean a period of consecutive fiscal years or portions thereof designated by the Committee over which Awards of Restricted Stock or Performance-Based Awards are to be earned.

     (d) “BOARD” means the Board of Directors of the Company.

     (e) “CAUSE” means (1) the conviction of a participant for committing a felony under federal law or the law of the state in which such action occurred, (2) dishonesty in the course of fulfilling a participant’s employment duties or (3) willful and deliberate failure on the part of a participant to perform his employment duties in any material respect, or such other events as will be determined by the Committee. The Committee will have the sole discretion to determine whether “Cause” exists, and its determination will be final.

     (f) “CHANGE IN CONTROL” and “CHANGE IN CONTROL PRICE” have the meanings set forth in Sections 9(b) and (c), respectively.

     (g) “CODE” means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.


 

2

     (h) “COMMISSION” means the Securities and Exchange Commission or any successor agency.

     (i) “COMMITTEE” means the Committee referred to in Section 2.

     (j) “COMMON STOCK” means common stock, par value $1.50 per share, of the Company.

     (k) “COMPANY” means MoneyGram International, Inc., a Delaware corporation.

     (l) “COMPANY UNIT” means any subsidiary, group of subsidiaries, line of business or division of the Company, as designated by the Committee.

     (m) “DISABILITY” means permanent and total disability as determined under procedures established by the Committee for purposes of the Plan.

     (n) “EXCHANGE ACT” means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.

     (o) “FAIR MARKET VALUE” means, as of any given date, the mean between the highest and lowest reported sales prices of the Stock on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national exchange on which the Stock is listed or on the Nasdaq Stock Market. If there is no regular public trading market for such Stock, the Fair Market Value of the Stock will be determined by the Committee in good faith. In connection with the administration of specific sections of the Plan, and in connection with the grant of particular Awards, the Committee may adopt alternative definitions of “Fair Market Value” as appropriate.

     (p) “INCENTIVE STOCK OPTION” means any Stock Option intended to be and designated as an “incentive stock option” within the meaning of Section 422 of the Code.

     (q) “MIP” means the Company’s Management Incentive Plan providing annual cash bonus awards to participating employees based upon predetermined goals and objectives.

     (r) “NET INCOME” means the consolidated net income of the Company determined in accordance with GAAP before extraordinary, unusual and other non-recurring items.

     (s) “NON-EMPLOYEE DIRECTOR” means a member of the Board who qualifies as a “Non-Employee Director” as defined in
Rule 16b-3(b)(3), as promulgated by the Commission under the Exchange Act, or any successor definition adopted by the Commission.


 

3

     (t) “NON-QUALIFIED STOCK OPTION” means any Stock Option that is not an Incentive Stock Option.

     (u) “PERFORMANCE GOALS” means the performance goals established by the Committee in connection with the grant of Restricted Stock or Performance-Based Awards. In the case of Qualified Performance-Based Awards, such goals (1) will be based on the attainment of specified levels of one or more of the following measures with respect to the Company or any Company Unit, as applicable: economic value added, sales or revenues, costs or expenses, net profit after tax, gross profit, operating profit, base earnings, return on actual or pro forma equity or net assets or capital, net capital employed, earnings per share, earnings per share from continuing operations, operating income, pre-tax income, operating income margin, net income, stockholder return including performance (total stockholder return) relative to the S&P 500, MidCap 400 or similar index or performance (total stockholder return) relative to the proxy comparator group, in both cases as determined pursuant to Rule 402(l) of Regulation S-K promulgated under the Exchange Act, cash generation, cash flow, unit volume and change in working capital and (2) will be set by the Committee within the time period prescribed by Section 162(m) of the Code and related regulations.

     (v) “PERFORMANCE-BASED AWARD” means an Award made pursuant to Section 8.

     (w) “PERFORMANCE-BASED RESTRICTED STOCK AWARD” has the meaning set forth in Section 7(c)(1) hereof.

     (x) “PLAN” means the 2004MoneyGram Omnibus Incentive Plan, as set forth herein and as hereafter amended from time to time.

     (y) “PREFERRED STOCK” means preferred stock, par value $0.01, of the Company.

     (z) “QUALIFIED PERFORMANCE-BASED AWARDS” means an Award of Restricted Stock or a Performance-Based Award designated as such by the Committee at the time of grant, based upon a determination that (1) the recipient is or may be a “covered employee” within the meaning of Section 162(m)(3) of the Code in the year in which the Company would expect to be able to claim a tax deduction with respect to such Restricted Stock or Performance-Based Award and (2) the Committee wishes such Award to qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C).

     (aa) “RESTRICTED STOCK” means an award granted under Section 7.


 

4

     (bb) “RETIREMENT,” except as otherwise determined by the Committee, means voluntary separation of employment, voluntary termination of employment or voluntary resignation from employment (a) at or after attaining age 55 on pension or vested to receive pension under a pension plan of the Corporation upon election, or (b) upon or after attaining age 55 and not less than five years’ continuous service with the Corporation or an affiliate of the Corporation, whether or not vested for pension. Retirement shall be deemed to occur at the close of business on the last day of the employee’s participation on the payroll of the Corporation whether receiving compensation for active employment, accrued vacation, salary continuation (regular way or lump sum) or like employment programs.

     (cc) “RULE 16b-3” means Rule 16b-3, as promulgated by the Commission under Section 16(b) of the Exchange Act, as amended from time to time.

     (dd) “STOCK” means the Common Stock or Preferred Stock.

     (ee) “STOCK APPRECIATION RIGHT” means a right granted under Section 6.

     (ff) “STOCK OPTION” means an option granted under Section 5.

     (gg) “TERMINATION OF EMPLOYMENT” means the termination of the participant’s employment with the Company and any subsidiary or Affiliate. A participant employed by a subsidiary or an Affiliate will also be deemed to incur a Termination of Employment if the subsidiary or Affiliate ceases to be such a subsidiary or Affiliate, as the case may be, and the participant does not immediately thereafter become an employee of the Company or another subsidiary or Affiliate. Transfers among the Company and its subsidiaries and Affiliates, as well as temporary absences from employment because of illness, vacation or leave of absence, will not be considered a Termination of Employment.

     In addition, certain other terms used herein have definitions given to them in the first place in which they are used.

SECTION 2. ADMINISTRATION.

     The Plan will be administered by the Human Resources Committee of the Board pursuant to authority delegated by the Board in accordance with the Company’s By-Laws. If at any time there is no such Human Resources Committee or such Human Resources Committee shall fail to be composed of at least two directors each of whom is a Non-Employee Director and is an “outside director” under Section 162(m)(4) of the Code, the Plan will be administered by a Committee selected by the Board and composed of not less than two individuals, each of whom is such a Non-Employee Director and such an “outside director.”


 

5

     The Committee will have plenary authority to grant Awards pursuant to the terms of the Plan to officers, employees and directors of the Company and its subsidiaries and Affiliates, but the Committee may not grant MIP Awards larger than the limits provided in Section 3.

     Among other things, the Committee will have the authority, subject to the terms of the Plan:

     (a) to select the officers, employees and directors to whom Awards may from time to time be granted;

     (b) to determine whether and to what extent Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock and Performance-Based Awards or any combination thereof are to be granted hereunder;

     (c) to determine the number of shares of Stock or the amount of cash to be covered by each Award granted hereunder;

     (d) to determine the terms and conditions of any Award granted hereunder (including, but not limited to, the option price (subject to Section 5(a)), any vesting condition, restriction or limitation (which may be related to the performance of the participant, the Company or any subsidiary, Affiliate or Company Unit) and any rule concerning vesting acceleration or waiver of forfeiture regarding any Award and any shares of Stock relating thereto, based on such factors as the Committee will determine) provided, however, that the Committee will have no power to accelerate the vesting, or waive the forfeiture, regarding any Award and any shares of Stock relating thereto, except in connection with a “change of control” of the Company, the sale of a subsidiary or majority-owned affiliate of the Company (and then only with respect to participants employed by each such subsidiary or affiliate), the death or disability of a participant or termination of employment of a participant, and, further provided, however, that the Committee will have no power to accelerate the vesting, or waive the forfeiture, of any Qualified Performance-Based Awards;

     (e) to modify, amend or adjust the terms and conditions, at any time or from time to time, of any Award, including but not limited to Performance Goals; provided, however, that the Committee may not adjust upwards the amount payable with respect to any Qualified Performance-Based Award or waive or alter the Performance Goals associated therewith and provided, further, however, that the Committee may not reprice Stock Options except for an amount of Stock Options representing not more than 10% of then outstanding Stock Options;

     (f) to determine to what extent and under what circumstances Stock and other amounts payable with respect to an Award will be deferred; and


 

6

     (g) to determine under what circumstances a Stock Option may be settled in cash or Stock under Section 5(j).

     The Committee will have the authority to adopt, alter or repeal such administrative rules, guidelines and practices governing the Plan as it from time to time deems advisable, to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan.

     The Committee may act only by a majority of its members then in office, except that the members thereof may (1) delegate to designated officers or employees of the Company such of its powers and authorities under the Plan as it deems appropriate (provided that no such delegation may be made that would cause Awards or other transactions under the Plan to fail to be exempt from Section 16(b) of the Exchange Act or that would cause Qualified Performance-Based Awards to cease to so qualify) and (2) authorize any one or more members or any designated officer or employee of the Company to execute and deliver documents on behalf of the Committee.

     Any determination made by the Committee or pursuant to delegated authority pursuant to the provisions of the Plan with respect to any Award will be made in the sole discretion of the Committee or such delegates at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee or any appropriately delegated officer(s) or employee(s) pursuant to the provision of the Plan will be final and binding on all persons, including the Company and Plan participants.

     Notwithstanding anything to the contrary in the Plan, the Committee will have the authority to modify, amend or adjust the terms and conditions of any Award as appropriate in the event of or in connection with any reorganization, recapitalization, stock split, stock dividend, combination or exchange of shares, merger, consolidation or any change in the capital structure of the Company.

SECTION 3. STOCK SUBJECT TO PLAN AND LIMITS ON AWARDS.

     (a) Subject to adjustment as provided herein, the number of shares of Common Stock of the Company available for grant under the Plan in each calendar year (including partial calendar years) during which the Plan is in effect shall be equal to two percent (2.0%) of the total number of shares of Common Stock of the Company outstanding as of the first day of each such year for which the Plan is in effect; provided that any shares available for grant in a particular calendar year (or partial calendar year) which are not, in fact, granted in such year shall be added to the shares available for grant in any subsequent calendar year.


 

7

     (b) Subject to adjustment as provided herein, the number of shares of Stock covered by Awards granted to any one participant will not exceed 500,000 shares for any consecutive twelve-month period and the aggregate dollar amount for Awards denominated solely in cash will not exceed $5.0 million for any such period.

     (c) In addition, and subject to adjustment as provided herein, no more than 7.5 million shares of Common Stock will be cumulatively available for the grant of Incentive Stock Options over the life of the Plan.

     (d) Shares subject to an option or award under the Plan may be authorized and unissued shares or may be “treasury shares.” In the event of any merger, reorganization, consolidation, recapitalization, spin-off, stock dividend, stock split, extraordinary distribution with respect to the Stock or other change in corporate structure affecting the Stock, such substitution or adjustments will be made in the aggregate number and kind of shares reserved for issuance under the Plan, in the aggregate limit on grants to individuals, in the number, kind, and option price of shares subject to outstanding Stock Options and Stock Appreciation Rights, in the number and kind of shares subject to other outstanding Awards granted under the Plan and/or such other equitable substitutions or adjustments as may be determined to be appropriate by the Committee or the Board, in its sole discretion; provided, however, that the number of shares subject to any Award will always be a whole number.

     (e) Awards under the MIP may not exceed in the case of (i) the Company’s Chief Executive Officer, one and one-half percent (1.5%) of net income as defined; (ii) a president of any of the Company’s operating companies, whether or not incorporated, six-tenths of one percent (0.6%) of net income as defined; and (iii) all other executive officers of the Company individually, one-half of one percent (0.5%) of net income as defined.

SECTION 4. ELIGIBILITY.

     Officers, employees and directors of the Company, its subsidiaries and Affiliates who are responsible for or contribute to the management, growth and profitability of the business of the Company, its subsidiaries and Affiliates are eligible to be granted Awards under the Plan.

SECTION 5. STOCK OPTIONS.

     Stock Options may be granted alone or in addition to other Awards granted under the Plan and may be of two types: Incentive Stock Options and Non-Qualified Stock Options. Any Stock Option granted under the Plan will be in such form as the Committee may from time to time approve.


 

8

     The Committee will have the authority to grant any optionee Incentive Stock Options, Non-Qualified Stock Options or both types of Stock Options (in each case with or without Stock Appreciation Rights). Incentive Stock Options may be granted only to employees of the Company and its subsidiaries (within the meaning of Section 424(f) of the Code). To the extent that any Stock Option is not designated as an Incentive Stock Option or even if so designated does not qualify as an Incentive Stock Option, it will be deemed to be a Non-Qualified Stock Option.

     Stock Options will be evidenced by option agreements, the terms and provisions of which may differ. An option agreement will indicate on its face whether it is an agreement for an Incentive Stock Option or a Non-Qualified Stock Option. The grant of a Stock Option will occur on the date the Committee by resolution selects an individual to be a participant in any grant of a Stock Option, determines the number of shares of Stock to be subject to such Stock Option to be granted to such individual and specifies the terms and provisions of the Stock Option. The Company will notify a participant of any grant of a Stock Option, and a written option agreement or agreements will be duly executed and delivered by the Company to the participant.

     Anything in the Plan to the contrary notwithstanding, no term of the Plan relating to Incentive Stock Options will be interpreted, amended or altered nor will any discretion or authority granted under the Plan be exercised so as to disqualify the Plan under Section 422 of the Code or, without the consent of the optionee affected, to disqualify any Incentive Stock Option under such Section 422.

     Stock Options granted under the Plan will be subject to the following terms and conditions and will contain such additional terms and conditions as the Committee will deem desirable:

     (a) OPTION PRICE. The option price per share of Stock purchasable under a Stock Option will be determined by the Committee and set forth in the option agreement, and will not be less than the Fair Market Value of the Stock subject to the Stock Option on the date of grant.

     (b) OPTION TERM. The term of each Stock Option will be fixed by the Committee, but no Incentive Stock Option may be exercisable more than 10 years after the date the Incentive Stock Option is granted.


 

9

     (c) EXERCISABILITY. Except as otherwise provided herein, Stock Options will be exercisable at such time or times and subject to such terms and conditions as will be determined by the Committee. If the Committee provides that any Stock Option is exercisable only in installments, the Committee may, subject to the provisions of Section 2(d) hereof, at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Committee may determine. In addition, the Committee may, subject to the provisions of Section 2(d) hereof, at any time accelerate the exercisability of any Stock Option.

     (d) METHOD OF EXERCISE. Subject to the provisions of this Section 5, Stock Options may be exercised, in whole or in part, at any time during the option term by giving written notice of exercise to the Company specifying the number of shares of Stock subject to the Stock Option to be purchased.

     Such notice must be accompanied by payment in full of the purchase price by certified or bank check or such other instrument as the Company may accept. An option agreement may provide that, if approved by the Committee, payment in full or in part or payment of tax liability, if any, relating to such exercise may also be made in the form of unrestricted Stock already owned by the optionee of the same class as the Stock subject to the Stock Option and, in the case of the exercise of a Non-Qualified Stock Option, Restricted Stock subject to an Award hereunder which is of the same class as the Stock subject to the Stock Option (in both cases based on the Fair Market Value of the Stock on the date the Stock Option is exercised); provided, however, that, in the case of an Incentive Stock Option, the right to make a payment in the form of already owned shares of Stock of the same class as the Stock subject to the Stock Option may be authorized only at the time the Stock Option is granted. In addition, an option agreement may provide that, in the discretion of the Committee, payment for any shares subject to a Stock Option or tax liability associated therewith may also be made by instruction to the Committee to withhold a number of such shares having a Fair Market Value on the date of exercise equal to the aggregate exercise price of such Stock Option.

     If payment of the option exercise price of a Non-Qualified Stock Option is made in whole or in part in the form of Restricted Stock, the number of shares of Stock to be received upon such exercise equal to the number of shares of Restricted Stock used for payment of the option exercise price will be subject to the same forfeiture restrictions to which such Restricted Stock was subject, unless otherwise determined by the Committee.


 

10

     No shares of Stock will be issued until full payment therefor has been made. Subject to any forfeiture restrictions that may apply if a Stock Option is exercised using Restricted Stock, an optionee will have all of the rights of a stockholder of the Company holding the class or series of Stock that is subject to such Stock Option (including, if applicable, the right to vote the shares and the right to receive dividends), when the optionee has given written notice of exercise, has paid in full for such shares and, if requested, has given the representation described in Section 12(a).

     (e) NONTRANSFERABILITY OF STOCK OPTIONS. (1) No Stock Option will be transferable by the optionee other than (A) by will or by the laws of descent and distribution or (B) in the case of a Non-Qualified Stock Option, pursuant to a qualified domestic relations order (as defined in the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder). All Stock Options will be exercisable, during the optionee’s lifetime, only by the optionee or by the guardian or legal representative of the optionee, it being understood that the terms “holder” and “optionee” include the guardian and legal representative of the optionee named in the option agreement and any person to whom a Stock Option is transferred by will or the laws of descent and distribution or pursuant to a qualified domestic relations order.

          (2) Notwithstanding Section 5(e)(1) above, the Committee may grant Stock Options that are transferable, or amend outstanding Stock Options to make them transferable, by the optionee (any such Stock Option so granted or amended a “Transferable Option”) to one or more members of the optionee’s immediate family, to partnerships of which the only partners are members of the optionee’s immediate family, or to trusts established by the optionee for the benefit of one or more members of the optionee’s immediate family. For this purpose the term “immediate family” means the optionee’s spouse, children or grandchildren. Consideration may not be paid for the transfer of a Transferable Option. A transferee described in this Section 5(e)(2) shall be subject to all terms and conditions applicable to the Transferable Option prior to its transfer. The option agreement with respect to a Transferable Option shall set forth its transfer restrictions, such option agreement shall be approved by the Committee, and only Stock Options granted pursuant to a stock option agreement expressly permitting transfer pursuant to this Section 5(e)(2) shall be so transferable.

     (f) TERMINATION BY DEATH. If an optionee’s employment terminates by reason of death, any Stock Option held by such optionee may thereafter be exercised, to the extent then exercisable, or on such accelerated basis as the Committee may determine, for a period of one year (or such other period as the Committee may specify in the option agreement) from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter.


 

11

     (g) TERMINATION BY REASON OF DISABILITY. If an optionee’s employment terminates by reason of Disability, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee may determine, for a period of three years (or such shorter period as the Committee may specify in the option agreement) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter; provided, however, that if the optionee dies within such three-year period (or such shorter period), any unexercised Stock Option held by such optionee will, notwithstanding the expiration of such three-year (or such shorter) period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of 12 months from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. In the event of termination of employment by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock Option.

     (h) TERMINATION BY REASON OF RETIREMENT. If an optionee’s employment terminates by reason of Retirement, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee may determine, for a period of five years (or such shorter period as the Committee may specify in the option agreement) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter; provided, however, that if the optionee dies within such five-year period (or such shorter period), any unexercised Stock Option held by such optionee will, notwithstanding such five-year (or such shorter) period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of 12 months from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. In the event of termination of employment by reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock Option.

     (i) OTHER TERMINATION. Unless otherwise determined by the Committee, if an optionee incurs a Termination of Employment for any reason other than death, Disability or Retirement or Cause, any Stock Option held by such optionee will thereupon terminate, except that such Stock Option, to the extent then exercisable, or subject to the provisions of Section 2(d) hereof, on such accelerated basis as the Committee may determine, may be exercised for the lesser of three months from the date of such Termination of Employment or the balance of such Stock Option’s term; provided, however, that if the optionee dies within such three-month period, any unexercised Stock Option held by such optionee will, notwithstanding the expiration of such three-month period, continue to be exercisable to the extent to which it was exercisable at the


 

12

time of death for a period of 12 months from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. In the event of Termination of Employment, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified Stock Option.

     (j) CASHING OUT OF STOCK OPTION. On receipt of written notice of exercise, the Committee may elect to cash out all or part of the shares of Stock for which a Stock Option is being exercised by paying the optionee an amount, in cash or Stock, equal to the excess of the Fair Market Value of the Stock over the option price times the number of shares of Stock for which the Option is being exercised on the effective date of such cash-out.

     (k) CHANGE IN CONTROL CASH-OUT. Subject to Section 12(h), but notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the “Exercise Period”), unless the Committee determines otherwise at the time of grant, an optionee will have the right, whether or not the Stock Option is fully exercisable and in lieu of the payment of the exercise price for the shares of Stock being purchased under the Stock Option and by giving notice to the Company, to elect (within the Exercise Period) to surrender all or part of the Stock Option to the Company and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per share of Stock on the date of such election will exceed the exercise price per share of Stock under the Stock Option (the “Spread”) multiplied by the number of shares of Stock granted under the Stock Option as to which the right granted under this Section 5(k) will have been exercised.

SECTION 6. STOCK APPRECIATION RIGHTS.

     (a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option granted under the Plan. In the case of a Non-Qualified Stock Option, such rights may be granted either at or after the time of grant of such Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such Stock Option. A Stock Appreciation Right will terminate and no longer be exercisable upon the termination or exercise of the related Stock Option.

     A Stock Appreciation Right may be exercised by an optionee in accordance with Section 6(b) by surrendering the applicable portion of the related Stock Option in accordance with procedures established by the Committee. Upon such exercise and surrender, the optionee will be entitled to receive an amount determined in the manner prescribed in Section 6(b). Stock Options which have been so surrendered will no longer be exercisable to the extent the related Stock Appreciation Rights have been exercised.


 

13

     (b) TERMS AND CONDITIONS. Stock Appreciation Rights will be subject to such terms and conditions as will be determined by the Committee, including the following:

     (1) Stock Appreciation Rights will be exercisable only at such time or times and to the extent that the Stock Options to which they relate are exercisable in accordance with the provisions of Section 5 and this Section 6;

     (2) Upon the exercise of a Stock Appreciation Right, an optionee will be entitled to receive an amount in cash, shares of Stock or both equal in value to the excess of the Fair Market Value of one share of Stock as of the date of exercise over the option price per share specified in the related Stock Option multiplied by the number of shares in respect of which the Stock Appreciation Right has been exercised, with the Committee having the right to determine the form of payment;

     (3) Stock Appreciation Rights will be transferable only to permitted transferees of the underlying Stock Option in accordance with Section 5(e).

SECTION 7. RESTRICTED STOCK.

     (a) ADMINISTRATION. Shares of Restricted Stock may be awarded either alone or in addition to other Awards granted under the Plan. The Committee will determine the individuals to whom and the time or times at which grants of Restricted Stock will be awarded, the number of shares to be awarded to any participant, the conditions for vesting, the time or times within which such Awards may be subject to forfeiture and any other terms and conditions of the Awards, in addition to those contained in Section 7(c).

     (b) AWARDS AND CERTIFICATES. Shares of Restricted Stock will be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of one or more stock certificates. Except as otherwise set forth in a Restricted Stock Agreement, any certificate issued in respect of shares of Restricted Stock will be registered in the name of such participant and will bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:

“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the 2004 Incentive Plan and a Restricted Stock Agreement. Copies of such Plan and Agreement are on file at the offices of MoneyGram International, Inc., Minneapolis, Minnesota.”


 

14

The Committee may require that the certificates evidencing such shares be held in custody by the Company until the restrictions thereon have lapsed and that, as a condition of any Award of Restricted Stock, the participant has delivered a stock power, endorsed in blank, relating to the Stock covered by such Award.

     (c) TERMS AND CONDITIONS. Shares of Restricted Stock will be subject to the following terms and conditions:

     (1) The Committee may, prior to or at the time of grant, designate an Award of Restricted Stock as a Qualified Performance-Based Award, in which event it will condition the grant or vesting, as applicable, of such Restricted Stock upon the attainment of Performance Goals. If the Committee does not designate an Award of Restricted Stock as a Qualified Performance-Based Award, it may also condition the grant or vesting thereof upon the attainment of Performance Goals or such other performance-based criteria as the Committee shall establish (such an Award, a “Performance-Based Restricted Stock Award”). Regardless of whether an Award of Restricted Stock is a Qualified Performance-Based Award or a Performance-Based Restricted Stock Award, the Committee may also condition the grant or vesting upon the continued service of the participant. The provisions of Restricted Stock Awards (including the conditions for grant or vesting and any applicable Performance Goals) need not be the same with respect to each recipient. The Committee may at any time, in its sole discretion, subject to the provisions of Section 7(c)(10), accelerate or waive, in whole or in part, any of the foregoing restrictions; provided, however, that in the case of Restricted Stock that is a Qualified Performance-Based Award, the applicable Performance Goals have been satisfied.

     (2) Subject to the provisions of the Plan and the Restricted Stock Agreement referred to in Section 7(c)(8), during the period set by the Committee, commencing with the date of such Award for which such participant’s continued service is required (the “Restriction Period”) and until the later of (A) the expiration of the Restriction Period and (B) the date the applicable Performance Goals (if any) are satisfied, the participant will not be permitted to sell, assign, transfer, pledge or otherwise encumber shares of Restricted Stock.

     (3) Except as provided in this paragraph (3) and Sections 7(c)(1) and (2) and the Restricted Stock Agreement, the participant will have, with respect to the shares of Restricted Stock, all of the rights of a stockholder of the Company holding the class or series of Stock that is the subject of the Restricted Stock, including, if applicable, the right to vote the shares and the right to receive any dividends. If so determined by the Committee in the applicable Restricted Stock Agreement and subject to Section 12(f) of the Plan, (A) dividends consisting of cash, stock or other property (other than Stock) on the class or series of Stock


 

15

that is the subject of the Restricted Stock shall be automatically deferred and reinvested in additional Restricted Stock (in the case of stock or other property, based on the fair market value thereof, and the Fair Market Value of the Stock, in each case as of the record date for the dividend) held subject to the vesting of the underlying Restricted Stock, or held subject to meeting any Performance Goals applicable to the underlying Restricted Stock, and (B) dividends payable in Stock shall be paid in the form of Restricted Stock of the same class as the Stock with which such dividend was paid and shall be held subject to the vesting of the underlying Restricted Stock, or held subject to meeting any Performance Goals applicable to the underlying Restricted Stock.

     (4) Except to the extent otherwise provided in the applicable Restricted Stock Agreement, Section 7(c)(1), 7(c)(2), 7(c)(5) or 9(a)(2), upon a participant’s Termination of Employment for any reason during the Restriction Period or before any applicable Performance Goals are met, all shares still subject to restriction will be forfeited by the participant.

     (5) Except to the extent otherwise provided in Section 9(a)(2) and Sections 7(c)(9) and (10), in the event that a participant retires or such participant’s employment is involuntarily terminated (other than for Cause), the Committee will have the discretion to waive in whole or in part any or all remaining restrictions (other than, in the case of Restricted Stock which is a Qualified Performance-Based Award, satisfaction of the applicable Performance Goals unless the participant’s employment is terminated by reason of death or Disability) with respect to any or all of such participant’s shares of Restricted Stock.

     (6) Except as otherwise provided herein or as required by law, if and when any applicable Performance Goals are satisfied and the Restriction Period expires without a prior forfeiture of the Restricted Stock, unlegended certificates for such shares will be delivered to the participant upon surrender of legended certificates.

     (7) Awards of Restricted Stock, the vesting of which is not conditioned upon the attainment of Performance Goals or other performance-based criteria, is limited to twenty percent (20%) of the number of shares of Common Stock of the Corporation available for grant under the Plan in each calendar year.

     (8) Each Award will be confirmed by, and be subject to the terms of, a Restricted Stock Agreement.

     (9) There will be no vesting acceleration, or waiver of forfeiture regarding any Award and any shares of Stock relating thereto, except in connection with a “change of control” of the Company, the sale of a subsidiary or majority-owned affiliate of the Company (and then only with respect to participants employed by


 

16

each subsidiary or affiliate), the death or disability of a participant, or termination of employment of a participant.

SECTION 8. PERFORMANCE-BASED AWARDS.

(a) ADMINISTRATION. Performance-Based Awards may be awarded either alone or in addition to other Awards granted under the Plan. Subject to the terms and conditions of the Plan, the Committee shall determine the officers and employees to whom and the time or times at which Performance-Based Awards will be awarded, the number or amount of Performance-Based Awards to be awarded to any participant, whether such Performance-Based Award shall be denominated in a number of shares of Stock, an amount of cash, or some combination thereof, the duration of the Award Cycle and any other terms and conditions of the Award, in addition to those contained in Section 8(b).

(b) TERMS AND CONDITIONS. Performance-Based Awards will be subject to the following terms and conditions:

     (1) The Committee may, prior to or at the time of the grant, designate Performance-Based Awards as Qualified Performance-Based Awards, in which event it will condition the settlement thereof upon the attainment of Performance Goals. If the Committee does not designate Performance-Based Awards as Qualified Performance-Based Awards, it may also condition the settlement thereof upon the attainment of Performance Goals or such other performance-based criteria as the Committee shall establish. Regardless of whether Performance-Based Awards are Qualified Performance-Based Awards, the Committee may also condition the settlement thereof upon the continued service of the participant. The provisions of such Performance-Based Awards (including without limitation any applicable Performance Goals) need not be the same with respect to each recipient. Subject to the provisions of the Plan and the Performance-Based Award Agreement referred to in Section 8(b)(5), Performance-Based Awards may not be sold, assigned, transferred, pledged or otherwise encumbered during the Award Cycle.


 

17

     (2) Unless otherwise provided by the Committee (A) from time to time pursuant to the administration of particular Award programs under this Section 8, such as the MoneyGram Management Incentive Plan, the MoneyGram Performance Unit Incentive Plan or the MoneyGram Performance-Based Stock Plan or (B) in any agreement relating to an Award, and except as provided in Section 8(b)(3), upon a participant’s Termination of Employment for any reason prior to the payment of an Award under this Section 8, all rights to receive cash or Stock in settlement of the Award shall be forfeited by the participant.

     (3) In the event that a participant’s employment is terminated (other than for Cause), or in the event a participant retires, the Committee shall have the discretion to waive, in whole or in part, any or all remaining payment limitations (other than, in the case of Awards that are Qualified Performance-Based Awards, satisfaction of the applicable Performance Goals unless the participant’s employment is terminated by reason of death or Disability) with respect to any or all of such participant’s Awards.

     (4) At the expiration of the Award Cycle, the Committee will evaluate the Company’s performance in light of any Performance Goals for such Award, and will determine the extent to which a Performance-Based Award granted to the participant has been earned, and the Committee will then cause to be delivered to the participant, as specified in the grant of such Award: (A) a number of shares of Stock equal to the number of shares determined by the Committee to have been earned or (B) cash equal to the amount determined by the Committee to have been earned or (C) a combination of shares of Stock and cash if so specified in the Award.

     (5) No Performance-Based Award may be assigned, transferred, or otherwise encumbered except, in the event of the death of a participant, by will or the laws of descent and distribution.

     (6) Each Award will be confirmed by, and be subject to, the terms of a Performance-Based Award Agreement.

     (7) Performance-Based Awards will be subject to a minimum one-year performance period.

SECTION 9. CHANGE IN CONTROL PROVISIONS.

     (a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control:


 

18

     (1) Any Stock Options and Stock Appreciation Rights outstanding as of the date such Change in Control is determined to have occurred and not then exercisable and vested will become fully exercisable and vested to the full extent of the original grant;

     (2) The restrictions and conditions to vesting applicable to any Restricted Stock will lapse, and such Restricted Stock will become free of all restrictions and become fully vested and transferable to the full extent of the original grant;

     (3) Performance-Based Awards will be considered to be earned and payable to the extent, if any, and in an amount, if any, and otherwise, in accordance with the provisions of the agreement relating to such Awards.

     (b) DEFINITION OF CHANGE IN CONTROL. For purposes of the Plan, a “Change in Control” will mean the happening of any of the following events:

     (1) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of twenty percent (20%) or more of either (A) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); excluding, however, the following: (i) any acquisition directly from the Company, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (3) of this Section 9(b); or

     (2) A change in the composition of the Board such that the individuals who, as of July 1, 2004, constitute the Board (such Board will be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 9(b), that any individual who becomes a member of the Board subsequent to July 1, 2004, whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) will be considered as though such individual were a member of the Incumbent Board; but, provided further, that any such individual whose initial assumption of office


 

19

occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board will not be so considered as a member of the Incumbent Board; or

     (3) The approval by the stockholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (“Corporate Transaction”) (or, if consummation of such Corporate Transaction is subject, at the time of such approval by stockholders, to the consent of any government or governmental agency, the earlier of the obtaining of such consent or the consummation of the Corporate Transaction); excluding, however, such a Corporate Transaction pursuant to which (A) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than sixty percent (60%) of, respectively, the outstanding shares of common stock, and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no Person (other than the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) will beneficially own, directly or indirectly, twenty percent (20%) or more of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding voting securities of such corporation entitled to vote generally in the election of directors except to the extent that such ownership existed prior to the Corporate Transaction and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or

     (4) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.


 

20

     (c) CHANGE IN CONTROL PRICE. For purposes of the Plan, “Change in Control Price” means the higher of (1) the highest reported sales price, regular way, of a share of Stock in any transaction reported on the New York Stock Exchange Composite Tape or other national exchange on which such shares are listed or on The Nasdaq Stock Market during the 60-day period prior to and including the date of a Change in Control or (2) if the Change in Control is the result of a tender or exchange offer or a Corporate Transaction, the highest price per share of Stock paid in such tender or exchange offer or Corporate Transaction; provided, however, that in the case of Incentive Stock Options and Stock Appreciation Rights relating to Incentive Stock Options, the Change in Control Price will be in all cases the Fair Market Value of the Stock on the date such Incentive Stock Option or Stock Appreciation Right is exercised. To the extent that the consideration paid in any such transaction described above consists all or in part of securities or other non-cash consideration, the value of such securities or other non-cash consideration will be determined in the sole discretion of the Board.

SECTION 10. TERM, AMENDMENT AND TERMINATION.

     The Plan will terminate June 11, 2014, but may be terminated sooner at any time by the Board. Awards outstanding as of the date of any such termination will not be affected or impaired by the termination of the Plan.

     The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation will be made which would (a) impair the rights of an optionee under a Stock Option or a recipient of a Stock Appreciation Right, Restricted Stock Award or Performance-Based Award theretofore granted without the optionee’s or recipient’s consent, except such an amendment which is necessary to cause any Award or transaction under the Plan to qualify, or to continue to qualify, for the exemption provided by Rule 16b-3, or (b) disqualify any Award or transaction under the Plan from the exemption provided by Rule 16b-3. In addition, no such amendment may be made without the approval of the Company’s stockholders to the extent such approval is required by law or agreement.

     The Committee may amend the terms of any Stock Option or other Award theretofore granted, prospectively or retroactively, but no such amendment will (1) impair the rights of any holder without the holder’s consent except such an amendment which is necessary to cause any Award or transaction under the Plan to qualify, or to continue to qualify, for the exemption provided by Rule 16b-3 or (2) amend any


 

21

Qualified Performance-Based Award in such a way as to cause it to cease to qualify for the exemption set forth in Section 162(m)(4)(C). The Committee may also substitute new Stock Options for previously granted Stock Options, including previously granted Stock Options having higher option prices; provided, however, that the Committee may take such action only with respect to Stock Options representing not more than 10% of then outstanding Stock Options.

     Subject to the above provisions, the Board will have authority to amend the Plan to take into account changes in law and tax and accounting rules, as well as other developments and to grant Awards which qualify for beneficial treatment under such rules without stockholder approval.

SECTION 11. UNFUNDED STATUS OF PLAN.

     It is presently intended that the Plan constitute an “unfunded” plan for incentive and deferred compensation. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Stock or make payments; provided, however, that, unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.

SECTION 12. GENERAL PROVISIONS.

     (a) The Committee may require each person purchasing or receiving shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring any shares without a view to the distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.

     All certificates for shares of Stock or other securities delivered under the Plan will be subject to such stock transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Commission, any stock exchange upon which the Stock is then listed and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

     Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver any certificate or certificates for shares of Stock under the Plan prior to fulfillment of all of the following conditions:


 

22

     (1) Listing or approval for listing upon notice of issuance, of such shares on the New York Stock Exchange, Inc., or such other securities exchange as may at the time be the principal market for the Stock;

     (2) Any registration or other qualification of such shares of the Company under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and

     (3) Obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable.

     (b) Nothing contained in the Plan will prevent the Company or any subsidiary or Affiliate from adopting other or additional compensation arrangements for its employees.

     (c) The adoption of the Plan will not confer upon any employee any right to continued employment nor will it interfere in any way with the right of the Company or any subsidiary or Affiliate to terminate the employment of any employee at any time.

     (d) No later than the date as of which an amount first becomes includible in the gross income of the participant for Federal income tax purposes with respect to any Award under the Plan, the participant will pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Company, withholding obligations may be settled with Stock, including Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan will be conditional on such payment or arrangements, and the Company and its Affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the participant. The Committee may establish such procedures as it deems appropriate, including the making of irrevocable elections, for the settlement of withholding obligations with Stock.

     (e) At the time of grant, the Committee may provide in connection with any grant made under the Plan that the shares of Stock received as a result of such grant will be subject to a right of first refusal pursuant to which the participant will be required to offer to the Company any shares that the participant wishes to sell at the then Fair Market Value of the Stock, subject to such other terms and conditions as the Committee may specify at the time of grant.


 

23

     (f) The reinvestment of dividends in additional Restricted Stock at the time of any dividend payment will only be permissible if sufficient shares of Stock are available under Section 3 for such reinvestment (taking into account then outstanding Stock Options and other Awards).

     (g) The Committee will establish such procedures as it deems appropriate for a participant to designate a beneficiary to whom any amounts payable in the event of the participant’s death are to be paid or by whom any rights of the participant, after the participant’s death, may be exercised.

     (h) Notwithstanding any other provision of the Plan or any agreement relating to any Award hereunder, if any right granted pursuant to this Plan would make a Change in Control transaction ineligible for pooling-of-interests-accounting under APB No. 16 that, but for the nature of such grant, would otherwise be eligible for such accounting treatment, the Committee will have the ability, in its sole discretion, to substitute for the cash payable pursuant to such grant Common Stock with a Fair Market Value equal to the cash that would otherwise be payable hereunder.

     (i) The Plan and all Awards made and actions taken thereunder will be governed by and construed in accordance with the laws of the State of Delaware.

SECTION 13. EFFECTIVE DATE OF PLAN.

     The Plan will be effective on the later of (a) the time it is approved by the Board and (b) the time certain provisions of the Plan are approved by stockholders for tax purposes.

SECTION 14. DIRECTOR STOCK OPTIONS.

     a) Each director of the Company who is not otherwise an employee of the Company or any of its subsidiaries or Affiliates, will (1) on the date of his or her first election as a director of the Company (such initial grant being an “Initial Grant”), and (2) annually on the third Thursday of February, during such director’s term (the “Annual Grant”), automatically be granted Non-Qualified Stock Options to purchase Common Stock having an exercise price per share of Common Stock equal to 100% of Fair Market Value per share of Common Stock at the date of grant of such Non-Qualified Stock Option. The number of shares subject to each such Initial Grant, and each such Annual Grant, will be 5,000 shares. A non-employee director who is first elected as a director of the Company during the course of a year (i.e., on a date other than the date of the Annual Grant) will, in addition to the Initial Grant, receive upon election a grant of


 

24

Non-Qualified Stock Options prorated to reflect the number of months served in the initial year of service, with the number of shares of Common Stock subject to such Stock Option being equal to (1) the number of shares subject to the Initial Grant multiplied by (2) a fraction the numerator of which will be the number of months from the date of such election through the date of the next Annual Grant and the denominator of which will be twelve (12).

     (b) An automatic director Stock Option will be granted hereunder only if as of each date of grant the director (1) is not otherwise an employee of the Company or any of its subsidiaries or Affiliates, (2) has not been an employee of the Company or any of its subsidiaries or Affiliates for any part of the preceding fiscal year, and (3) has served on the Board continuously since the commencement of his term.

     (c) Except as expressly provided in this Section 14, any Stock Option granted hereunder will be subject to the terms and conditions of the Plan as if the grant were made pursuant to Section 5 hereof including, without limitation, the rights set forth in Section 5(j) hereof.

 

FORM OF INDEMNIFICATION AGREEMENT
 

Exhibit 10.5

INDEMNIFICATION AGREEMENT

     This Indemnification Agreement (“Agreement”) is made as of the                     day of                                       ,                    , by and between MoneyGram International, Inc. (the “Corporation”), a Delaware corporation, and                                       , a Director of the Corporation (the “Director”).

Recitals

     A. The Director has been elected to serve as a director of the Corporation and the Corporation desires the Director to continue in such capacity.

     B. In addition to the indemnification to which the Director is entitled under the Amended and Restated Certificate of Incorporation of the Corporation (the “Articles”), the Corporation at its sole expense maintains insurance protecting its officers and directors against certain losses arising out of actual or threatened actions, suits or proceedings to which such persons may be made or threatened to be made parties (“D & O Insurance”). However, the coverage of the Corporation’s D & O Insurance has decreased in recent years and the Corporation and the Director cannot be sure that insurance coverage will continue to be available in the future or, if available, that it will not be unreasonably expensive to purchase and maintain.

     C. The Articles and the Delaware General Corporation Law specifically provide that they are not exclusive, and thereby contemplate that contracts may be entered into between the Corporation and the members of its Board of Directors with respect to indemnification of such directors.

Agreement

     In order to induce the Director to continue to serve in the Director’s capacity as a director and in consideration of the Director’s valuable services for the Corporation, the Corporation and the Director agree as follows:

     1. Continued Service. Director will continue to serve at the will of the Corporation, or in accordance with separate contract to the extent that such a contract is in effect at the time in question, as a director of the Corporation so long as the Director is duly elected and qualified in accordance with the Articles and the Bylaws of the Corporation (“Bylaws”) or until the Director resigns in accordance with applicable law.

     2. Indemnity of Director. The Corporation shall hold harmless and indemnify Director to the full extent authorized or permitted by the provisions of the Delaware

 


 

General Corporation Law or by any amendment thereof or other statutory provisions authorizing or permitting such indemnification which is adopted after the date hereof.

     3. Maintenance of Insurance and Self Insurance.

     (a) Subject only to the provisions of Section 3(b) hereof, so long as Director shall continue to serve as a director of the Corporation (or shall continue at the request of the Corporation to serve as a director of another corporation, partnership, joint venture, trust or other enterprise) and thereafter so long as Director shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative by reason of the fact that Director was a director of the Corporation or served in any of said other capacities, the Corporation will purchase and maintain in effect for the benefit of Director one or more valid, binding and enforceable policies of D & O Insurance providing, in all respects, coverage at least comparable to that presently provided.

     (b) The Corporation shall not be required to maintain said policies of D & O Insurance in effect if said insurance is not reasonably available or if, in the reasonable business judgment of the then directors of the Corporation, either (i) the premium cost for such insurance is substantially disproportionate to the amount of coverage or (ii) the coverage provided by such insurance is so limited by exclusions that there is insufficient benefit from such insurance.

     (c) In the event the Corporation does not purchase and maintain in effect said policies of D & O Insurance pursuant to the provisions of Section 3(b) hereof, the Corporation shall hold harmless and indemnify Director to the full extent of the coverage which would otherwise have been provided for the benefit of Director pursuant to such D & O Insurance.

     4. Additional Indemnity. Subject only to the exclusions set forth in Section 5 hereof, and without limiting any right which Director may have now or in the future pursuant to the Delaware General Corporation Law, the Articles, the Bylaws, any other agreement, any resolution, any policy of insurance or otherwise, the Corporation hereby further agrees to hold harmless and indemnify Director:

     Against any and all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by Director in connection with any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, whether by third parties or by or in the right of the Corporation to which Director at any time becomes a party, or is threatened to be made a party, by reason of the fact that Director is or was a director of the Corporation, or is or was serving or at any time serves at the request of the Corporation as a director of another corporation, partnership, joint venture, trust or other enterprise.

2


 

     5. Limitations on Additional Indemnity. No indemnity pursuant to Section 4 hereof shall be paid by the Corporation:

     (a) for which and to the extent that payment is actually made to Director under a valid and collectible insurance policy;

     (b) for which and to the extent that Director is indemnified or receives a recovery otherwise than pursuant to Section 4;

     (c) on account of any suit in which judgment is rendered against Director for an accounting of profits made from the purchase or sale by Director of securities of the Corporation pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934 and amendments thereto or similar provisions of any federal, state or local statutory law;

     (d) with respect to acts or omissions which are not in good faith or which constitute intentional misconduct or a knowing violation of law;

     (e) with respect to authorization by Director of the unlawful payment of a dividend or other distribution on the Corporation’s capital stock or the unlawful purchase of its capital stock;

     (f) with respect to any transaction from which Director derived an improper personal benefit; or

     (g) if a final decision by a Court having jurisdiction in the matter shall determine that such indemnification is not lawful.

     6. Notification and Defense of Claim. Promptly after receipt by Director of notice of the commencement of any action, suit or proceeding, Director will, if a claim in respect thereof is to be made against the Corporation under this Agreement, notify the Corporation of the commencement thereof; but the omission so to notify the Corporation will not relieve it from any liability which it may have to Director otherwise than under this Agreement or from any liability which is not directly related to the failure of Director promptly to so notify the Corporation. With respect to any such action, suit or proceeding as to which Director notifies the Corporation of the commencement thereof:

     (a) The Corporation will be entitled to participate therein at its own expense; and,

     (b) Except as otherwise provided below, to the extent that it may wish, the Corporation jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel satisfactory to Director. After notice from the Corporation to Director of its election so to assume the defense thereof, the Corporation will not be liable to Director under this Agreement for any legal or other expenses

3


 

subsequently incurred by Director in connection with the defense thereof other than reasonable costs of investigation or as otherwise provided below. Director shall have the right to employ the Director’s counsel in such action, suit or proceeding, but the fees and expenses of such counsel incurred after notice from the Corporation of its assumption of the defense thereof shall be at the expense of Director unless (i) the employment of counsel by Director has been authorized by the Corporation (ii) Director shall have reasonably concluded that there may be a conflict of interest between the Corporation and Director in the conduct of the defense of such action or (iii) the Corporation shall not in fact have employed counsel to assume the defense of such action, in each of which cases the fees and expenses of counsel shall be at the expense of the Corporation. The Corporation shall not be entitled to continue the defense of any action, suit or proceeding properly brought by or on behalf of the Corporation or as to which Director shall have made the conclusion provided for in (ii) above.

     (c) The Corporation shall not be required to indemnify Director under this Agreement for any amounts paid in settlement of any action or claim effected without its written consent. The Corporation shall not settle any action or claim in any manner which would impose any penalty or limitation on Director without Director’s written consent. Neither the Corporation nor Director will unreasonably withhold its consent to any proposed settlement.

     7. Advance Payments.

     (a) Director shall be entitled to receive advance payments in the amount of all costs, charges, and expenses, including attorney and other fees and expenses, actually and reasonably incurred or reasonably to be incurred by Director in defense of any action, suit or proceeding as described in Section 4 hereof.

     (b) Director agrees that the Director will reimburse the Corporation for all costs, charges and reasonable expenses paid or advanced by the Corporation in defending any civil, criminal, administrative or investigative action, suit or proceeding against Director in the event and only to the extent that it ultimately shall be determined that Director is not entitled to be indemnified by the Corporation for such costs, charges and expenses under the provisions of this Agreement.

     8. Indemnification Request.

     1. Advancement.

     (a) Director shall in order to request advanced payments according to Section 7 hereof, submit to the Board of Directors a sworn statement of request for advancement of expenses in the form of Exhibit 1 attached hereto and made a part hereof (“the Advancement Request”), stating that (i) the Director has incurred or will incur actual expenses in defending an action, suit, or proceeding as described in Section 4 hereof and (ii) the Director undertakes to repay such amount if it shall ultimately be determined

4


 

that the Director is not entitled to be indemnified by the Corporation under this Agreement.

     (b) Upon receipt of the Advancement Request the Chairman of the Board, the President or any Vice President shall authorize immediate payment of the expenses stated in the Advancement Request within 10 calendar days, whereupon such payments shall immediately be made by the Corporation. No security shall be required in connection with any Advancement Request and it shall be accepted without reference to Director’s ability to make repayment.

     2. Indemnification.

     (a) Director, in order to request indemnification pursuant to Section 4 hereof, shall submit to the Board of Directors a sworn statement of request for indemnification in the form of Exhibit 2 attached hereto and made a part hereof (the “Indemnification Request”) stating that Director is entitled to indemnification under this Agreement. Such Indemnification Request shall contain a summary of the action, suit or proceeding and an itemized list of all payments made or to be made with respect to which indemnification is requested.

     (b) The Board of Directors shall be deemed to have determined that Director is entitled to such indemnification unless, within 30 days after submission of the Indemnification Request, the Board of Directors shall have notified Director in writing that it has determined, by a majority vote of directors who were not parties to such action, suit or proceeding based upon clear and convincing evidence, that Director is not entitled to indemnification under this Agreement. The evidence shall be disclosed to Director in such notice which shall be sworn to by all directors who participated in the determination and voted to deny indemnification.

     (c) In the event that (i) a majority vote according to Section 8.2(b) cannot be obtained or that (ii) there is a change in control of the Corporation (other than a change in control which has been approved by members of the Board of Directors who were directors prior to such change in control), the following procedure shall take place:

     (aa) Director shall choose subject to Corporation approval (which approval shall not be unreasonably withheld) counsel who has not performed any services for the Corporation or Director within the last five years and who is in good standing (“Independent Legal Counsel”).

     (bb) Independent Legal Counsel shall then determine within (i) thirty (30) days after submission of the Indemnification Request, or (ii) the Director’s acceptance to act as an Independent Legal Counsel, or (iii) such reasonable time as is required under the circumstances, whichever comes later, whether Director is entitled to indemnification under this Agreement. Indemnification may only be denied according to Section 5 hereof and only based upon clear and convincing evidence. In the case of a denial, Independent Legal Counsel shall

5


 

submit to the Board of Directors and to Director within 10 days after the decision a written opinion disclosing the grounds and the evidence upon which such decision was based. The decision of Independent Legal Counsel shall be final.

     (d) The termination of any action, suit or proceeding by judgement, order, settlement or conviction, or upon a plea of no contest or its equivalent, shall not, of itself, create a presumption that Director’s conduct was such that indemnity is not available pursuant to Section 5.

     9. Continuation of Indemnity. All agreements and obligations of the Corporation contained herein shall continue during the period Director is a director of the Corporation (including service at the request of the Corporation as a director of another corporation, partnership, joint venture, trust or other enterprise) and shall continue thereafter so long as Director shall be subject to any possible claim or threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that Director was a director of the Corporation or serving in any other capacity referred to herein.

     10. Enforcement.

     (a) The Corporation expressly confirms and agrees that it has entered into this Agreement and assumes the obligations imposed on the Corporation hereby in order to induce Director to serve or continue to serve as a director of the Corporation, and acknowledges that Director is relying upon this Agreement in continuing in such capacity.

     (b) In the event Director is required to bring any action to enforce rights or to collect moneys due under this Agreement and is successful in such action, the Corporation shall reimburse Director for all of Director’s reasonable fees and expenses in bringing and pursuing such action.

     11. Severability. If any provision of this Agreement or the application of any provision hereof to any person or circumstance is held invalid, unenforceable or otherwise illegal, the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected, and the provision so held to be invalid, unenforceable or otherwise illegal shall be reformed to the extent (and only to the extent) necessary to make it enforceable, valid and legal.

     12. Governing Law; Binding Effect; Amendment and Termination.

     (a) This Agreement shall be interpreted and enforced in accordance with the laws of the State of Delaware.

     (b) This Agreement shall be binding upon Director and upon the Corporation, its successors and assigns, and shall inure to the benefit of Director, the Director’s heirs,

6


 

personal representatives and assigns and to the benefit of the Corporation, its successors and assigns.

     (c) No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.

     13. Stockholder Ratification or Agreement. This Agreement is made subject to ratification by (or prior approval of the form and execution of this Agreement having been granted by) the stockholders of this Corporation, provided, however, that Director’s rights hereunder shall be effective pending ratification as herein provided.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of the day and year first above written.

           
      MONEYGRAM INTERNATIONAL, INC.
 
       
       
      By  
 
 
       

7

MANAGEMENT INCENTIVE PLAN
 

Exhibit 10.6

MONEYGRAM INTERNATIONAL, INC.

MANAGEMENT INCENTIVE PLAN

Pursuant to the 2004 MoneyGram International, Inc. Omnibus Incentive Plan

As Stated _______, 2004

I.   PURPOSE:
 
    The purpose of the MoneyGram International, Inc. Management Incentive Plan (Plan) is to provide key executives of MoneyGram International, Inc. (Moneygram) and its subsidiaries with an incentive to achieve goals as set forth under this Plan for each calendar year (Plan Year) for their respective companies and to provide effective management and leadership to that end.
 
II.   PHILOSOPHY:
 
    The Plan will provide key executives incentive bonuses based upon appropriately weighted pre-defined income and other performance measurements.
 
III.   SUBSIDIARIES, SUBSIDIARY GROUPS AND DIVISIONS:

  A.   Each subsidiary, subsidiary group, line of business or division listed below is a “Company” for the purposes of this Plan:
 
  Name of Company
 
  Global Funds Transfer
Payment Systems
 
  MoneyGram may, by action of its Board of Directors or its Human Resources Committee, add or remove business units on the list of participant companies from time to time.

  B.   FUNDING LIMIT:
 
      A “funding limit” shall be established annually for each Company participant who has been designated an Executive Officer as defined under Section 16(b) of the Securities Exchange Act. The funding limit shall be an amount determined by multiplying the actual net income of the Company for the Plan Year by the percent of such income approved by the Human Resources Committee of the MoneyGram International, Inc. Board of Directors (Committee) for such funding

1


 

      limit. The executive cannot be paid a larger bonus than the funding limit provided by this clause, but may be paid less in the discretion of the Committee based on the Performance Goals set forth below and other such factors which the Committee may consider.
 
  C.   PERFORMANCE GOALS:

  1.   OPERATING OR PRE-TAX INCOME (as calculated for external reporting purposes):
 
      An appropriate “operating income” or “pre-tax income” target for the plan year for each Company may be recommended by the Chief Executive Officer of MoneyGram to the Committee for approval taking into account overall corporate objectives, historical income and Plan Year financial plan income (on the same basis as determined below) and, if appropriate, other circumstances.
 
      Operating or pre-tax income to be used in calculating the bonus pool of each Company shall mean operating income before minority interest, interest expense and taxes, after deduction of corporate overhead, or pre-tax income after minority interest, in each case adjusted to appropriately exclude the effects of gains and losses from the sale or other disposition of capital assets other than vehicles. In addition, an adjustment to actual operating or pre-tax income will be made for any increase or decrease in cost to a subsidiary in connection with a change in the actual formula allocation of corporate overhead over amounts included in the Plan for the year.
 
      Special treatment of any other significant unusual or non-recurring items (for purposes of determining actual or target operating or pre-tax income) arising after a Company’s targets are set may be recommended by the Chief Executive Officer of MoneyGram to the Committee for approval, including, for example, appropriate adjustment of operating or pre-tax income target or actuals to reflect planned effects of an acquisition approved after target has been set. Other examples include unusual items or effects of a change in accounting principle.
 
      Incentives to be paid under this Plan must be deducted from the subsidiary corporation’s earnings by the end of the year. Goals must be achieved after deducting from actual results all incentive compensation applicable to the year, including those incentives earned under this Plan.
 
  2.   VALUE ADDED MEASUREMENT:
 
      An appropriate “Value Added” target for the plan year for certain companies may be recommended by the Chief Executive Officer of MoneyGram International, Inc. to the Committee for approval. This measurement is intended to place increased emphasis on securing an adequate return to MoneyGram on all capital employed in the

2


 

      business. MoneyGram Value Added (MVA) compares net operating income to the return required on capital invested in the business.
 
      In calculating the bonus pool of each applicable Company, MVA shall mean Net Operating Profit After Taxes (NOPAT is defined as sales minus operating expenses minus taxes) minus a Capital Charge calculated by multiplying a Cost of Capital times the actual Capital (Capital is defined as total assets less current and other liabilities exclusive of debt). Certain adjustments are necessary to determine NOPAT and Capital.
 
  3.   CASH FLOW:
 
      An appropriate “Cash Flow” target for the plan year for certain companies may be recommended by the Chief Executive Officer of MoneyGram International, Inc. to the Committee for approval. This measurement is intended to place increased emphasis on delivering available cash to MoneyGram.
 
      Operating Cash Flow is defined as the net change in cash resulting from the operations of the Company. Cash flows from operations exclude the impact of investing activities (acquiring and disposing of investments and productive long-lived assets) and financing activities (borrowing and repaying debt, payment of dividends, and treasury stock repurchases).
 
  4.   OTHER PERFORMANCE MEASUREMENTS:
 
      An appropriate number of performance measurements other than operating or pre-tax income, MVA and cash flow may be established for each Company, to place increased emphasis on areas of importance to achieving overall corporate objectives, with the Chief Executive Officer of MoneyGram to recommend to the Committee the measures to be used and, at the end of the year, the level of achievement against each.
 
  5.   REVENUE:
 
      The bonus pool earned will be subject to a further calculation whereby the total bonus pool otherwise accruable will be adjusted by 95% (threshold) up to 105% (maximum), depending on the achievement against the revenue target.

3


 

  6.   ESTABLISHING TARGETS:
 
      The targets for revenue, operating or pre-tax income, MVA, cash flow and for the categories of discretionary performance measurements to be employed will be established by the Committee no later than 90 days after the beginning of the Plan Year after receiving the recommendations of the Chief Executive Officer of MoneyGram International, Inc.

  D.   PARTICIPANT ELIGIBILITY:
 
      The Committee will select the Executive Officers as defined under Section 16(b) of the Securities Exchange Act eligible for participation no later than 90 days after the beginning of the Plan Year. Other personnel will be eligible for participation as designated by each Company President or Chief Executive Officer and recommended to the Chief Executive Officer of MoneyGram International, Inc. for approval, limited only to those executives who occupy a position in which they can significantly affect operating results as pre-defined by appropriate and consistent criteria, i.e., base salary not less than $49,000 per year, or base salary not less than 50% of the Company’s Chief Executive Officer, or position not more than the third organizational level below the Company Chief Executive Officer or another applicable criteria.
 
      NOTE: Individuals not qualifying under the criteria established for the Plan Year who were included in the previous year will be grandfathered (continue as qualified participants until retirement, reassignment, or termination of employment) if designated by the Company President or Chief Executive Officer, and approved by the Chief Executive Officer of MoneyGram International, Inc.
 
  E.   TARGET BONUSES:
 
      Target bonuses will be approved by the Committee for each Executive Officer in writing within the following parameters no later than 90 days after the beginning of the Plan Year and will be expressed as a percentage of salary paid during the year. Target bonuses for other eligible personnel will be established in writing within the following parameters subject to approval by the Chief Executive Officer of MoneyGram International, Inc.
 
      Actual bonus awards will be dependent on Company performance versus the targets established. A threshold performance will be required before any bonus award is earned under the net income goal. Awards will also be capped when stretch performance levels are achieved.

4


 

                         
    As a Percentage of Salary
Subsidiary Positions (1)
  Threshold(2)
  Target
  Cap
President/General Manager
    25.0 %     50.0 %     100.0 %
Executive Vice President-Senior Vice President, and Other Operating
    22.5 %     45.0 %     90.0 %
Executives
    20.0 %     40.0 %     80.0 %
Vice Presidents
    17.5 %     35.0 %     70.0 %
 
    15.0 %     30.0 %     60.0 %
Key Management Reporting to Officers
    12.5 %     25.0 %     50.0 % (3)
 
    10.0 %     20.0 %     40.0 % (3)
Staff Professionals
    7.5 %     15.0 %     30.0 % (3)
 
    5.0 %     10.0 %     20.0 % (3)


(1)   Target Bonus and Cap, as determined by the Committee, is dependent upon organization reporting relationships.
(2)   Reflects minimum achievement of all performance targets. Threshold could be lower if minimum achievement of only one performance target is met.
(3)   For certain positions, Target Bonus is the maximum formula award that may be earned.

  F.   BONUS POOL TARGET:

  1.   The “Bonus Pool Target” will be initially established no later than 90 days after the beginning of the Plan Year and will be adjusted to equal the sum of the target bonuses of all designated participants in each Company based upon actual Plan Year salaries, as outlined in paragraph D above, plus 15% for Special Achievement Awards.
 
  2.   The bonus pool will accrue in accordance with the Bonus Pool Accrual Formula recommended by the Chief Executive Officer of MoneyGram International, Inc. and approved by the Committee.
 
  3.   Bonus pool accruals not paid out shall not be carried forward to any succeeding year.

  G.   INDIVIDUAL BONUS AWARDS:

  1.   Indicated bonus awards will be equal to the product of the target bonus percentage times the weighted average percentage of bonus pool accrued as determined in paragraph F above times the individual’s actual base salary earnings during the Plan Year, subject to adjustments as follows:

  a)   discretionary upward or downward adjustment of formula bonus awards by the Committee after considering the recommendation of the Company President with the approval of the Chief Executive Officer of MoneyGram International, Inc. for those executives not affected by Section 162(m) of the Internal Revenue Code, and

5


 

  b)   discretionary downward adjustment of awards by the Committee for those Executive Officers affected by Section 162(m) of the Internal Revenue Code, and
 
  c)   no individual award may exceed the individual’s capped target award or the funding limit with respect to Executive Officers, and the aggregate recommended bonuses may not exceed the bonus pool accrued for other than Special Achievement Awards.

  2.   Bonuses awarded to the participating management staff of subsidiary groups may be paid from funds accrued based upon the target bonus for such participant(s) times the weighted average performance of the Companies in the subsidiary group, subject to adjustments as above.

IV.   MONEYGRAM INTERNATIONAL, INC. CORPORATE STAFF:

  A.   FUNDING LIMIT:
 
      A “funding limit” shall be established annually for each Corporate participant who has been designated an Executive Officer as defined under Section 16(b) of the Securities Exchange Act. The funding limit will be an amount determined by multiplying the actual net income from continuing operations of MoneyGram International, Inc. (as used in the income per share calculation described herein) for the Plan Year by the percent of such income approved by the Committee for such funding limit. The executive cannot be paid a larger bonus than the funding limit provided by this clause, but may be paid less in the discretion of the Committee based on the Performance Goals set forth below and such other factors which the Committee may consider.
 
  B.   PERFORMANCE GOALS:

  1.   INCOME PER SHARE:
 
      An appropriate “income per share” from continuing operations target for MoneyGram International, Inc. may be recommended by the Chief Executive Officer of MoneyGram International, Inc. to the Committee for approval after considering historical income per share from continuing operations, Plan Year financial plan income, overall corporate objectives, and, if appropriate, other circumstances.
 
      Income per share from continuing operations is determined before unusual or extraordinary items, effects of changes in accounting principles or a change in federal income tax rates after the target has been set. Reclassification of a major business unit to discontinued operations status after targets have been set would also require adjustment because of the effect on continuing operations results. While gains on disposition of a business would normally not be included in determining actual Plan Year net income or income per share, in the event of the sale of a subsidiary or major business unit, a portion of gain would be included equal to the difference between the sold unit’s planned net income for the year and actual results to date of sale plus calculated interest savings on proceeds

6


 

      for the balance of the year, so that actual results are not penalized for selling a business.
 
      Incentives to be paid under this Plan must be deducted from MoneyGram’s earnings by the end of the year. Goals must be achieved after deducting from actual results all incentive compensation applicable to the year, including those incentives earned under this Plan.
 
  2.   OPERATING INCOME:
 
      An appropriate “operating income” may be recommended by the Chief Executive Officer of MoneyGram International, Inc. to the Committee for approval.
 
      Operating income is defined as operating income before minority interest, interest expense, interest income, and taxes, excluding unallocated corporate overhead expenses, unusual, non-cash charges (such as goodwill impairments and restructuring charges), and spin-off related costs.
 
  3.   VALUE ADDED MEASUREMENT:
 
      An appropriate “Value Added” target for the plan year for Corporate may be recommended by the Chief Executive Officer of MoneyGram for approval by the Human Resources Committee. This measurement is intended to place increased emphasis on securing an adequate return to MoneyGram on all capital employed in the business. MoneyGram Value Added (MVA) compares operating income to the return required on capital invested in the business.
 
      In calculating the bonus pool for Corporate, MVA shall mean Net Operating Profit After Taxes (NOPAT is defined as sales minus operating expenses minus taxes) minus a Capital Charge calculated by multiplying a Cost of Capital times the actual Capital (Capital is defined as total assets less current and other liabilities exclusive of debt). Certain adjustments are necessary to determine NOPAT and Capital.
 
  4.   CASH FLOW:
 
      An appropriate “Cash Flow” target for the plan year for certain companies may be recommended by the Chief Executive Officer of MoneyGram International, Inc. to the Committee for approval. This measurement is intended to place increased emphasis on delivering available cash to MoneyGram.
 
      Operating Cash Flow is defined as the net change in cash resulting from the operations of the Company. Cash flows from operations exclude the impact of investing activities (acquiring and disposing of investments and productive long-lived assets) and financing activities (borrowing and repaying debt, payment of dividends, and treasury stock repurchases).
 
  5.   OTHER PERFORMANCE MEASUREMENTS:

7


 

      An appropriate number of performance measurements other than income per share will be established for Corporate, with the Chief Executive Officer of MoneyGram to recommend to the Committee the level of achievement against each of the measures.
 
  6.   REVENUE:
 
      The bonus pool earned will be subject to a further calculation whereby the total bonus pool otherwise accruable will be adjusted by 95% (threshold) up to 105% (maximum) depending on the achievement against the revenue target.
 
  7.   ESTABLISHING TARGETS:
 
      The actual targets for revenue, income per share, cash flow, operating income, MVA and for the performance measurements to be used will be established by the Committee no later than 90 days after the beginning of the Plan Year after receiving the recommendations of the Chief Executive Officer of MoneyGram International, Inc.
 
  C.   PARTICIPANT ELIGIBILITY:
 
      The Committee will select the Executive Officers as defined under Section 16(b) of the Securities Exchange Act eligible for participation no later than 90 days after the beginning of the Plan Year. Other personnel will be eligible for participation as recommended by the appropriate staff Vice President and as approved by the Chief Executive Officer of MoneyGram International, Inc., limited only to those executives who occupy a position in which they can significantly affect operating results as defined by the following criteria:

  a)   Salary grade
 
  b)   Not more than Organizational Level Four below the Chief Executive Officer.

      NOTE: Individuals not qualifying under the criteria established for the Plan Year who were included in the previous year will be grandfathered (continue as qualified participants until retirement, reassignment, or termination of employment) if designated by the appropriate Vice President and approved by the Chief Executive Officer of MoneyGram International, Inc.
 
  D.   TARGET BONUSES:
 
      Target bonuses will be approved by the Committee for each Executive Officer in writing within the following parameters no later than 90 days after the beginning of the Plan Year and will be expressed as a percentage of salary. Target bonuses for other eligible personnel will be established in writing within the following parameters subject to approval by the Chief Executive Officer of MoneyGram International, Inc.

8


 

      Actual bonus awards will be dependent on Company performance versus the targets established. A threshold performance will be required before any bonus award is earned under the income per share goal. Awards also will be capped when stretch performance levels are achieved.
                         
    As a Percentage of Salary
Corporate Positions(1)
  Threshold(2)
  Target
  Cap
President & Chief Executive Officer
    45.0 %     90.0 %     180.0 %
Senior Advisory Group
    25.0 %     50.0 %     100.0 %
 
    22.5 %     45.0 %     90.0 %
 
    20.0 %     40.0 %     80.0 %
Vice Presidents/Corporate Staff Officers
    20.0 %     40.0 %     80.0 %
 
    17.5 %     35.0 %     70.0 %
 
    15.0 %     30.0 %     60.0 %
Staff Directors(2)
    15.0 %     30.0 %     60.0 % (3)
 
    12.5 %     25.0 %     50.0 % (3)
 
    10.0 %     20.0 %     40.0 % (3)
Staff Professionals*
    10.0 %     20.0 %     40.0 % (3)
 
    7.5 %     15.0 %     30.0 % (3)


(1)   Target Bonus and Cap, as determined by the Committee, is dependent upon organization reporting relationships.
(2)   Reflects minimum of achievement of all performance targets. Threshold could be lower if minimum achievement of only one performance target is met.
(3)   For most positions below the Director level, Target Bonus is the maximum formula award that may be earned.

  E.   BONUS POOL TARGET:
  1.   The “Bonus Pool Target” will be established no later than 90 days after the beginning of the Plan Year and will be adjusted to equal the sum of the target bonuses of all qualified participants based upon actual Plan Year base salaries, as outlined in paragraph C above, plus 15% for Special Achievement Awards.
 
  2.   The bonus pool will accrue in accordance with the Bonus Pool Accrual Formula recommended by the Chief Executive Officer of MoneyGram International, Inc. and approved by the Committee.
 
  3.   Bonus pool accruals not paid out shall not be carried forward to any succeeding year.

  F.   INDIVIDUAL BONUS AWARDS:
      Indicated bonus awards will be equal to the product of the target bonus percentage times the weighted average percentage of bonus pool accrued as determined in paragraph D above times the individual’s actual Plan Year base salary earnings, subject to adjustments as follows:

9


 

  a)   discretionary upward or downward adjustment of formula awards by the Committee after considering the recommendations of the Chief Executive Officer of MoneyGram International, Inc. for those executives not affected by Section 162(m) of the Internal Revenue Code,
 
  b)   discretionary downward adjustment of awards by the Committee for those Executive Officers affected by Section 162(m) of the Internal Revenue Code, and
 
  c)   no individual award may exceed the individual’s capped target award or the funding limit with respect to Executive Officers and the aggregate recommended bonuses may not exceed the bonus pool for other than Special Achievement Awards.

V.   REPAYMENT PROVISIONS:

  A.   NON-COMPETE:
 
      Unless a Change of Control (as defined in the MoneyGram International, Inc. Omnibus Incentive Plan, as amended) shall have occurred after the date hereof:

  1.   In order to better protect the goodwill of MoneyGram and its Affiliates (as defined in the Plan) and to prevent the disclosure of MoneyGram’s or its Affiliates’ trade secrets and confidential information and thereby help insure the long-term success of the business, each participant in this Plan, without prior written consent of MoneyGram, will not engage in any activity or provide any services, whether as a director, manager, supervisor, employee, adviser, agent, consultant, owner of more than five (5) percent of any enterprise or otherwise, for a period of two (2) years following the date of such participant’s termination of employment with MoneyGram or any of its Affiliates, in connection with the manufacture, development, advertising, promotion, design, or sale of any service or product which is the same as or similar to or competitive with any services or products of MoneyGram or its Affiliates (including both existing services or products as well as services or products known to such participant, as a consequence of such participant’s employment with MoneyGram or one of its Affiliates, to be in development):

  a)   with respect to which such participant’s work has been directly concerned at any time during the two (2) years preceding termination of employment with MoneyGram or one of its Affiliates, or
 
  b)   with respect to which during that period of time such participant, as a consequence of participant’s job performance and duties, acquired knowledge of trade secrets or other confidential information of MoneyGram or its Affiliates.

10


 

  2.   For purposes of the provisions of paragraph V A, it shall be conclusively presumed that a participant in this Plan has knowledge of information he or she was directly exposed to through actual receipt or review of memos or documents containing such information, or through actual attendance at meetings at which such information was discussed or disclosed.
 
  3.   If, at any time within two (2) years following the date of a participant’s termination of employment with MoneyGram or any of its Affiliates, such participant engages in any conduct agreed to be avoided in accordance with paragraph V A, then all bonuses paid under this Plan to such participant during the last 12 months of employment shall be returned or otherwise repaid by such participant to MoneyGram. Participants in this Plan consent to the deduction from any amounts MoneyGram or any of its Affiliates owes to such participants to the extent of the amounts such participants owe MoneyGram hereunder.

  B.   MISCONDUCT:
 
      Unless a Change of Control shall have occurred after the date hereof, all bonuses paid for 2003 and thereafter under this Plan to any participant shall be returned or otherwise repaid by such participant to MoneyGram, if MoneyGram reasonably determines that during a participant’s employment with MoneyGram or any of its Affiliates:

  a)   such participant knowingly participated in misconduct that causes a misstatement of the financial statements of MoneyGram or any of its Affiliates or misconduct which represents a material violation of any code of ethics of MoneyGram applicable to such participant or of the    compliance program or similar program of MoneyGram; or
 
  b)   such participant was aware of and failed to report, as required by any code of ethics of MoneyGram applicable to such participant or by the          compliance program or similar program of MoneyGram, misconduct that causes a misstatement of the financial statements of MoneyGram or any of its Affiliates or misconduct which represents a material knowing violation of any code of ethics of MoneyGram applicable to such participant or of the          compliance program or similar program of MoneyGram.

      Participants in this Plan consent to the deduction from any amounts MoneyGram or any of its Affiliates owes to such participants to the extent of the amounts such participants owe MoneyGram hereunder.
 
  C.   ACTS CONTRARY TO MONEYGRAM:
 
      Unless a Change of Control shall have occurred after the date hereof, if MoneyGram reasonably determines that at any time within two (2)

11


 

      years after the award of any bonus under this Plan to a participant that such participant has acted significantly contrary to the best interests of MoneyGram, including, but not limited to, any direct or indirect intentional disparagement of MoneyGram, then any bonus paid under this Plan to such participant during the prior 2-year period shall be returned or otherwise repaid by the participant to MoneyGram. Participants in this Plan consent to the deduction from any amounts MoneyGram or any of its Affiliates owes to such participants to the extent of the amounts such participants owe MoneyGram hereunder.
 
  D.   The Corporation’s reasonable determination required under paragraphs V B and V C shall be made by the Human Resources Committee of the Corporation’s Board of Directors, in the case of executive officers of the Corporation, and by the Chief Executive Officer and Corporate Compliance Officer of the Corporation, in the case of all other officers and employees.

VI.   SPECIAL ACHIEVEMENT AWARDS:
 
    Special bonuses of up to 15% of base salary for exceptional performance to employees (primarily exempt employees) who are not participants in this Plan, including newly hired employees, may be recommended at the discretion of the Chief Executive Officer to the Committee from the separate funds for discretionary awards provided for under paragraphs III F and IV E.
 
VII.   APPROVAL AND DISTRIBUTION:
 
    The individual incentive bonus amounts and the terms of payment thereof will be fixed following the close of the Plan Year by the Committee. Any award made under this Plan is subject to the approval of this Plan by the stockholders of MoneyGram International, Inc.
 
VIII.   COMPENSATION ADVISORY COMMITTEE:
 
    The Compensation Advisory Committee is appointed by the Chief Executive Officer of MoneyGram International, Inc. to assist the Committee in the implementation and administration of this Plan. The Compensation Advisory Committee shall propose administrative guidelines to the Committee to govern interpretations of this Plan and to resolve ambiguities, if any, but the Compensation Advisory Committee will not have the power to terminate, alter, amend, or modify this Plan or any actions hereunder in any way at any time.
 
IX.   SPECIAL COMPENSATION STATUS:
 
    All bonuses paid under this Plan shall be deemed to be special compensation and, therefore, unless otherwise provided for in another plan or agreement, will not be included in determining the earnings of the recipients for the purposes of any pension, group insurance or other plan or agreement of a Company or of MoneyGram International, Inc. Participants in this Plan shall not be eligible for any contractual or other short-term (sales, productivity, etc.) incentive plan except in

12


 

    those cases where participation is weighted between this Plan and any such other short-term incentive plan.
 
X.   DEFERRALS:
 
    Participants subject to taxation of income by the United States may submit to the Committee, prior to November 15 of the year in which the bonus is being earned a written request that all or a portion, but not less than a specified minimum, of their bonus awards to be determined, if any, be irrevocably deferred substantially in accordance with the terms and conditions of a deferred compensation plan approved by the Board of Directors of MoneyGram International, Inc. or, if applicable, one of its subsidiaries if such plan has been adopted. Participants subject to taxation of income by other jurisdictions may submit to the Committee a written request that all or a portion of their bonus awards be deferred in accordance with the terms and conditions of a plan which is adopted by the Board of Directors of a participant’s Company. Upon the receipt of any such request, the Committee thereunder shall determine whether such request should be honored in whole or part and shall forthwith advise each participant of its determination on such request.
 
XI.   PLAN TERMINATION:
 
    This Plan shall continue in effect until such time as it may be canceled or otherwise terminated by action of the Board of Directors of MoneyGram International, Inc. and will not become effective with respect to any Company unless and until its Board of Directors adopts a specific plan for such Company. While it is contemplated that incentive awards from the Plan will be made, the Board of Directors of MoneyGram International, Inc., or any other Company hereunder, may terminate, amend, alter, or modify this Plan at any time and from time to time. Participation in the Plan shall create no right to participate in any future year’s Plan.
 
XII.   EMPLOYEE RIGHTS:
 
    No participant in this Plan shall be deemed to have a right to any part or share of this Plan, except as provided in Paragraph XIII. This Plan does not create for any employee or participant any right to be retained in service by any Company, nor affect the right of any such Company to discharge any employee or participant from employment. Except as provided for in administrative guidelines, a participant who is not an employee of MoneyGram International, Inc. or one of its subsidiaries on the date bonuses are paid will not receive a bonus payment.
 
XIII.   EFFECT OF CHANGE OF CONTROL:
 
    Notwithstanding anything to the contrary in this Plan, in the event of a Change of Control (as defined in the 2004 MoneyGram International, Inc. Omnibus Incentive Plan) each participant in the Plan shall be entitled to a prorata bonus award calculated on the basis of achievement of performance goals through the date of the Change of Control.
 
XIV.   EFFECTIVE DATE:

13


 

    The Plan shall be effective                           , 2004, provided however, that any award made under this Plan is subject to the approval of the 2004 MoneyGram International, Inc. Omnibus Incentive Plan by the stockholders of MoneyGram International, Inc.

14

DEFERRED COMPENSATION PLAN
 

Exhibit 10.7

TRAVELERS EXPRESS COMPANY, INC.
DEFERRED COMPENSATION PLAN

AS STATED_______, 2004

1. PURPOSE OF THE PLAN.

     The purpose of the Deferred Compensation Plan (the “Plan”) is to provide a select group of management or highly compensated employees of Travelers Express Company, Inc. (the “Corporation”), and its subsidiaries with an opportunity to defer the receipt of incentive compensation awarded to them under the Management Incentive Plan and certain other incentive plans of Travelers Express Company, Inc., and its subsidiaries (the “Incentive Plans”) or such other substitute plans as may be adopted by the Corporation (“successor plans”) and thereby enhance the long-range benefits and purposes of the incentive awards. Each plan year shall extend from January 1 through December 31 of each calendar year.

2. ADMINISTRATION OF THE PLAN.

     The Plan shall be administered by a committee appointed by the Chief Executive Officer of the Corporation hereinafter the Compensation Advisory Committee or (the “Committee”). Subject to the express provisions of the Plan, and the Incentive Plans or successor plans, the Committee shall have the authority to adopt, amend and rescind such rules and regulations, and to make such determinations and interpretations relating to the Plan, which it deems necessary or advisable for the administration of the Plan, but it shall not have the power to amend, suspend or terminate the Plan. All such rules, regulations, determinations and interpretations shall be conclusive and binding on all parties.

3. PARTICIPATION IN THE PLAN.

     (a) Participation in the Plan shall be restricted to a select group of management or highly compensated employees of the Corporation or one of its subsidiaries who are participants in certain Incentive Plans, including the Management Incentive Plan, and any other bonus or bonuses or similar or successor plans, who have been selected in writing by the Chief Executive Officer of the Corporation to participate in the Plan, and whose timely written requests to defer the receipt of all or a portion of any incentive compensation which may be awarded to them, are honored in whole or in part by the Committee. Any individual whose request for deferral is not accepted or honored by the Committee, whether for failure of timely submission or for any other reason, shall not become a participant in the Plan, and the Committee’s determination in this regard shall be conclusive and binding.

     (b) Participants may defer incentive compensation into a cash account and, if designated by the Committee, into a stock unit account.

     (c) If a participant in the Plan shall 1) sever, voluntarily or involuntarily, his or her employment with the Corporation or one of its subsidiaries other than as a result of disability or retirement, 2) engage in any activity in competition with the Corporation or

 


 

any of its subsidiaries during or following such employment, or 3) remain in the employ of a corporation which for any reason ceases to be a subsidiary of the Corporation, the Committee may at any time thereafter direct, in its sole and exclusive discretion, that his participation in the Plan shall terminate, and that he or she be paid in a lump sum the aggregate amount credited to his or her deferred incentive cash account as of the date such participation is terminated and that he or she be paid shares of Travelers Express Company, Inc., Common Stock (“Common Stock”) equal to the aggregate number of stock units credited to his or her deferred stock unit account as of the date such participation is terminated (with any fractional unit being settled by cash payment). The Committee is authorized to establish and implement a policy and procedures for administration of this paragraph, including, but not limited to, a policy regarding small account balance cash-outs.

     (d) The Corporation and each participating subsidiary shall be solely liable for payment of any benefits and, except as may be otherwise determined by the Committee, for maintenance of deferred incentive accounts pursuant to paragraph 7, with respect to its own employees who participate in the Plan. In the event a participant leaves the employ of the Corporation or a participating subsidiary (“former employer”) and is subsequently employed by another employer, the Corporation or another subsidiary of the Corporation (“new employer”), the former employer may agree to transfer and the new employer may agree to assume the benefit liability reflected in such participant’s deferred incentive account, without the consent of such participant and subject to the approval of the Committee, in its sole discretion. In the event of such a transfer and assumption of liability, the former employer shall have no further liability for any benefit under the Plan to its former employee or otherwise with respect to such transferred account.

4. REQUESTS FOR DEFERRAL.

     All requests for deferral of incentive awards must be made in writing prior to November 15 of the year in which the bonus is being earned and shall be in such form and shall contain such terms and conditions as the Committee may determine. Each such request shall specify the dollar amount or the percentage to be deferred of incentive award which would otherwise be received in the following calendar year, but the deferral amount must be in an amount equal to or greater than the lesser of $10,000 or 25% of the incentive award. Each such request shall also specify 1) the date (no later than the employee’s actual retirement date) when payment of the aggregate amount credited to the deferred incentive account is to commence, 2) whether such payment is then to be made in a lump sum or in quarterly or annual installments, 3) if payment is to be made in installments, the period of time (not in excess of ten years) over which the installments are to be paid, and 4) if the participant is permitted to defer incentive compensation into a stock unit account, the portion of the deferred incentive compensation which shall be treated as a cash account under paragraph 7(b) and the portion which shall be treated as a stock unit account under paragraph 7(c). If the participant has requested that a portion of the deferred incentive compensation be placed in a stock unit account, such request shall also include acknowledgment that such stock unit account will be settled in Common Stock of the

2


 

Corporation, and that such stock unit account cannot be converted to a cash account in the future. The Committee shall, under no circumstances, accept any request for deferral of less than $1,000 of an incentive award or any request which is not in writing or which is not timely submitted.

5. DEFERRAL AND PAYMENT OF INCENTIVE AWARDS.

     The Committee shall, prior to December 15 of the year in which the bonus is being earned, notify each individual who has submitted a request for deferral of an incentive award whether or not such request has been accepted and honored. If the request has been honored in whole or in part, the Committee shall advise the participant of the dollar amount or percentage of his or her incentive compensation which the Committee has determined to be deferred. The Committee shall further advise the participant of its determination as to the date when payment of the aggregate amount credited to the participant’s deferred incentive account is to commence, whether payment of the amount so credited as of that date will then be made in a lump sum or in quarterly or annual installments, if payment is to be made in installments, the period of time over which the installments will be paid, and if the participant is permitted to defer incentive compensation into a stock unit account, whether the deferred incentive account shall be treated as a cash account or a stock unit account or split between cash and stock units. Upon subsequently being advised of the existence of special circumstances which are beyond the participant’s control and which impose an unforeseen severe financial hardship on the participant or his or her beneficiary, the Committee may, in its sole and exclusive discretion, modify the deferral arrangement established for that participant to the extent necessary to remedy such financial hardship.

     If the participant has elected to defer incentive compensation in the form of cash, the Corporation shall distribute a sum in cash to such participant, pursuant to his or her election provided for in paragraph 4. If the participant has elected to defer incentive compensation in the form of stock units, the Corporation shall distribute to such participant, pursuant to his or her election provided for in paragraph 4, shares of Common Stock of the Corporation equal to the number of stock units being settled in such installment (with any fractional unit being settled by cash payment).

6. CONVERSION OF CASH ACCOUNT BALANCE.

     Each participant who is permitted to defer incentive compensation into a stock unit account may, not more than once a year or such other period as is determined by the Committee, by written notice delivered to the Committee, convert the aggregate balance or any portion thereof in his or her deferred compensation cash account (either before or after installment payments from the account may have commenced) from an account in the form of cash to an account in the form of stock units in an amount equal to the cash balance or specified portion thereof divided by the closing price of the Common Stock of the Corporation (as reported for the New York Stock Exchange-Composite Transactions) on the last trading day of the quarter in which such notice is given, said account to then accrue dividend equivalents as set forth in paragraph 7(c) below; provided however, that no such notice of conversion (“Conversion Notice”) (a)

3


 

may be given within six months following the date of an election by such participant, if an Executive Officer of the Corporation, with respect to any plan of the Corporation, that effected a Discretionary Transaction (as defined in Rule 16b-3(f) under the Securities Exchange Act of 1934) that was a disposition or (b) may be given after an individual ceases to be an employee of the Corporation . The stock unit account will be settled in Common Stock of the Corporation and such stock unit account cannot be converted to a cash account in the future.

7. DEFERRED INCENTIVE ACCOUNT.

     (a) A deferred incentive account shall be maintained by his or her employer for each participant in the Plan, and there shall be credited to each participant’s account, on the date incentive compensation is paid, the incentive award, or portion thereof, which would have been paid to such participant on said date if the receipt thereof had not been deferred. If the account is to be a stock unit account, the incentive compensation award shall be converted into stock units by dividing the closing price of the Corporation’s Common Stock (as reported for the New York Stock Exchange Composite Transactions) on the day such incentive award is payable into such incentive award.

     (b) If the participant has elected to defer incentive compensation in the form of cash, there shall be credited on the last day of the quarter to each participant’s account, an interest credit on his or her deferred incentive award at the interest rates determined by the Committee to be payable during each calendar year, or portion thereof, prior to the termination of such participant’s deferral period or, if the amount then credited to his or her deferred incentive account is to be paid in installments, prior to the termination of such installment period. Interest will be paid on a prorated basis for amounts withdrawn from the account during the quarter, with the remaining balance accruing interest for the duration of the quarter. The interest credit for the following quarter shall be a rate equal to the yield as of March 31, June 30, September 30, and December 31 on Merrill Lynch Taxable Bond Index - Long Term Medium Quality (A3) Industrial Bonds, unless and until otherwise determined.

     (c) If a participant has elected to defer incentive compensation in the form of stock units, then, in the event of a dividend paid in cash, stock of the Corporation (other than Common Stock) or property, additional credits (dividend equivalents) shall be made to the participant’s stock unit account consisting of a number of stock units equal to the amount of such dividend per share (or the fair market value, on the date of payment, of dividends paid in stock or property), multiplied by the aggregate number of stock units credited to such participant’s deferred compensation account on the record date for the payment of such dividend, divided by the last closing price of the Corporation’s Common Stock (as reported for the New York State Exchange-Composite transactions) prior to the date such dividend is payable to stockholders. After payment of deferred compensation commences, dividend equivalents shall accrue on the unpaid balance thereof in the same manner until all such deferred compensation has been paid.

4


 

     (d) In the event of a dividend of Common Stock declared and paid by the Corporation, an additional credit shall be made to the participant’s stock unit account of a number of stock units equal to the number of shares of the Corporation’s Common Stock which the participant would have received as a stock dividend had he or she been the owner on the record date for the payment of such stock dividend of the number of shares of Common Stock equal to the number of units in such stock unit account on such date. After payment of deferred compensation commences, additional credits for stock dividends shall accrue on the unpaid balance thereof in the same manner until all such deferred compensation has been paid.

     (e) The Plan shall at all times be unfunded. The Corporation shall not be required to segregate physically any amounts of money or otherwise provide funding or security for any amounts credited to the deferred incentive accounts of participants in the Plan.

8. CHANGE OF CONTROL OR CHANGE IN CAPITALIZATION.

     (a) If a tender offer or exchange offer for shares of Common Stock of the Corporation (other than such an offer by the Corporation) is commenced, or if the stockholders of the Corporation shall approve an agreement providing either for a transaction in which the Corporation will cease to be an independent publicly owned corporation or for a sale or other disposition of all or substantially all the assets of the Corporation (“Change of Control”), a lump sum cash payment shall be made to each participant participating in the Plan of the aggregate current balance of his or her deferred compensation cash account accrued on the date of the Change of Control, notwithstanding any other provision herein. If the participant has elected to defer compensation in the form of stock units, the Corporation shall distribute to such participant shares of Common Stock of the Corporation equal to the number of stock units in such participant’s stock unit account on the day preceding the date of the Change of Control (with any fractional unit being settled by cash payment). Any notice by a participant to change or terminate his or her election to defer Compensation on or before the date of the Change of Control shall be effective as of the date of the Change of Control, notwithstanding any other provision herein.

     (b) Any recapitalization, reclassification, split-up, spin-off, sale of assets, combination or merger not otherwise provided for herein which affects the outstanding shares of Common Stock of the Corporation or any other relevant change in the capitalization of the Corporation shall be appropriately adjusted for by the Board of Directors of this Corporation, and any such adjustments shall be final, conclusive and binding.

9. DESIGNATION OF BENEFICIARY.

     Each participant in the Plan shall deliver to the Committee a written instrument, in the form provided by the Committee, designating one or more beneficiaries to whom payment of the amount credited to his or her deferred incentive account shall be made in the event of his or her death. Unless the Committee shall otherwise determine, such

5


 

payments shall be made in such amounts and at such times as they would otherwise have been paid to the participant if he had survived.

10. NONASSIGNABILITY OF PARTICIPATION RIGHTS.

     No right, interest or benefit under the Plan shall be assignable or transferable under any circumstances other than to a participant’s designated beneficiary in the event of his or her death, nor shall any such right, interest or benefit be subject to or liable for any debt, obligation, liability or default of any participant. The payments, benefits or rights arising by reason of this Plan shall not in any way be subject to a participant’s debts, contracts or engagements, and shall not be subject to attachment, garnishment, levy, execution or other legal or equitable process.

11. RIGHTS OF PARTICIPANTS.

     A participant in the Plan shall have only those rights, interests or benefits as are expressly provided in the Plan and in the Incentive Plans or successor plans. The Plan shall be deemed to be ancillary to the Incentive Plans or successor plans and the rights of participants in the Plan shall be limited as provided in the Incentive Plans or successor plans. The right of a participant or designated beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of the Corporation. All amounts credited to an account shall constitute general assets of the Corporation and may be disposed of by the Corporation at such time and for such purposes as it may deem appropriate.

12. CLAIMS FOR BENEFITS.

     Claims for benefits under the Plan shall be filed with the Committee. Written notice of the disposition of a claim shall be furnished the claimant within 60 days after the application therefor is filed. In the event the claim is denied, the reasons for the denial shall be specifically set forth. Pertinent provisions of this Plan shall be cited. In addition, the written notice shall describe any additional material or information necessary for the claimant to perfect the claim (along with an explanation of why such material or information is needed), and the written notice will fully describe the claim review procedures of paragraph 13 below.

13. CLAIM REVIEW.

     Any claimant who has been denied a benefit shall be entitled, upon request to the Committee, to receive a written notice of such action, together with a full and clear statement of the reasons for the action. The claimant may also review this Plan if he or she chooses. If the claimant wishes further consideration of his or her position, he or she may request a hearing. The request, together with a written statement of the claimant’s position, shall be filed with a Committee member no later than 60 days after receipt of the written notification provided for above. The Committee shall schedule an opportunity for a full and fair hearing of the issue within the next 60 days. The decision following the hearing shall be made within 60 days and shall be communicated in writing to the claimant. If the claimant requests, the hearing may be waived, in which case the Committee’s decision shall be made within 60 days from the date on which the hearing is waived and shall be communicated in writing to the claimant.

6


 

14. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.

     The Board of Directors of the Corporation (the “Board”) may from time to time amend, suspend or terminate the Plan, in whole or in part, and if the Plan is suspended or terminated, the Board may reinstate any or all provisions of the Plan, except that no amendment, suspension or termination of the Plan shall, without the consent of a participant, adversely affect such participant’s right to receive payment of the entire amount credited to his or her deferred incentive account on the date of such Board action. In the event the Plan is suspended or terminated, the Board may, in its discretion, direct the Committee to pay to each participant the amount credited to his or her account either in a lump sum or in accordance with the Committee’s prior determination regarding the method of payment.

15. EFFECTIVE DATE.

     The Plan shall become effective on the date of its approval by the Human Resources Committee of the Travelers Express Company, Inc., Board of Directors or a quorum of the Board of Directors or on such other date as the Human Resources Committee may direct, but the Plan shall become operative with respect to a select group of management or highly compensated employees of each subsidiary only upon the adoption of the Plan by that subsidiary’s Board of Directors.

     IN WITNESS WHEREOF, the undersigned authorized officer has signed this document on                                       , 200  , effective as of                    .

TRAVELERS EXPRESS COMPANY, INC.
By:                                                          
Its:                                                          

7

TIER I EXECUTIVE SEVERANCE PLAN
 

Exhibit 10.8

MONEYGRAM INTERNATIONAL, INC.
EXECUTIVE SEVERANCE PLAN (TIER I)
AS OF                 , 2004

     1. PURPOSE: To provide management continuity by inducing selected Executives to remain in the employ of MoneyGram International, Inc. (the “Corporation”) or one of its subsidiaries pending a possible Change of Control of the Corporation.

     2. OBJECTIVES: To ensure in the event of a possible Change of Control of the Corporation, in addition to the Executive’s regular duties, that he may be available to be called upon to assist in the objective assessment of such situations, to advise management and the Board of Directors (the “Board”) of the Corporation as to whether such proposals would be in the best interests of the Corporation, its, subsidiaries and its shareholders and to take such other actions as management or the Board might determine reasonably appropriate and in the best interests of the Corporation and its shareholders.

     3. PARTICIPATION: Participation in this Executive Severance Plan (Tier I) (this “Plan”) will be limited to selected Executives (each referred to herein as “Executive”) whose importance to the Corporation during such periods is deemed to warrant good and valuable special consideration by the Chief Executive Officer of the Corporation. Each such Executive’s participation shall be evidenced by a certificate (“Certificate”) issued by the Corporation, each of which is incorporated herein by reference as if set forth in its entirety. In the event an Executive shall become ineligible hereunder, his Certificate shall be surrendered promptly to the Corporation.

     4. DEFINITION OF CHANGE OF CONTROL: For purposes of this Plan, a “Change of Control” shall mean any of the following events:

          (a) An acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning

 


 

 2

of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either: (1) the then outstanding shares of Common Stock of the Corporation (the “Outstanding Corporation Common Stock”) or (2) the combined voting power of the then Outstanding Voting Securities of the Corporation entitled to vote generally in the election of Directors (the “Outstanding Corporation Voting Securities”); excluding, however the following: (A) any acquisition directly from the Corporation or any entity controlled by the Corporation other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Corporation or any entity controlled by the Corporation, (B) any acquisition by the Corporation, or any entity controlled by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any entity controlled by the Corporation or (D) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of Section 4(c); or

          (b) A change in the composition of the Board such that the individuals who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this Section 4(b) that any individual, who becomes a member of the Board subsequent to the effective date of the Plan, whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board, (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened

 


 

 3

solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board, or

          (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a “Corporate Transaction”) excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Corporate Transaction (the “Prior Shareholders”) beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of Common Stock and the combined voting power of the then Outstanding Voting Securities entitled to vote generally in the election of Directors, as the case may be, of the Corporation or other entity resulting from such Corporate Transaction (including, without limitation, a corporation or other entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (2) no Person (other than the Corporation or any entity controlled by the Corporation, any employee benefit plan (or related trust) of the Corporation or any entity controlled by the Corporation or such corporation or other entity resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of Common Stock of the Corporation or other entity resulting from such Corporate Transaction or the combined voting power of the Outstanding Voting Securities of such Corporation or other entity entitled to vote generally in the election of Directors except to the extent that such ownership existed prior to the Corporate Transaction and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the

 


 

 4

members of the Board of Directors of the Corporation resulting from such Corporate Transaction; and further excluding any disposition of all or substantially all of the assets of the Corporation pursuant to a spin-off, split-up or similar transaction (a “Spin-off”) if, immediately following the Spin-off, the Prior Shareholders beneficially own, directly or indirectly, more than 80% of the outstanding shares of Common Stock and the combined voting power of the then Outstanding Voting Securities entitled to vote generally in the election of directors of both entities resulting from such transaction, in substantially the same proportions as their ownership, immediately prior to such transaction, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities; provided, that if another Corporate Transaction involving the Corporation occurs in connection with or following a Spin-off, such Corporate Transaction shall be analyzed separately for purposes of determining whether a Change of Control has occurred;

          (d) The approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.

     5. DEFINITIONS:

          (a) For purposes of this Plan, “Cause” with respect to an Executive shall mean:

               (i) The willful and continued failure of the Executive to perform substantially the Executive’s duties with the Corporation or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance improvement is delivered to the Executive by the Board or the Chief Executive Officer of the Corporation which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties, or

               (ii) The willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Corporation. For purposes of this

 


 

 5

Section 5(a), no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Corporation. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Corporation or based upon the advice of counsel for the Corporation shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Corporation. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding the Executive, if he is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good-faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

          (b) For purposes of this Plan, “Good Reason” with respect to an Executive shall mean:

               (i) The assignment to the Executive of any duties inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities immediately prior to the Change of Control, or any other action by the Corporation or any of its subsidiaries which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Corporation or the applicable subsidiary promptly after receipt of notice thereof given by the Executive;

 


 

 6

               (ii) Any reduction of the Executive’s base salary, annual bonus, incentive opportunities, retirement benefits, welfare or fringe benefits below the highest level enjoyed by the Executive during the 120-day period prior to the Change of Control;

               (iii) The Corporation’s or one of its subsidiaries requiring the Executive to be based at any office or location other than that at which he was based immediately prior to the Change of Control or the Corporation’s or one of its subsidiaries requiring the Executive to travel to a substantially greater extent than required immediately prior to the Change of Control;

               (iv) Any purported termination by the Corporation or one of its subsidiaries of the Executive’s employment otherwise than as expressly permitted by this Plan; or

               (v) Any failure by the Corporation to comply with and satisfy Section 11(c) of this Plan.

For purposes of this Plan, any good-faith determination of “Good Reason” made by an Executive shall be conclusive with respect to that Executive.

          (c) For purposes of this Plan, “Window Period” means the 30-day period following the first anniversary of the Change of Control.

     6. ELIGIBILITY FOR BENEFITS: Benefits as described in Section 7 shall be provided in the event the Executive’s employment with the Corporation or any of its subsidiaries is terminated:

          (a) Involuntarily by the Corporation or the applicable subsidiaries without Cause (a “Without Cause Termination”); or

          (b) By the Executive for Good Reason (a “Good Reason Termination”) or

          (c) By the Executive’s own election for any reason during the Window Period; provided, in the case of a Without Cause Termination or a Good Reason Termination, that such termination occurs within thirty-six months after a Change of Control; and provided, further, that in

 


 

 7

no event shall a termination as a consequence of an Executive’s death, disability, or Retirement (as defined in the next sentence) entitle the Executive to benefits under this Plan. “Retirement” shall mean the Executive’s voluntary retirement at or after his normal retirement date under the Corporation’s or a subsidiary’s retirement plan or, if the Executive does not participate in any such plan that provides for a normal retirement date, at or after age 65.

     7. BENEFIT ENTITLEMENTS:

          (a) Lump Sum Payment: On or before the Executive’s last day of employment with the Corporation or any of its subsidiaries, the Corporation or the applicable subsidiary will pay to the Executive as compensation for services rendered a lump sum cash amount (subject to any applicable payroll or other taxes required to be withheld) equal to the sum of (i) Executive’s highest annual salary fixed during the period Executive was an employee of the Corporation or any of its subsidiaries, plus (ii) the greater of (x) the largest amount awarded to him in a year as cash bonus (whether or not deferred and regardless of deferral election) under the Corporation’s Management Incentive Plan during the preceding four years or if the Executive has not been employed for at least four full fiscal years, all of the completed full fiscal years during which the Executive has been employed, or (y) the target bonus under the Corporation’s Management Incentive Plan for the fiscal year in which the Change of Control occurs, plus (iii) the greater of (x) the largest amount awarded to Executive in a year as cash bonus (whether or not deferred and regardless of deferral election) under the Corporation’s Performance Unit Incentive Plan during the preceding four years or if the Executive has not been employed for at least four full fiscal years, all of the completed full fiscal years during which the Executive has been employed, or (y) the aggregate value of shares when earned during a performance period under any performance-related Restricted Stock award during the preceding four years or if the Executive has not been employed for at least four full fiscal years, all of the completed full fiscal years during which the Executive has been employed, or (z) the

 


 

 8

aggregate value at the time of grant of the target shares awarded under the Corporation’s performance-related Restricted Stock programs for the fiscal year in which the Change of Control occurs, multiplied by:

               (i) Three times a fraction, the numerator of which is 36 minus the number of full months from the date of the Change of Control through the last day of the Executive’s employment, and the denominator of which is 36, in the case of a Without Cause Termination or a Good Reason Termination, or

               (ii) Two if the termination is voluntary during the Window Period.

          (b) Employee Plans: The Executive’s participation in life, accident, health, compensation deferral, automobile, club membership, and financial counseling plans of the Corporation, or the applicable subsidiary, if any, provided to the Executive immediately prior to the Change of Control or his termination, shall be continued, or equivalent benefits provided, by the Corporation or the applicable subsidiary at no direct cost or tax cost to the Executive in excess of the costs that would be imposed on the Executive, if he remained an employee, for a period (the “Severance Period”) of:

               (i) Three years times a fraction, the numerator of which is 36 minus the number of full months from the date of the Change of Control through the last day of the Executive’s employment, and the denominator of which is 36, in the case of a Without Cause Termination or a Good Reason Termination, or

               (ii) Two years if the termination is voluntary during the Window Period, in each case from the date of termination (or until his death or normal retirement date, whichever is sooner). The Executive’s participation in any applicable qualified or nonqualified retirement and/or pension plans and any deferred compensation or bonus plan of the Corporation or any of its subsidiaries, if any, shall continue only through the last day of employment. Any terminating

 


 

      9

     distributions and/or vested rights under such plans shall be governed by the terms of the respective plans. For purposes of determining the eligibility of the Executive for any post-retirement life and health benefits, the Executive shall be treated as having attained an additional three years of age and service credit (in the case of a Without Cause Termination or a Good Reason Termination) or two years of age and service credit (if the termination is voluntary during the Window Period), in each case as of the last day of the Executive’s employment.

          (c) Special Retirement Benefits: If the Executive is, immediately prior to his termination of employment, an active participant accruing benefits under any qualified and/or nonqualified defined benefit retirement plans (collectively, the “Retirement Plans”), then the Executive or his beneficiaries shall be paid Special Retirement Benefits as and when the Executive or such beneficiaries become entitled to receive benefits under the Retirement Plans (as defined below), equal to the excess of (i) the retirement benefits that would be payable to the Executive or his beneficiaries under the Retirement Plans if the Executive’s employment had continued during the Severance Period, all of his accrued benefits under the Retirement Plans (including those attributable to the Severance Period) were fully vested, and his final average compensation is equal to the Deemed Final Average Compensation, as defined below, over (ii) the total qualified and unqualified benefits actually payable to the Executive or his beneficiaries under the Retirement Plan. The “Deemed Final Average Compensation” means the Executive’s final average compensation computed in accordance with the Retirement Plans, except that the amount specified in Section 7(a) shall be considered as having been paid to the Executive as “compensation” in equal monthly installments during the Severance Period. All Special Retirement Benefits shall be unfunded and payable solely from the general assets of the Corporation or its appropriate subsidiary, and are not intended to meet the qualification requirements of Section 401 of the Internal Revenue Code. The amount of the Special Retirement Benefits shall be determined using

 


 

10

actuarial assumptions no less favorable to the Executive than those used in the qualified Retirement Plan immediately prior to the Change of Control.

          (d) Outplacement: The Executive shall be provided with outplacement benefits in accordance with those offered to Executives immediately prior to the Change of Control.

          (e) Minimum Benefit Entitlement: Notwithstanding anything to the contrary in this Section 7, and except as provided in Section 8(a), in no event shall an Executive’s severance benefits under this Plan be less than the benefits (if any) such Executive would have received in accordance with the severance policy of the Corporation or applicable subsidiary in effect immediately prior to the Change of Control.

     8. TAXES: (a) Anything in this Plan to the contrary notwithstanding, and except as set forth below, in the event it shall be determined that any of an Executive’s Payment(s) would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon such Executive’s Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it shall be determined that the Executive is entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Executive’s Safe Harbor Amount, then no Gross-Up Payment shall be made to the Executive and the amounts payable under this Plan shall be reduced so that the Parachute Value of all of such Executive’s Payments, in the aggregate, equals the Executive’s Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the Executive’s Payments under Section 7(a), unless an alternative method of reduction is elected by the Executive, and in any event shall be made in such a manner as to maximize the Value of all Payments actually made to the Executive.

 


 

11

For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Plan (and no other Payments) shall be reduced. If the reduction of the amounts payable under this Plan would not result in a reduction of the Parachute Value of all Payments to the Executive’s Safe Harbor Amount, no amounts payable to such Executive under this Plan shall be reduced pursuant to this Section 8(a) and the Gross-Up Payment shall be made to the Executive. The Corporation’s obligation to make Gross-Up Payments under this Section 8 shall not be conditioned upon the Executive’s termination of employment.

          (b) Determination By Accountant. Subject to the provisions of Section 8(c)ii, all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment to any Executive is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Corporation’s auditor or another nationally recognized accounting firm appointed by the Corporation (the “Accounting Firm”). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). The Accounting Firm shall provide detailed supporting calculations both to the Corporation and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Corporation. All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Corporation to the applicable Executive within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Corporation and the applicable Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting

 


 

12

Firm hereunder it is possible that Gross-Up Payments that will not have been made by the Corporation should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder. In the event the Corporation exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive.

          (c) Notification Required. The Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim. The Executive shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

               (i) Give the Corporation any information reasonably requested by the Corporation relating to such claim,

               (ii) Take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation,

               (iii) Cooperate with the Corporation in good faith in order to effectively contest such claim, and

 


 

13

               (iv) Permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c)ii, the Corporation shall control all proceedings taken in connection with such contest and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund, or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall pay the amount of such payment to the Executive, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, (including interest or penalties) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and provided, further that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Corporation’s control of the contest shall be limited to issues with respect to which a the Gross-Up Payment would be payable hereunder and the

 


 

14

Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

          (d) Repayment. If, after the receipt by the Executive of a Gross-Up Payment or an amount paid by the Corporation pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the Executive shall (subject to the Corporation’s complying with the requirements of Section 8(c), if applicable,) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount paid by the Corporation pursuant to Section 8(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the Executive shall not be required to repay such amount to the Corporation, but the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

          (e) Withholding. Notwithstanding any other provision of this Section 8, the Corporation may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of each Executive, all or any portion of any Gross-Up Payment.

          (f)  Definitions: The following terms shall have the following meanings for purposes of this Section 8.

          “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

          “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

 


 

15

          A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of an Executive, whether paid or payable pursuant to this Plan or otherwise.

          The “Safe Harbor Amount” of an Executive means 2.99 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

          “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

     9. INDEMNIFICATION: If litigation is brought to enforce or interpret any provision contained herein, the Corporation or applicable subsidiary, to the extent permitted by applicable law and the Corporation’s or subsidiary’s Articles of Incorporation, as the case may be, shall indemnify each Executive who is a party thereto for his reasonable attorneys’ fees and disbursements incurred in such litigation, regardless of the outcome thereof, and shall pay interest on any money judgment obtained by the Executive calculated at the Citibank, N.A. prime interest rate in effect from time to time from the date that payment(s) to him should have been made under this Plan until the date the payment(s) is made. Such attorneys’ fees and disbursements shall be paid promptly as incurred by the Executive.

     10. PAYMENT OBLIGATIONS ABSOLUTE: Except as expressly provided in Section 13 and 14, the Corporation’s or subsidiary’s obligation to pay the Executive the benefits hereunder and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counter-claim, recoupment, defense or other right which the Corporation or any of its subsidiaries may have against him or anyone else. All amounts paid or payable by the Corporation or one of its subsidiaries hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Corporation or subsidiary shall be final and the Corporation or subsidiary will not seek to recover all or any part of such payment(s) from the Executive or from whosoever may be

 


 

16

entitled thereto, for any reason whatsoever. No Executive shall be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Plan, and the obtaining of any such other employment shall in no event effect any reduction of the Corporation’s or subsidiary’s obligations to make the payments and arrangements required to be made under this Plan. The Corporation or applicable subsidiary may at the discretion of the Chief Executive Officer of the Corporation enter into an irrevocable, third-party guarantee or similar agreement with a bank or other institution with respect to the benefits payable to an Executive hereunder, which would provide for the unconditional payment of such benefits by such third party upon presentment by an Executive of his Certificate (and on such other conditions deemed necessary or desirable by the Corporation or such subsidiary) at some specified time after termination of employment. Such third-party guarantor shall have no liability for improper payment if it follows the instructions of the Corporation or such subsidiary as provided in such Certificate and other documents required to be presented under the agreement, unless the Corporation or such subsidiary, in a written notice, has previously advised such third-party guarantor of the determination by its Board of Directors of ineligibility of the Executive in accordance with Section 15.

     11. CONTINUING OBLIGATIONS: It shall be a condition to the entitlement of an Executive to any benefits under this Plan that he agree to retain in confidence any confidential information known to him concerning the Corporation and its subsidiaries and their respective businesses as long as such information is not publicly disclosed, except as required by law.

     12. SUCCESSORS:

          (a) The benefits provided under this Plan are personal to the Executives and without the prior written consent of the Corporation shall not be assignable by any Executive

 


 

17

otherwise than by will or the laws of descent and distribution. This Plan shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

          (b) This Plan shall inure to the benefit of and be binding upon the Corporation and its successors and assigns.

          (c) The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to assume expressly and agree to perform this Plan in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. As used in this Plan, Corporation shall mean the Corporation as hereinbefore defined and any other person or entity which assumes or agrees to perform this Plan by operation of law, or otherwise.

     13. SEVERABILITY: Any provision in this Plan which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     14. OTHER PLANS AND AGREEMENTS: Notwithstanding any provision herein to the contrary, in the event the Executive’s employment with the Corporation or applicable subsidiary terminates and the Executive is entitled to receive termination, separation or other like amounts from the Corporation or any of its subsidiaries pursuant to any contract of employment, generally prevailing separation pay policy, or other program of the Corporation or applicable subsidiary, all such amounts shall be applied to and set off against the Corporation’s or applicable subsidiary’s obligation set forth in Sections 7 and 8 of this Plan. Nothing in this Section 14 is intended to result in set-off of pension benefits, supplemental executive retirement benefits,

 


 

18

disability benefits, retiree benefits or any other plan benefits not directly provided as termination or separation benefits.

     15. AMENDMENT AND TERMINATION: This Plan may be amended or terminated by action of the Board. This Plan shall terminate with respect to an Executive if the Chief Executive Officer of the Corporation determines that the Executive is no longer a key executive to be provided a severance agreement and so notifies the Executive by certified mail at least thirty (30) days before participation in this Plan shall cease. Notwithstanding the foregoing, no such amendment, termination or determination may be made, (and if made, shall have no effect during the period of thirty-six months following any Change of Control or (ii) during any period of time when the Corporation has knowledge that any third person has taken steps reasonably calculated to effect a Change of Control, until such third person has abandoned or terminated his efforts to effect a Change of Control as determined by the Board in good faith, but in its sole discretion.

     16. GOVERNING LAW: This Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Plan are not part of the provisions hereof and shall have no force or effect.

     17. By acceptance of participation in this Plan, an Executive agrees to give a minimum of four (4) weeks’ notice to the Corporation in the event of his voluntary resignation.

 

TIER II EXECUTIVE SEVERANCE PLAN
 

Exhibit 10.9

MONEYGRAM INTERNATIONAL, INC.
EXECUTIVE SEVERANCE PLAN (TIER II)
AS OF ___________, 2004

     1. PURPOSE: To provide management continuity by inducing selected Executives to remain in the employ of MoneyGram International, Inc. (the “Corporation”) or one of its subsidiaries pending a possible Change of Control of the Corporation.

     2. OBJECTIVES: To ensure in the event of a possible Change of Control of the Corporation, in addition to the Executive’s regular duties, that he may be available to be called upon to assist in the objective assessment of such situations, to advise management and the Board of Directors (the “Board”) of the Corporation as to whether such proposals would be in the best interests of the Corporation its subsidiaries and its shareholders, and to take such other actions as management or the Board might determine reasonably appropriate and in the best interests of the Corporation and its shareholders.

     3. PARTICIPATION: Participation in this Executive Severance Plan (Tier II) (this “Plan”) will be limited to selected Executives (each referred to herein as “Executive”) whose importance to the Corporation during such periods is deemed to warrant good and valuable special consideration by the Chief Executive Officer of the Corporation. Each such Executive’s participation shall be evidenced by a certificate (“Certificate”) issued by the Corporation, each of which is incorporated herein by reference as if set forth in its entirety. In the event an Executive shall become ineligible hereunder, his Certificate shall be surrendered promptly to the Corporation.

     4. DEFINITION OF CHANGE OF CONTROL: For purposes of this Plan, a “Change of Control” shall mean any of the following events:

          (a) An acquisition by an individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning

 


 

  2

of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either: (1) the then outstanding shares of common stock of the Corporation (the “Outstanding Corporation Common Stock”) or (2) the combined voting power of the then Outstanding Voting Securities of the Corporation entitled to vote generally in the election of Directors (the “Outstanding Corporation Voting Securities”); excluding, however, the following: (A) any acquisition directly from the Corporation or any entity controlled by the Corporation other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Corporation or any entity controlled by the Corporation, (B) any acquisition by the Corporation or any entity controlled by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any entity controlled by the Corporation or (D) any acquisition pursuant to a transaction which complies with clauses (1), (2) and (3) of Section 4(c); or

          (b) A change in the composition of the Board such that the individuals who, as of the effective date of the Plan, constitute the Board (such Board shall be hereinafter referred to as the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, for purposes of this section 4(b), that any individual who becomes a member of the Board subsequent to the effective date of the Plan, whose election or nomination for election by the Corporation’s shareholders was approved by a vote of at least a majority of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; but provided further, that any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened

 


 

  3

solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be so considered as a member of the Incumbent Board, or

          (c) Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Corporation (a “Corporate Transaction”) excluding, however, such a Corporate Transaction pursuant to which (1) all or substantially all of the individuals and entities who are the beneficial owners, respectively, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities immediately prior to such Corporate Transaction (the “Prior Shareholders”) beneficially own, directly or indirectly, more than 60% of, respectively, the outstanding shares of Common Stock and the combined voting power of the then Outstanding Voting Securities entitled to vote generally in the election of Directors, as the case may be, of the Corporation or other entity resulting from such Corporate Transaction (including, without limitation, a corporation or other entity which as a result of such transaction owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities, as the case may be, (2) no Person (other than the Corporation or any entity controlled by the Corporation, any employee benefit plan (or related trust) of the Corporation or any entity controlled by the Corporation or such corporation or other entity resulting from such Corporate Transaction) will beneficially own, directly or indirectly, 20% or more of, respectively, the outstanding shares of Common Stock of the Corporation or other entity resulting from such Corporate Transaction or the combined voting power of the Outstanding Voting Securities of such Corporation or other entity entitled to vote generally in the election of Directors except to the extent that such ownership existed prior to the Corporate Transaction and (3) individuals who were members of the Incumbent Board will constitute at least a majority of the

 


 

  4

members of the Board of Directors of the Corporation resulting from such Corporate Transaction; and further excluding any disposition of all or substantially all of the assets of the Corporation pursuant to a spin-off, split-up or similar transaction (a “Spin-off”) if, immediately following the Spin-off, the Prior Shareholders beneficially own, directly or indirectly, more than 80% of the outstanding shares of Common Stock and the combined voting power of the then Outstanding Voting Securities entitled to vote generally in the election of directors of both entities resulting from such transaction, in substantially the same proportions as their ownership, immediately prior to such transaction, of the Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities; provided, that if another Corporate Transaction involving the Corporation occurs in connection with or following a Spin-off, such Corporate Transaction shall be analyzed separately for purposes of determining whether a Change of Control has occurred;

          (d) The approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation.

     5. DEFINITIONS:

          (a) For purposes of this Plan, “Cause” with respect to an Executive shall mean:

               (i) The willful and continued failure of the Executive to perform substantially the Executive’s duties with the Corporation or one of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance improvement is delivered to the Executive by the Board or the Chief Executive Officer of the Corporation which specifically identifies the manner in which the Board or Chief Executive Officer believes that the Executive has not substantially performed the Executive’s duties, or

               (ii) The willful engaging by the Executive in illegal conduct or gross misconduct which is materially and demonstrably injurious to the Corporation. For purposes of this

 


 

  5

Section 5(a), no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Corporation. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of the Corporation or based upon the advice of counsel for the Corporation shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Corporation. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire membership of the Board (excluding the Executive if he is a member of the Board) at a meeting of the Board called and held for such purpose (after reasonable notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that, in the good-faith opinion of the Board, the Executive is guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail.

          (b) For purposes of the Plan, “Good Reason” with respect to an Executive shall mean:

               (i) The assignment to the Executive of any duties inconsistent in any respect with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities immediately prior to the Change of Control, or any other action by the Corporation or any of its subsidiaries which results in a diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Corporation or the applicable subsidiary promptly after receipt of notice thereof given by the Executive;

 


 

  6

               (ii) Any reduction of the Executive’s base salary, annual bonus, incentive opportunities, retirement benefits, welfare or fringe benefits below the highest level enjoyed by the Executive during the 120-day period prior to the Change of Control;

               (iii) The Corporation’s or one of its subsidiaries requiring the Executive to be based at any office or location other than that at which he was based immediately prior to the Change of Control or the Corporation’s or one of its subsidiaries requiring the Executive to travel to a substantially greater extent than required immediately prior to the Change of Control;

               (iv) Any purported termination by the Corporation or one of its subsidiaries of the Executive’s employment otherwise than as expressly permitted by this Plan; or

               (v) Any failure by the Corporation to comply with and satisfy Section 11(c) of this Plan.

For purposes of this Plan, any good faith determination of “Good Reason” made by an Executive shall be conclusive with respect to that Executive.

     6. ELIGIBILITY FOR BENEFITS: Benefits as described in Section 7 shall be provided in the event the Executive’s employment with the Corporation or any of its subsidiaries is terminated:

          (a) Involuntarily by the Corporation or the applicable subsidiaries without Cause (a “Without Cause Termination”); or

          (b) By the Executive for Good Reason (a “Good Reason Termination”) provided that such termination occurs within eighteen months after a Change of Control; and provided, further, that in no event shall a termination as a consequence of an Executive’s death, disability, or Retirement (as defined in the next sentence) entitle the Executive to benefits under this Plan. “Retirement” shall mean the Executive’s voluntary retirement at or after his normal retirement

 


 

  7

date under the Corporation’s or a subsidiary’s retirement plan or, if the Executive does not participate in any such plan that provides for a normal retirement date, at or after age 65.

     7. BENEFIT ENTITLEMENTS:

          (a) Lump Sum Payment: On or before the Executive’s last day of employment with the Corporation or any of its subsidiaries, the Corporation or the applicable subsidiary will pay to the Executive as compensation for services rendered a lump sum cash amount (subject to any applicable payroll or other taxes required to be withheld) equal to (i) two times the sum of (x) Executive’s highest annual salary fixed during the period Executive was an employee of the Corporation or any of its subsidiaries, plus (y) the greater of (A) the largest amount awarded to him in a year as cash bonus (whether or not deferred and regardless of deferral election) under the Corporation’s Management Incentive Plan during the preceding four years (or if the Executive has not been employed for at least four full fiscal years, all of the completed full fiscal years during which the Executive has been employed), or (B) the target bonus under the Corporation’s Management Incentive Plan for the fiscal year in which the Change of Control occurs, plus (z) the greater of (I) the largest amount awarded to Executive in a year as cash bonus (whether or not deferred and regardless of deferral election) under the Corporation’s Performance Unit Incentive Plan during the preceding four years or if the Executive has not been employed for at least four full fiscal years, all of the completed full fiscal years during which the Executive has been employed, or (II) the aggregate value of shares when earned during a performance period under any performance-related Restricted Stock award during the preceding four years or if the Executive has not been employed for at least four fiscal years, all of the completed full fiscal years during which the Executive has been employed, or (III) the aggregate value at the time of grant of the target shares awarded under the Corporation’s performance-related Restricted Stock programs for the fiscal year in which the Change of Control occurs, multiplied by (ii) a fraction, the numerator of which is 24

 


 

  8

minus the number of full months from the date of the Change of Control through the last day of the Executive’s employment, and the denominator of which is 24.

          (b) Employee Plans: The Executive’s participation in life, accident, health, compensation deferral, automobile, club membership, and financial counseling plans of the Corporation, or the applicable subsidiary, if any, provided to the Executive immediately prior to the Change of Control or his termination, shall be continued, or equivalent benefits provided, by the Corporation or the applicable subsidiary at no direct cost or tax cost to the Executive in excess of the costs that would be imposed on the Executive if he remained an employee for a period (the “Severance Period”) of two years times a fraction, the numerator of which is 24 minus the number of full months from the date of the Change of Control through the last day of the Executive’s employment, and the denominator of which is 24. The Executive’s participation in any applicable qualified or nonqualified retirement and/or pension plans and any deferred compensation or bonus plan of the Corporation or any of its subsidiaries, if any, shall continue only through the last day of employment. Any terminating distributions and/or vested rights under such plans shall be governed by the terms of the respective plans. For purposes of determining the eligibility of the Executive for any post-retirement life and health benefits, the Executive shall be treated as having attained an additional two years of age and service credit, in each case as of the last day of the Executive’s employment.

          (c) Special Retirement Benefits: If the Executive is, immediately prior to his termination of employment, an active participant accruing benefits under any qualified and/or nonqualified defined benefit retirement plans (collectively, the “Retirement Plans”), then the Executive or his beneficiaries shall be paid Special Retirement Benefits as and when the Executive or such beneficiaries become entitled to receive benefits under the Retirement Plans (as defined below), equal to the excess of (i) the retirement benefits that would be payable to the Executive or

 


 

  9

his beneficiaries under the Retirement Plans if the Executive’s employment had continued during the Severance Period, all of his accrued benefits under the Retirement Plans (including those attributable to the Severance Period) were fully vested, and his final average compensation is equal to the Deemed Final Average Compensation, as defined below, over (ii) the total qualified and unqualified benefits actually payable to the Executive or his beneficiaries under the Retirement Plan. The “Deemed Final Average Compensation” means the Executive’s final average compensation computed in accordance with the Retirement Plans, except that the amount specified in Section 7(a) shall be considered as having been paid to the Executive as “compensation” in equal monthly installments during the Severance Period. All Special Retirement Benefits shall be unfunded and payable solely from the general assets of the Corporation or its appropriate subsidiary, and are not intended to meet the qualification requirements of Section 401 of the Internal Revenue Code. The amount of the Special Retirement Benefits shall be determined using actuarial assumptions no less favorable to the Executive than those used in the qualified Retirement Plan immediately prior to the Change of Control.

          (d) Outplacement: The Executive shall be provided with outplacement benefits in accordance with those offered to Executives immediately prior to the Change of Control.

          (e) Minimum Benefit Entitlement: Notwithstanding anything to the contrary in this Section 7, and except as provided in Section 8(a), in no event shall an Executive’s severance benefit under this Plan be less than the benefits (if any) such Executive would have received in accordance with the severance policy of the Corporation or applicable subsidiary in effect immediately prior to the Change of Control.

     8. TAXES: (a) Anything in this Plan to the contrary notwithstanding, and except as set forth below, in the event it shall be determined that any of an Executive’s Payment(s) would be subject to the Excise Tax, then the Executive shall be entitled to receive an additional payment (the “Gross-Up Payment”) in an amount such that, after payment by the Executive of all taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon such Executive’s Payments. Notwithstanding the foregoing provisions of this Section 8(a), if it shall be determined that the Executive is entitled to the Gross-Up Payment, but that the Parachute Value of all Payments does not exceed 110% of the Executive’s Safe Harbor Amount, then no Gross-Up Payment shall be made to the Executive and the amounts payable under this Plan shall be reduced so that the Parachute Value of all of such Executive’s Payments, in the aggregate, equals the Executive’s Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the Executive’s Payments under Section 7(a), unless an alternative method of reduction is elected by the Executive, and in any event shall be made in such a manner as to maximize the Value of all Payments actually made to the Executive.

For purposes of reducing the Payments to the Safe Harbor Amount, only amounts payable under this Plan (and no other Payments) shall be reduced. If the reduction of the amounts payable under this Plan would not result in a reduction of the Parachute Value of all Payments to the Executive’s Safe Harbor Amount, no amounts payable to such Executive under this Plan shall be reduced pursuant to this Section 8(a) and the Gross-Up Payment shall be made to the Executive. The Corporation’s obligation to make Gross-Up Payments under this Section 8 shall not be conditioned upon the Executive’s termination of employment.

 


 

  10

          (b) Determination By Accountant. Subject to the provisions of Section 8(c)ii, all determinations required to be made under this Section 8, including whether and when a Gross-Up Payment to any Executive is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by the Corporation’s auditor or another nationally recognized accounting firm appointed by the Corporation (the “Accounting Firm”). In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change of Control, the Executive may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). The Accounting Firm shall provide detailed supporting calculations both to the Corporation and the Executive within 15 business days of the receipt of notice from the Executive that there has been a Payment or such earlier time as is requested by the Corporation. All fees and expenses of the Accounting Firm shall be borne solely by the Corporation. Any Gross-Up Payment, as determined pursuant to this Section 8, shall be paid by the Corporation to the applicable Executive within five days of the receipt of the Accounting Firm’s determination. Any determination by the Accounting Firm shall be binding upon the Corporation and the applicable Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder it is possible that Gross-Up Payments that will not have been made by the Corporation should have been made (the “Underpayment”), consistent with the calculations required to be made hereunder. In the event the Corporation exhausts its remedies pursuant to Section 8(c) and the Executive thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Corporation to or for the benefit of the Executive.

          (c) Notification Required. The Executive shall notify the Corporation in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Corporation of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Executive is informed in writing of such claim. The Executive shall apprise the Corporation of the nature of such claim and the date on which such claim is requested to be paid. The Executive shall not pay such claim prior to the expiration of the 30-day period following the date on which the Executive gives such notice to the Corporation (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Corporation notifies the Executive in writing prior to the expiration of such period that it desires to contest such claim, the Executive shall:

               (i) Give the Corporation any information reasonably requested by the Corporation relating to such claim,

               (ii) Take such action in connection with contesting such claim as the Corporation shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Corporation,

               (iii) Cooperate with the Corporation in good faith in order to effectively contest such claim, and

               (iv) Permit the Corporation to participate in any proceedings relating to such claim; provided, however, that the Corporation shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax, (including interest and penalties) imposed as a result of such representation and payment of costs and expenses. Without limitation on the foregoing provisions of this Section 8(c)ii, the Corporation shall control all proceedings taken in connection with such contest and, at its sole discretion, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the applicable taxing authority in respect of such claim and may, at its sole discretion, either direct the Executive to pay the tax claimed and sue for a refund, or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Corporation shall determine; provided, however, that if the Corporation directs the Executive to pay such claim and sue for a refund, the Corporation shall pay the amount of such payment to the Executive, and shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or income tax, (including interest or penalties) imposed with respect to such payment or with respect to any imputed income in connection with such payment; and provided, further that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Corporation’s control of the contest shall be limited to issues with respect to which a the Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

 


 

  11

          (d) Repayment. If, after the receipt by the Executive of a Gross-Up Payment or an amount paid by the Corporation pursuant to Section 8(c), the Executive becomes entitled to receive any refund with respect to the Excise Tax to which such Gross-Up Payment relates or with respect to such claim, the Executive shall (subject to the Corporation’s complying with the requirements of Section 8(c), if applicable,) promptly pay to the Corporation the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount paid by the Corporation pursuant to Section 8(c), a determination is made that the Executive shall not be entitled to any refund with respect to such claim and the Corporation does not notify the Executive in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then the Executive shall not be required to repay such amount to the Corporation, but the amount of such payment shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

          (e) Withholding. Notwithstanding any other provision of this Section 8, the Corporation may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of each Executive, all or any portion of any Gross-Up Payment.

          (f)  Definitions: The following terms shall have the following meanings for purposes of this Section 8.

          “Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

          “Parachute Value” of a Payment shall mean the present value as of the date of the change of control for purposes of Section 280G of the Code of the portion of such Payment that constitutes a “parachute payment” under Section 280G(b)(2), as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

          A “Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of an Executive, whether paid or payable pursuant to this Plan or otherwise.

          The “Safe Harbor Amount” of an Executive means 2.99 times the Executive’s “base amount,” within the meaning of Section 280G(b)(3) of the Code.

          “Value” of a Payment shall mean the economic present value of a Payment as of the date of the change of control for purposes of Section 280G of the Code, as determined by the Accounting Firm using the discount rate required by Section 280G(d)(4) of the Code.

 


 

  12

     9. PAYMENT OBLIGATIONS ABSOLUTE: Except as expressly provided in Section 13 and 14, the Corporation’s or subsidiary’s obligation to pay the Executive the benefits hereunder and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counter-claim, recoupment, defense or other right which the Corporation or any of its subsidiaries may have against him or anyone else. All amounts paid or payable by the Corporation or one of its subsidiaries hereunder shall be paid without notice or demand. Each and every payment made hereunder by the Corporation or subsidiary shall be final and the Corporation or subsidiary will not seek to recover all or any part of such payment(s) from the Executive or from whosoever may be entitled thereto, for any reason whatsoever. No Executive shall be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Plan, and the obtaining of any such other employment shall in no event effect any reduction of the Corporation’s or subsidiary’s obligations to make the payments and arrangements required to be made under this Plan. The Corporation or applicable subsidiary may at the discretion of the Chief Executive Officer of the Corporation enter into an irrevocable, third-party guarantee or similar agreement with a bank or other institution with respect to the benefits payable to an Executive hereunder, which would provide for the unconditional payment of such benefits by such third party upon presentment by an Executive of his Certificate (and on such other conditions deemed necessary or desirable by the Corporation or such subsidiary) at some specified time after termination of employment. Such third-party guarantor shall have no liability for improper payment if it follows the instructions of the Corporation or such subsidiary as provided in such Certificate and other documents required to be presented under the agreement, unless the Corporation or such subsidiary, in a written notice, has previously advised such third-party

 


 

  13

guarantor of the determination by its Board of Directors of ineligibility of the Executive in accordance with Section 14.

     10. CONTINUING OBLIGATIONS: It shall be a condition to the entitlement of an Executive to any benefits under this Plan that he agree to retain in confidence any confidential information known to him concerning the Corporation and its subsidiaries and their respective businesses as long as such information is not publicly disclosed, except as required by law.

     11. SUCCESSORS:

          (a) The benefits provided under this Plan are personal to the Executives and without the prior written consent of the Corporation shall not be assignable by any Executive otherwise than by will or the laws of descent and distribution. This Plan shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

          (b) This Plan shall inure to the benefit of and be binding upon the Corporation and its successors and assigns.

          (c) The Corporation will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Corporation to assume expressly and agree to perform this Plan in the same manner and to the same extent that the Corporation would be required to perform it if no such succession had taken place. As used in this Plan, Corporation shall mean the Corporation as hereinbefore defined and any other person or entity which assumes or agrees to perform this Plan by operation of law, or otherwise.

     12. SEVERABILITY: Any provision in this Plan which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions

 


 

  14

hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

     13. OTHER PLANS AND AGREEMENTS: Notwithstanding any provision herein to the contrary, in the event the Executive’s employment with the Corporation or applicable subsidiary terminates and the Executive is entitled to receive termination, separation or other like amounts from the Corporation or any of its subsidiaries pursuant to any contract of employment, generally prevailing separation pay policy, or other program of the Corporation or applicable subsidiary, all such amounts shall be applied to and set off against the Corporation’s or applicable subsidiary’s obligation set forth in Section 7 of this Plan. Nothing in this Section 13 is intended to result in set-off of pension benefits, supplemental executive retirement benefits, disability benefits, retiree benefits or any other plan benefits not directly provided as termination or separation benefits.

     14. AMENDMENT AND TERMINATION: This Plan may be amended or terminated by action of the Board. This Plan shall terminate with respect to an Executive if the Chief Executive Officer of the Corporation determines that the Executive is no longer a key executive to be provided a severance agreement and so notifies the Executive by certified mail at least thirty (30) days before participation in this Plan shall cease. Notwithstanding the foregoing, no such amendment, termination or determination may be made, (and if made, shall have no effect) (i) during the period of thirty-six months following any Change of Control or (ii) during any period of time when the Corporation has knowledge that any third person has taken steps reasonably calculated to effect a Change of Control, until such third person has abandoned or terminated his efforts to effect a Change of Control as determined by the Board in good faith, but in its sole discretion.

 


 

  15

     15. GOVERNING LAW: This Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws. The captions of this Plan are not part of the provisions hereof and shall have no force or effect.

     16. ACCEPTANCE: By acceptance of participation in this Plan, an Executive agrees to give a minimum of four (4) weeks’ notice to the Corporation or any of its subsidiaries in the event of his voluntary resignation.

 

SUPPLEMENTAL 401(K) PLAN
 

Exhibit 10.10

TRAVELERS EXPRESS COMPANY, INC.
SUPPLEMENTAL 401(k) PLAN

1. Purpose of the Plan

The purpose of the Supplemental 401(k) Plan (the “Plan”) is to provide a select group of management or highly compensated employees who are officers and key employees of Travelers Express Company, Inc. (the “Company”), and its subsidiaries or affiliates with an opportunity to accumulate pre-tax savings for retirement.

2. Administration of the Plan

The Plan shall be administered by the Compensation Advisory Committee (the Committee) the members of which shall be appointed by the Chief Executive Officer of the Company. Subject to the express provisions of the Plan, the Committee shall have the authority to adopt, amend and rescind such rules and regulations, and to make such determinations and interpretations relating to the Plan, which it deems necessary or advisable for the administration of the Plan, but it shall not have the power to amend, suspend or terminate the Plan. All such rules, regulations, determinations and interpretations shall be conclusive and binding on all parties.

3. Participation in the Plan

(a) Participation in the Plan shall be restricted to those officers and key employees of the Company and its subsidiaries as designated by the Company’s President and Chief Executive Officer and whose annual compensation limits the elective deferrals they may contribute to the Travelers Express Company, Inc., Capital Accumulation Plan (the “401(k) Plan”) as contained in Section 402 of the Internal Revenue Code, and whose timely written requests to defer the receipt of compensation, which may be owed to them for services rendered, are honored in whole or in part by the Committee, in its sole discretion. A written request for deferral under paragraph 4 shall not be timely in any event unless it is duly submitted to the Committee before the services to which the base salary to be deferred is related have been rendered.

 


 

(b) If a participant in the Plan shall (1) sever his or her employment with the Company or one of its subsidiaries during or following such employment, (2) engage in any activity in competition with the Company or any of its subsidiaries during or following such employment, or (3) remain in the employ of a corporation which for any reason ceases to be a subsidiary of the Company, his or her participation in the Plan shall automatically terminate, and the Committee may direct, in its sole discretion, that he or she be paid in a lump sum the aggregate amount credited to his or her deferred compensation account as of the date his or her employment is severed or the Committee determines that he or she has engaged in such competitive activity or that his or her employer is no longer a subsidiary of the Company.

4. Requests for Deferral

All requests for deferral of compensation must be made in writing 30 days prior to the beginning of each quarter and shall be in such form and shall contain such terms and conditions as the Committee may determine. Each such request shall specify the percentage or dollar amount of base salary if any, but in no event shall the amount to be deferred in a Plan year be greater than the lesser of (i ) $41,000, or the amount specified by the Internal Revenue Service under Code Section 415, Defined Contribution Annual Maximum, less the total amount of all contributions of whatever nature, to the Participant’s 401(k) Plan account during the same time period, or (ii) 50% of the participant’s base salary in the Plan year. Each such request shall also specify (1) the date when payment of the aggregate amount credited to the deferred compensation account is to commence (which shall not be earlier than age 55 nor later than the actual retirement date) and (2) whether such payment is then to be made in a lump sum or in quarterly or annual installments, and the period of time (not in excess of ten years) over which the installments are to be paid. The Committee shall not, under any circumstances, accept any request for deferral greater than the limits defined above, or any request which is not in writing or which is not timely submitted.

5. Deferral of Compensation

The Committee shall notify each individual who has submitted a request for deferral of compensation whether or not such request has been accepted and honored. If the request has been honored in whole or in part, the Committee shall advise the participant of the percentage of his or her compensation which the Committee has determined to be deferred. The Committee shall further advise the participant of its determination as to the date when payment of the aggregate amount credited to the participant’s deferred compensation account is to commence, whether payment of the amount so credited as of that date will then be made in a lump sum or in quarterly or annual installments, and if payment is to be made in installments, the period of time over which the installments will be paid. Upon subsequently being advised of the existence of special circumstances which are beyond the participant’s control and which impose a severe financial hardship on the participant or his or her beneficiary, the Committee may, in its sole and exclusive discretion, modify the deferral arrangement established for that participant to the extent necessary to remedy such financial hardship.

2


 

6. Deferred Compensation Account

(a)   A deferred compensation account shall be maintained for each participant of this Plan by his or her employer. The employer shall credit to each participant’s account the following amounts, as appropriate:

     (i) The deferral duly elected under this Plan on the date the participant would have received such deferral as base salary;

     (ii) Based on the provision of the 401(k) Plan in effect at the time, an amount with respect to the deferrals in (1), above, calculated on the same basis as the employer’s then current matching contribution on elective deferrals under the 401(k) Plan on the first day of each quarter. In no event shall this amount exceed the maximum amount of matching contributions which would be available, assuming the participant elects the maximum deferrals allowed under 401(k) and the limitations on elective deferrals contained in Code Section 402 do not apply, less the amount of actual matching contributions made by the employer to the participant’s 401(k) account, if any, for the same period;

     (iii) Based on the provisions of the 401(k) Plan in effect at the time, and not withstanding the amount, if any, of deferrals in (i) above, an amount equal to the employer matching contributions which would have been made to the participant’s 401(k) Plan account based on the amount of elective deferrals actually made by said participant to the 401(k) Plan, but for the application of Code Section 401(a)(17) or any other similar law on the first day of each quarter; and

     (iv) Interest on the participant account balance at a per annum rate equal to the yield as of January 1, April 1, July 1, and October 1 on Merrill Lynch Taxable Bond Index-Long Term Medium Quality (A3) Industrial Bonds or such other rate the Committee may determine in its sole discretion, credited quarterly prior to the termination of the participant’s deferral period, or if the deferred compensation account is to be paid in installments, prior to the termination of such installment period.

(b) The Company or employer, as the case may be, shall not be required to physically segregate any amounts of money or property or otherwise provide for funding of any amounts credited to the deferred compensation accounts of participants in the Plan. Participants have no claim, interest or right to any particular funds or property that the Company or any employer may choose to reserve or otherwise use to provide for its liabilities under this Plan and the participants of this Plan shall have the rights of general creditor only with respect to their interests in the Plan.

7. Designation of Beneficiary

Each participant in the plan shall deliver to the Committee a written instrument, in the form provided by the Committee, designating one or more beneficiaries to whom payment of the amount credited to his or her deferred compensation account shall be made in the event of his or her death. Unless the Committee shall otherwise determine, such payments shall be made in such amounts and at such times as they would otherwise have been paid to the participant if he had survived.

3


 

8. Nonassignability of Participant Rights

No right, interest or benefit under the Plan shall be assignable or transferable under any circumstances other than to a participant’s designated beneficiary in the event of his or her death, nor shall any such right, interest or benefit be subject to or liable for any debt, obligation, liability or default of any participant. In the event of any attempt to assign or transfer any right, interest or benefit under the Plan, or to subject any such right, interest or benefit to a debt, obligation, liability or default of a participant, his or her participation in the Plan shall terminate on the date such an attempt is made, and he or she shall be paid in a lump sum the aggregate amount credited to his or her deferred compensation account as of that date.

9. Rights of Participants

A participant in the Plan shall have only those rights, interest or benefits as are expressly provided in the Plan. This Plan does not create for any employee or participant any right to be retained in service by any Company nor affect the right of any such Company to discharge any employee or participant from employment.

10. Amendment, Suspension or Termination of the Plan

(a) The Board of Directors of the Company (the Board) may from time to time amend, suspend or terminate the Plan, in whole or in part, and if the Plan is suspended or terminated, the Board may reinstate any or all provisions of the Plan, except that no amendment, suspension or termination of the Plan shall, without consent of a participant, adversely affect such participant’s right to receive payment of the entire amount credited to his or her deferred compensation account on the date of such Board action. In the event the Plan is suspended or terminated, the Board may, in its discretion, direct the Committee to pay to each participant the amount credited to his or her account either in a lump sum or in accordance with the Committee’s prior determination regarding the method of payment.

(b) Any action by the Company under the Plan may be by resolution of its Board of Directors, or by any person or persons duly authorized by resolution of said Board to take such action.

11. Effective Date

The Plan shall become effective on the date of its approval by the Board or on such other date as the Board may direct. The Plan year is January 1 to December 31.

4

SUPPLEMENTAL PENSION PLAN
 

Exhibit 10.11

TRAVELERS EXPRESS COMPANY, INC.
SUPPLEMENTAL PENSION PLAN

(Restated as of January 1, 2001)

 


 

TABLE OF CONTENTS

                 
       
ARTICLE 1. PURPOSE
    1  
       
ARTICLE 2. DEFINITIONS
    1  
       
ARTICLE 3. PARTICIPATION
    3  
       
ARTICLE 4. FUNDING
    4  
       
ARTICLE 5. CATEGORIES OF BENEFIT PAYMENTS TO ELIGIBLE EMPLOYEES
    4  
       
ARTICLE 6. RETIREMENT BENEFITS
    4  
       
ARTICLE 7. FINAL AVERAGE EARNINGS
    5  
       
ARTICLE 8. OPTIONAL FORMS
    6  
       
ARTICLE 9. LISTING OF ELIGIBLE EMPLOYEES
    6  
       
ARTICLE 10. SURVIVOR’S BENEFIT
    6  
       
ARTICLE 11. VESTING
    7  
       
ARTICLE 12. NON-COMPETE AND FORFEITURE PROVISIONS
    7  
       
ARTICLE 13. CHANGE OF CONTROL
    8  
       
ARTICLE 14. ADMINISTRATION, MODIFICATION, AND TERMINATION OF THE PLAN
    9  
       
ARTICLE 15. TAX WITHHOLDING
    9  
       
ARTICLE 16. MISCELLANEOUS
    10  
       
ARTICLE 17. APPLICABLE LAW
    10  
       
SCHEDULE A.
    11  
  1.    
General Rules
    11  
  2.    
Schedule A Benefit
    11  

 i 

 


 

                 
  3.    
Special Benefit
    11  
  4.    
Reduction in Monthly Amount for Commencement Before Age 65
    11  
  Exhibit A.     12  
 
       
SCHEDULE E.
    13  
  1.    
General Rules
    13  
  2.    
Restoration Benefit
    13  
 
       
SCHEDULE F.
    14  
  1.    
General Rules
    14  
  2.    
Post-1997 Benefit
    14  
  3.    
Pre-1998 Benefit
    14  
  4.    
Reduction in Monthly Amount for Commencement Before Age 65
    15  
  Exhibit F.     16  
        17  

ii

 


 

TRAVELERS EXPRESS COMPANY, INC.
SUPPLEMENTAL PENSION PLAN
(Restated as of January 1, 2001)

ARTICLE 1. PURPOSE

The purpose of the Travelers Express Company, Inc. Supplemental Pension Plan (the “Plan”) is to provide deferred compensation to Eligible Employees (as defined in Article 3) on and after January 1, 1994. Eligible Employees and former Eligible Employees who terminated employment prior to January 1, 1994 remain subject to the terms of the prior plan in which they participated at the time of their termination, but any benefits remaining to be paid under the prior plan shall be paid from this Plan. It is the intention of Travelers Express Company, Inc. (the “Company”) that Eligible Employees are those employees designated by the Board of Directors of the Company pursuant to Article 3, from a select group of management or highly-compensated employees of the Company, or any of its subsidiaries or affiliates (“Subsidiaries”) and that the Plan continue to be eligible for exemptions under Parts 1, 2, 3 and 4 of Title I of ERISA and U.S. Department of Labor regulations. It also is the intention of the Company that the Plan be unfunded, that any Eligible Employee’s rights under the Plan are those of a general creditor only, and that there be no elections with respect to any benefits under the Plan by Eligible Employees. Subject to rights and benefits expressly fixed by the terms hereof, the Company also intends that the Plan may be amended or terminated and that benefits may be reduced or eliminated as the Board of Directors of the Company determines from time to time and that individuals’ rights may be altered.

By adoption of this Plan document, the Company hereby amends and restates the Plan, effective as of January 1, 2001.

ARTICLE 2. DEFINITIONS

Whenever used in this Plan, the following words and phrases shall have the respective meanings stated below unless a different meaning is expressly provided or is plainly required by the context. Capitalized terms not defined in this Article, but defined in the Viad Corp Retirement Income Plan (“VCRIP”), shall have the respective meanings ascribed to them in VCRIP. Capitalized terms applicable to a specific Schedule of Benefits, and not defined in this Article or VCRIP, are defined in the applicable Schedule of Benefits.

(a)   “COMMITTEE” means the committee, if any, appointed by the Company, in its sole discretion, to carry out some or all of the administrative activities necessary or advisable for the proper administration of the Plan. If the Company does not appoint,

1


 

or has not appointed, such a committee, references to the Committee shall be interpreted to mean the Company or its authorized delegate.

(b)   “COVERED COMPENSATION” means the average (without indexing) of the Eligible Employee’s taxable wage bases in effect for each calendar year during the 35-year period ending with the calendar year in which the Eligible Employee attains or will attain Social Security retirement age, as determined under Internal Revenue Code Section 415(b)(8). In determining an Eligible Employee’s Covered Compensation for any calendar year, the taxable wage base for the current and any subsequent calendar year is assumed to be the same as the taxable wage base in effect as of the beginning of the calendar year for which the determination is being made. An Eligible Employee’s Covered Compensation for a calendar year after the 35-year period is equal to his or her Covered Compensation for the calendar year in which the Eligible Employee attained Social Security retirement age. An Eligible Employee’s Covered Compensation for a calendar year before the 35-year period is the taxable wage base in effect as of the beginning of the calendar year. Covered Compensation is automatically adjusted at the beginning of each calendar year
 
(c)   “CREDITED SERVICE” means the period or periods of employment counted as Service (as defined in VCRIP) that is not excluded from Credited Service under VCRIP. However, as provided under the Predecessor Plan Document, Credited Service shall not include:

  (1)   Periods of employment prior to 1970 during which the Eligible Employee did not make required contributions under the predecessor to VCRIP;
 
  (2)   Periods of employment prior to May 1, 1989 with Republic Money Order, Inc.; or
 
  (3)   Periods of employment prior to January 1, 1983 with Trav/Act Systems, Inc.
 
      Notwithstanding the foregoing, Credited Service shall continue to be counted under this Plan with respect to Service on and after January 1, 2001 under the same terms and conditions as applied immediately before 2001, even though Credited Service under VCRIP does not include any Service after December 31, 2000. In no event, however, shall more than thirty (30) years of Credited Service be taken into account for any Eligible Employee under this Plan.

(d)   “ELIGIBLE EMPLOYEE” means each employee of the Company or a Subsidiary designated pursuant to Article 3 and the applicable Schedule of Benefits as eligible to participate in that Schedule of Benefits. Except with respect to Schedule E, Eligible Employees covered by a particular Schedule of Benefits shall be listed in the corresponding Exhibit carrying the same letter designation.

2


 

(e)   “EXHIBIT” means the listing of Eligible Employees covered by the Schedule of Benefits with the same letter designation as further described in Article 3 and Article 9.
 
(f)   “FINAL AVERAGE EARNINGS” means the earnings used to determine benefits under this Plan as further described in Article 7.
 
(g)   “MIPs” means bonuses awarded under the Management Incentive Plan, or its predecessor or successor plan, as well as bonuses awarded as a special recognition award, special achievement award, spot award or, as determined by the Committee, pursuant to any other similar bonus program.
 
(h)   “PENSION PLANS” means all qualified and nonqualified pension plans sponsored by the Company or a Related Company, other than this Plan, the Viad Corp Capital Accumulation Plan, the MoneyGram Payment Systems, Inc. Savings Plan, and the Viad Corp Employees’ Stock Ownership Plan.
 
(i)   “PLAN” means this Travelers Express Company, Inc. Supplemental Pension Plan, as amended.
 
(j)   “PRIMARY SOCIAL SECURITY BENEFIT” means the annual amount available to the Eligible Employee at age 65 (or at the time of his or her retirement, if later), as determined without regard to any increase in the wage base or benefit levels after the determination date under the provisions of Title II of the Social Security Act in effect at the Eligible Employee’s termination of employment, and assuming no future earnings between the Eligible Employee’s termination of employment and his or her 65th birthday.
 
(k)   “SCHEDULE OF BENEFITS” means each schedule attached hereto and made a part of this Plan providing for benefits to Eligible Employees listed in the corresponding Exhibit carrying the same letter designation.
 
(l)   “SUBSIDIARY” means any subsidiary or affiliate of the Company.
 
(m)   “VCRIP” means the Viad Corp Retirement Income Plan, as amended.

ARTICLE 3. PARTICIPATION

An employee of the Company (or any of its Subsidiaries) may become eligible to participate in the Plan (an “Eligible Employee”) when approved by the Board of Directors of the Company. An employee of the Company (or any of its Subsidiaries), who is determined to be entitled to benefits solely under Schedule E, shall be deemed to have been designated an Eligible Employee (under that Schedule) by the Board of Directors of the Company. A list of Eligible Employees with respect to each Schedule of Benefits, other than Schedule E, is

3


 

correspondingly denominated and attached as an Exhibit to the Plan and each such Exhibit shall be periodically updated.

ARTICLE 4. FUNDING

No fund shall be established to provide for the payment of benefits under the Plan. No trust, other than one which will not cause the Plan to be “funded” under current Internal Revenue Service and U.S. Department of Labor regulations and rulings, shall be created. Any rights of an Eligible Employee or any other person claiming by or through him or her shall be those of a general creditor of the Company only. The Company may create book reserves or take such other steps as it deems appropriate to provide for its expected liabilities under the Plan. Any funds, and the proceeds therefrom, utilized by the Company to provide for its expected liabilities under the Plan shall remain the unrestricted assets of the Company.

ARTICLE 5. CATEGORIES OF BENEFIT PAYMENTS TO ELIGIBLE EMPLOYEES

Benefits shall be payable by the Company in accordance with the terms and conditions of the Plan and as described in each Schedule of Benefits to the Eligible Employees described in each such Schedule of Benefits and its corresponding Exhibit.

ARTICLE 6. RETIREMENT BENEFITS

Except, as otherwise expressly provided in the Plan or in a Schedule of Benefits, the Plan shall make monthly payments to an Eligible Employee at the same time such Eligible Employee receives or would be deemed to receive under any Schedule of Benefits his or her pension benefits under the Pension Plans (herein, and in any Schedule of Benefits, referred to for the purposes of the Plan as “the time of his or her retirement”), but in no event shall monthly payments begin before such Eligible Employee has attained the age of 55 and has actually left the employ of the Company and all Related Companies. Unless otherwise expressly stated in a Schedule of Benefits, such monthly payments shall be equal to the amount by which the sum of the monthly pension benefits payable to the Eligible Employee from Pension Plans is less than the aggregate amount(s) determined under the applicable Schedule(s) of Benefits. In making this determination, the amount(s) from such Pension Plans shall be determined prior to the election of any payment options (such as joint and survivor elections). In addition, when an Eligible Employee is a participant in more than one Pension Plan and benefits under any one of such Pension Plans are not available immediately on account of early retirement eligibility provisions, then, for the purposes of the Plan, such benefits shall be taken into account as though payable immediately on an actuarially equivalent basis, as reasonably determined by the Committee in its sole discretion. Similarly, for purposes of determining monthly amounts payable from this Plan, if an Eligible Employee commenced or received a distribution of benefits from one or more Pension Plans before benefits are payable under this Plan, such distributed benefits shall be taken into

4


 

account for purposes of this paragraph as though they had not been previously distributed, adjusted on an actuarially equivalent basis, using the factors in effect under such Pension Plans for adjusting payment forms when the benefits commenced or were paid.

ARTICLE 7. FINAL AVERAGE EARNINGS

(a)   GENERAL RULES. Final Average Earnings means, except as further modified by subsection (b), the five-year average of the Eligible Employee’s last 60 months of base salary, sales commissions and overtime plus fifty percent (50%) of the MIPs earned and paid from the Company and its Subsidiaries during that period. If the Eligible Employee’s period of employment with the Company and its Subsidiaries is less than 60 months, the number of actual months of the Eligible Employee’s period of employment with the Company and its Subsidiaries shall be used to determine Final Average Earnings. Notwithstanding the foregoing, if the Eligible Employee received salary for less than 15 days in a calendar month, the salary and overtime for that month shall not count and that month shall not count among the months to be averaged in determining Final Average Earnings. For purposes of determining Final Average Earnings of a Disabled Participant (as defined in VCRIP), the Eligible Employee’s base salary, sales commissions and overtime plus fifty percent (50%) of the MIPs paid from the Company and its Subsidiaries during the 12-month period preceding the date that the individual became a Disabled Participant shall be deemed to continue during the period for which the Disabled Participant continues to be credited with Service under VCRIP. Final Average Earnings shall be determined under this Plan without regard to any limitations under Internal Revenue Code Section 401(a)(17) on the amount of annual compensation that may be taken into account under qualified plans.

(b)   SPECIAL ADJUSTMENTS. Notwithstanding the foregoing, the following additional rules shall apply in determining Final Average Earnings under the Schedules specified:

  (1)   For an Eligible Employee covered by Schedule E, Final Average Earnings shall include MIPs that would otherwise be included but for the fact the bonus was deferred. Any deferrals included in Final Average Earnings shall only be counted once in calculating such Final Average Earnings.
 
  (2)   For an Eligible Employee covered by Schedule F, Final Average Earnings at December 31, 1997 used to determine the Pre-1998 Benefit is the highest five (5) consecutive calendar year average over the last ten (10) consecutive calendar years through 1997 of the Eligible Employee’s base salary (and no sales commissions, overtime or MIPs). If the Eligible Employee’s period of employment is less than 60 months as of December 31, 1997, the number of actual months of the Eligible Employee’s period of employment with the

5


 

Company and its Subsidiaries through 1997 shall be used to determine Final Average Earnings at December 31, 1997.

ARTICLE 8. OPTIONAL FORMS

If any pension benefit is payable to an Eligible Employee from a Pension Plan, and an optional form of payment is elected under that Pension Plan, then a similar election will be deemed made under the Plan. If two or more such pensions are payable from such other Pension Plans, then the option selected from the Pension Plan generating the largest monthly pension payment (include the beneficiary designation in connection with such option and benefits, if applicable) shall prevail for the purposes of the Plan. Notwithstanding the foregoing, no lump sum distributions shall occur or be permitted hereunder except as provided under Article 13 or, with respect to an Eligible Employee who has only a Cash Accumulation Benefit (as defined in VCRIP) under VCRIP and has elected to receive that benefit as a lump sum, as provided under Schedule E. Except as otherwise provided in Schedule E, if the Eligible Employee has both a Cash Accumulation Benefit and a Grandfathered Benefit (as defined in VCRIP), the benefit under this Plan shall be paid in the same payment form as the Grandfathered Benefit is paid.

ARTICLE 9. LISTING OF ELIGIBLE EMPLOYEES

A listing of Eligible Employees shall be maintained in the form of the Exhibits to the Plan. Exhibit A shall contain those covered under Schedule A and Exhibit F shall contain those covered under Schedule F. If an employee is incorrectly included or excluded from an Exhibit, actual entitlement to participation and benefits under the Plan shall be reasonably determined by the Committee in its sole discretion.

ARTICLE 10. SURVIVOR’S BENEFIT

(a)   ELIGIBILITY. If while covered by this Plan, for purposes other than a terminated vested benefit, an Eligible Employee dies before benefits have commenced and if on the date of his or her death such Eligible Employee:

  (1)   Has 5 or more years of service; or

  (2)   Was 55 years of age or older;

then his or her Eligible Spouse (if any), as defined in the VCRIP, shall be entitled to a survivor’s benefit.

(b)   AMOUNT. This survivor’s benefit shall be calculated by assuming that the Eligible Employee:

6


 

  (1)   Was 55 years of age (or his actual age if older) on the date of death;
 
  (2)   Retired on the first day of the month following his or her death; and
 
  (3)   Elected a Single Life Annuity.

The Eligible Spouse will be entitled to receive 1/2 of this benefit which shall be further reduced by 1/6 of 1% for each month the Eligible Spouse is more than 60 months younger than the Eligible Employee.

The survivor’s benefit under this Article 10 shall be reduced by any spousal survivor’s benefit payable from Pension Plans when such benefit becomes payable, as reasonably determined by the Committee in its sole discretion.

ARTICLE 11. VESTING

In addition to all the terms and conditions of the Plan, no Eligible Employee or beneficiary shall be entitled to a benefit under the Plan unless such Eligible Employee has actually attained fully vested status in VCRIP, as reasonably determined by the Committee in its sole discretion. Notwithstanding any other provision hereof, any Eligible Employee hereunder who has accumulated five years of service with the Company and Related Companies taken as a whole, ignoring breaks in service, shall be fully vested and entitled to benefits hereunder.

ARTICLE 12. NON-COMPETE AND FORFEITURE PROVISIONS

Notwithstanding any other provision in this Plan to the contrary, from and after January 1, 2000, an Eligible Employee’s right to receive a benefit or future benefits under this Plan shall be governed by the following provisions:

(a)   The right shall be conditioned upon certification by the Eligible Employee prior to their receipt of any future benefits under this Plan that the Eligible Employee has read and understands the non-compete and forfeiture provisions set forth in this Article 12, and that the Eligible Employee has no intent to engage in any activity or provide any services which are contrary to the spirit and intent of these provisions. The Eligible Employee’s failure to so certify shall not constitute a waiver on the part of the Company as to the enforceability of these provisions under Article 12.
 
(b)   In order to better protect the goodwill of the Company and its Subsidiaries and to prevent the disclosure of the Company’s or its Subsidiaries’ trade secrets and confidential information and thereby help insure the long-term success of the business, the Eligible Employee, without prior written consent of the Company, will not engage in any activity or provide any services, whether as a director, manager, supervisor, employee, adviser, agent, consultant, owner of more than five (5) percent

7


 

    of any enterprise or otherwise, for a period of two (2) years following the date of the Eligible Employee’s termination of employment with the Company, or its Subsidiaries, in connection with the manufacture, development, advertising, promotion, design, or sale or any other activity in furtherance of any business enterprise, service or product which is the same as or similar to or competitive with or in any way adverse to any services or products or other activities of the Company or its Subsidiaries (including both existing services or products as well as services or products known to the Eligible Employee, as a consequence of the Eligible Employee’s employment with the Company or one of its Subsidiaries, to be in development):

  (1)   With respect to which the Eligible Employee’s work has been directly concerned at any time preceding termination of employment with the Company or any of its Subsidiaries, or
 
  (2)   With respect to which during that period of time the Eligible Employee, as a consequence of the Eligible Employee’s job performance and duties, acquired knowledge of the trade secrets or other confidential information of the Company or its Subsidiaries.

For purposes of this Article 12, it shall be conclusively presumed that the Eligible Employee has knowledge of information he or she was directly exposed to through actual receipt or review of memoranda or documents containing such information, or through actual attendance at meetings at which such information was discussed or disclosed.

(c)   If, at any time during the two (2) year period after the Eligible Employee’s termination of employment from the Company or any of its Subsidiaries, the Eligible Employee engages in any conduct described in subsection (b) above, then the amount of any payments made to the Eligible Employee from the Plan during that period (without regard to tax effects) shall be paid by the Eligible Employee to the Company. The Eligible Employee consents to the deduction from any amounts the Company or any of its Subsidiaries owes the Eligible Employee from time to time to the extent of the amount the Eligible Employee owes the Company hereunder.

ARTICLE 13. CHANGE OF CONTROL

Upon a Change of Control and with respect to only the Chief Executive Officer of the Company, the provisions of this paragraph shall apply and override any contrary provisions of this Plan or any Schedule. For purposes of this Article 13, “Change of Control” shall have the meaning specified in Section 3(a) of the Trust Agreement for the Viad Corp Executives’ Deferred Compensation and Benefit Security Trust.

8


 

Upon a Change of Control, all Plan benefits of the Chief Executive Officer of the Company as of the date of the Change of Control shall be immediately determined, based on the facts in existence as of the date of the Change of Control and without regard to Article 12. The Plan benefits so determined shall be fully vested and paid to the Chief Executive Officer in an actuarially equivalent single sum as soon as practicable following the Change of Control; provided, however, that such immediate vesting and payment shall not be made if an acquiring entity has a credit rating from Standard & Poors Corporation on its longer term unsecured debt obligations of single “A” or better. The determination of “actuarially equivalent” shall be made in accordance with generally accepted actuarial methods using:

(a)   For the interest rate, the annual rate of interest on 30-year Treasury securities for the month of November preceding the calendar year in which the benefit is distributed, and
 
(b)   For the mortality basis, the rates prescribed by the 1983 Group Annuity Mortality Table with a fixed blend of 50 percent male mortality rates and 50 percent female mortality rates (commonly referred to as the ‘83 GATT Table).

ARTICLE 14. ADMINISTRATION, MODIFICATION, AND TERMINATION OF THE PLAN

The Board of Directors of the Company may terminate the Plan or any Schedule of Benefits at any time. Any amounts vested under the Plan prior to any such termination shall continue to be subject to the terms and conditions in effect under the Plan when the Plan is terminated. The Plan may be amended at any time or from time to time by the Board of Directors of the Company; provided, however, that no amendment shall have the effect of retroactively reducing benefits earned up to the date that the amendment is adopted. The Company shall have full power and authority to interpret and administer the Plan, to promulgate rules of Plan administration, to adopt a claims procedure, to conclusively settle any disputes as to rights or benefits arising from the Plan, and to make such decisions or take such actions as the Company, in its sole discretion, reasonably deems necessary or advisable to aid in the proper administration and maintenance of the Plan.

ARTICLE 15. TAX WITHHOLDING

Any federal, state or local taxes, including FICA tax amounts, required by law to be withheld with respect to benefits earned and vested under this Plan or any other compensation arrangement may be withheld from the Eligible Employee’s benefit, salary, wages or other amounts paid by the Company and reasonably available for withholding. Prior to making or authorizing any benefit payment under this Plan, the Company may require such documents from any taxing authority, or may require such indemnities or a surety bond from any

9


 

Eligible Employee or beneficiary, as the Company shall reasonably consider necessary for its protection.

ARTICLE 16. MISCELLANEOUS

The Plan, and any determination made by the Committee or the Company in connection therewith, shall be binding upon each Eligible Employee, his or her beneficiary or beneficiaries, heirs, executors, administrators, successors and assigns. Notwithstanding the foregoing sentence, no benefit under the Plan may be sold, assigned, transferred, conveyed, hypothecated, encumbered, anticipated or otherwise disposed of, and any attempt to do so shall be void. No such benefit payment shall be, prior to actual receipt thereof by the Eligible Employee, or his or her beneficiary or beneficiaries, as the case may be, in any manner subject to the debts, contracts, liabilities or engagements of such Eligible Employee or beneficiary(ies). The Plan shall not constitute, nor be deemed to constitute, a contract of employment between the Company (or any Related Company) and any Eligible Employee, nor shall any provision hereof restrict the right of the Company (or any Related Company) to discharge any Eligible Employee from his or her employment, with or without cause. If any particular provision of this Plan shall be found to be illegal or unenforceable, such provision shall not affect any other provision, but this Plan shall be construed in all respects as if such invalid provision were omitted.

ARTICLE 17. APPLICABLE LAW

This Plan shall be construed in accordance with and governed by the laws of the State of Minnesota to the extent not superseded by the laws of the United States of America.

Adopted pursuant to the Viad Board of Directors’ resolution of May 8, 2001.

         
  By   /s/ Suzanne Pearl
     
 
       
  Its   Vice President - Human Resources
     
 
       
  Date    
     

10


 

SCHEDULE A.

1. GENERAL RULES

Benefits may be payable under this Schedule of Benefits in respect of persons employed by the Company or any of its Subsidiaries who are selected by the Board of Directors for inclusion under this Schedule of Benefits. The annual amount used under this Schedule of Benefits to determine the monthly benefit (one-twelfth of the annual amount) payable to any Eligible Employee as of his or her 65th birthdate under Article 6 is the Schedule A Benefit.

2. SCHEDULE A BENEFIT

For purposes of this Schedule A, the Schedule A Benefit is the product of (a) and (b) less the product of (b) and (c), plus the Special Benefit, if any, described in section 3, where:

(a)   Is 2% of the Eligible Employee’s Final Average Earnings.
 
(b)   Is the Eligible Employee’s Credited Service, not to exceed 25 years.
 
(c)   Is 2% of the Eligible Employee’s Primary Social Security Benefit.

3. SPECIAL BENEFIT

For purposes of determining the Schedule A Benefit, an Eligible Employee who has 25 or more years of Credited Service shall receive the Special Benefit described in this section. The Special Benefit is the product of the Eligible Employee’s Final Average Earnings times 0.5% for each of the Eligible Employee’s additional full years of Credited Service after 25 years and up to 30 years. In no event shall the Special Benefit exceed 2.5% of the Eligible Employee’s Final Average Earnings.

4. REDUCTION IN MONTHLY AMOUNT FOR COMMENCEMENT BEFORE AGE 65

The monthly amount determined under this Schedule of Benefits shall be subject to a reduction of one-third (1/3) of one percent for each of the first thirty-six (36) months that benefit commencement precedes his or her 65th birthday and of five-twelfths (5/12) of one percent for each additional month (over 36) that benefit commencement precedes his or her 65th birthday. In no event, however, may an Eligible Employee commence benefits prior to his or her 55th birthday. Notwithstanding the foregoing, if the Eligible Employee has 30 or more full years of Credited Service and benefits under this Plan commence on or after the Eligible Employee’s 60th birthday, there shall be no reduction.

Eligible Employees under this Schedule are listed on Exhibit A to this Plan.

11


 

EXHIBIT A.

12


 

SCHEDULE E.

1. GENERAL RULES

Employees of the Company or any of its Subsidiaries who participate in the VCRIP automatically become Eligible Employees under this Schedule E if their benefits under the VCRIP are limited by Internal Revenue Code Section 401(a)(17) or Section 415. The Company shall administratively identify the Eligible Employees under this Schedule E, based on the effect of such Internal Revenue Code provisions on their VCRIP benefits. Designation as an Eligible Employee under this Schedule E shall not require separate approval of the Board of Directors of the Company.

Coverage of an Eligible Employee under this Schedule E neither requires nor precludes the Eligible Employee’s coverage under another Schedule of Benefits. However, coverage under this Schedule E also does not provide duplication of benefits for an Eligible Employee who, in addition to being covered under this Schedule E, is covered under another Schedule of Benefits. The Company may determine and communicate an Eligible Employee’s aggregate benefit under this Plan by considering this Schedule E together with any other Schedule of Benefits that happens to cover the Eligible Employee. Subject to the foregoing, the amount of benefit attributable to this Schedule E and payable to an Eligible Employee pursuant to Article 6 shall be the Restoration Benefit.

2. RESTORATION BENEFIT

For purposes of this Schedule E, the Restoration Benefit is a monthly pension based on the rules of VCRIP applicable to the Eligible Employee at the time of his or her retirement, including any reductions for early retirement, but using one twelfth of Final Average Earnings, as defined in Article 7, in place of Average Monthly Compensation, and using one twelfth of Final Average Earnings determined as of December 31, 2000, for purposes of calculating the Grandfathered Benefit.

For purposes of this Schedule of Benefits, Compensation shall be determined without regard to the annual limit on compensation that may be taken into account under a qualified plan pursuant to Internal Revenue Code Section 401(a)(17) and shall include MIPs that would otherwise have been included but for the fact that the bonus was deferred. Notwithstanding the foregoing, any MIPs included in Compensation shall only be counted once. In addition, the monthly pension shall be determined under this section without regard to the limitations set forth in Internal Revenue Code Section 415 and applicable to qualified plans. In determining Compensation under this paragraph, only the Company (and no Related Company) shall be considered an Employer.

Notwithstanding any Plan provision to the contrary, if the Eligible Employee’s Restoration Benefit is solely attributable to Service (as defined in VCRIP) after December 31, 2000, then the Eligible Employee’s benefit under this Schedule shall be paid in the same payment form as the Eligible Employee elected to receive his or her Cash Accumulation Benefit under VCRIP.

13


 

SCHEDULE F.

1. GENERAL RULES

Benefits may be payable under this Schedule of Benefits in respect of persons employed by the Company or any of its Subsidiaries who are selected by the Board of Directors of the Company. The annual amount used under this Schedule of Benefits to determine the monthly benefit (one-twelfth of the annual amount) payable to an Eligible Employee as of his or her 65th birthdate under Article 6 is the sum of the Eligible Employee’s Post-1997 Benefit and the Eligible Employee’s Pre-1998 Benefit.

2. POST-1997 BENEFIT

For purposes of this Schedule F, the Post-1997 Benefit is the sum of (a) and (b), multiplied by the Eligible Employee’s Credited Service for periods after 1997, where:

(a)   Is 1.15 percent of the Eligible Employee’s Final Average Earnings up to Covered Compensation.
 
(b)   Is 1.70 percent of the excess, if any, of the Eligible Employee’s Final Average Earnings over Covered Compensation.

An Eligible Employee’s Credited Service under this section 2 shall be limited to 30 years minus any Credited Service taken into account for purposes of any calculation under section 3.

3. PRE-1998 BENEFIT

For purposes of this Schedule F, the Pre-1998 Benefit is the sum of (a) and (b), together multiplied by (c), where:

(a)   Is 1.10 percent of Eligible Employee’s Final Average Earnings at December 31, 1997 up to Covered Compensation at December 31, 1997, multiplied by the Eligible Employee’s Credited Service for the period prior to December 31, 1997.
 
(b)   Is 1.70 percent of the excess, if any, of the Eligible Employee’s Final Average Earnings at December 31, 1997 over Covered Compensation at December 31, 1997, multiplied by the Eligible Employee’s Credited Service for the period prior to December 31, 1997.
 
(c)   Is a fraction (not less than one) whose numerator is the Eligible Employee’s Final Average Earnings at termination of employment and whose denominator is the Eligible Employee’s Final Average Earnings at December 31, 1997.

14


 

4. REDUCTION IN MONTHLY AMOUNT FOR COMMENCEMENT BEFORE AGE 65

The monthly amount determined under this Schedule of Benefits shall be subject to a reduction of one-third (1/3) of one percent for each of the first thirty-six (36) months that benefit commencement precedes his or her 65th birthday and of five-twelfths (5/12) of one percent for each additional month (over 36) that benefit commencement precedes his or her 65th birthday. In no event, however, may an Eligible Employee commence benefits prior to his or her 55th birthday.

Eligible Employees under this Schedule F are listed on Exhibit F to the Plan.

15


 

EXHIBIT F.

16

DEFERRED COMPENSATION PLAN FOR DIRECTORS
 

Exhibit 10.12

DEFERRED COMPENSATION PLAN
FOR DIRECTORS OF
MONEYGRAM INTERNATIONAL, INC.

_____________, 2004

1.   ESTABLISHMENT OF PLAN.

An unfunded plan of voluntary deferred compensation known as the “Deferred Compensation Plan for Directors” (Plan) has been established in recognition of the valuable services provided to MoneyGram International, Inc., by the individuals who serve as members of its Board of Directors. Viad Corp, a Delaware corporation, intends to distribute to its stockholders (the Spin-Off) one share of common stock, $0.01 par value, of its wholly-owned subsidiary (MoneyGram International, Inc.) which will own and operate its financial services business (MoneyGram International, Inc. Common Stock) for each outstanding share of common stock of Viad Corp). All references herein to the “Corporation” mean MoneyGram International, Inc. All Directors of the Corporation, except Directors receiving a regular salary as an employee of the Corporation or one of its subsidiaries, are eligible to participate in this Plan. A Director may elect to defer under this Plan any retainer or meeting attendance fee otherwise payable to him or her (Compensation) by the Corporation or by domestic subsidiaries of this Corporation (subsidiaries). Travelers Express Company, Inc., which, upon consummation of the Spin-Off will be a wholly owned subsidiary of MoneyGram International, Inc., hereby assumes and is solely responsible for all liabilities under the Deferred Compensation Plan for Directors of Viad.

2.   EFFECTIVE DATE.

This Plan will become effective on    , 2004.

3.   ELECTION TO PARTICIPATE IN THE PLAN.

     A. (i) A Director of this Corporation may elect to defer the receipt of all or a specified part of the Compensation otherwise payable to him or her during a calendar year by the Corporation or its subsidiaries. Any person who shall become a Director during any calendar year, and who was not a Director of the Corporation or its subsidiaries on the preceding December 31, may elect before the Director’s term begins to defer such Compensation. Such election shall also specify whether the account shall be treated as a cash account under Section 4A or a stock unit account under Section 4B; provided that an election to defer Compensation into a stock unit account must be specifically approved by the Board of Directors of the Corporation. If the account is to be a cash account, the Compensation, if it is a meeting attendance fee, shall be payable on the date of each applicable meeting, and, if it is a retainer, shall be payable on the last

- 1 -


 

trading day of each applicable quarter. If the account is to be a stock unit account, the Compensation shall be converted into stock units by dividing the closing price of the Corporation’s Common Stock (as reported for the New York Stock Exchange-Composite Transactions) on the day such Compensation is payable into such Compensation, which, in the case of a meeting attendance fee or a retainer, is the last trading day of each applicable quarter.

     B. Any election under this Plan, unless otherwise provided therein, shall be made by delivering a signed request to the Secretary of the Corporation on or before December 31 with respect to the following calendar year, or, for a new Director, on or before his or her term begins. An election shall continue from year to year, unless specifically limited, until terminated by a signed request in the same manner in which an election is made. However, any such termination shall not become effective until the end of the calendar year in which notice of termination is given.

     C. Each Director may, by notice delivered to the Secretary of the Corporation, convert: (i) the aggregate balance in his or her deferred compensation account (either before or after payments from the account may have commenced) from an account in the form of stock units to an account in the form of cash in an amount equal to such stock units balance multiplied by the closing price of the Common Stock of the Corporation (as reported for the New York Stock Exchange-Composite Transactions) on the last trading day of the quarter in which such notice is given, said account to accrue interest as set forth in Section 4 below, or (ii) convert the aggregate balance in his or her deferred compensation account (either before or after installment payments from the account may have commenced) from an account in the form of cash to an account in the form of stock units in an amount equal to cash balance divided by the closing price of the Common Stock of the Corporation (as reported for the New York Stock Exchange-Composite Transactions) on the last trading day of the quarter in which such notice is given, said account to accrue dividend equivalents as set forth in Section 4 below; provided however, that no such notice of conversion (“Conversion Notice”) (a) may be given within six months following the date of an election by such Director, with respect to any plan of the Corporation, that effected a Discretionary Transaction (as defined in Rule 16b-3(f) under the Securities Exchange Act of 1934) that was an acquisition (if the Conversion Notice is pursuant to clause (i)) or a disposition (if the Conversion Notice is pursuant to clause (ii)) or (b) may be given after an individual ceases to be a Director.

4.   ACCRUAL OF INTEREST OR DIVIDEND EQUIVALENTS.

     A. If a Director has elected to defer Compensation in the form of cash, then interest on the unpaid balance of such Director’s deferred compensation account, consisting of both accumulated Compensation and interest, if any, will be credited on the last day of each quarter based upon the yield on Merrill Lynch

- 2 -


 

Taxable Bond Index-Long Term Medium Quality (A3) Industrial Bonds in effect at the beginning of such quarter, said interest to commence with the date such compensation was otherwise payable. After payment of deferred Compensation commences, interest shall accrue on the unpaid balance thereof in the same manner until all such deferred Compensation has been paid.

     B. If a Director has elected to defer Compensation in the form of stock units, then, in the event of a dividend paid in cash, stock of the Corporation (other than Common Stock) or property, additional credits (dividend equivalents) shall be made to the Director’s stock unit account consisting of a number of stock units equal to the amount of such dividend per share (or the fair market value, on the date of payment, of dividends paid in stock or property), multiplied by the aggregate number of stock units credited to such Director’s deferred compensation account on the record date for the payment of such dividend, divided by the last closing price of the Corporation’s Common Stock (as reported for the New York State Exchange-Composite Transactions) prior to the date such dividend is payable to stockholders. Furthermore, additional credits (dividend equivalents) shall be made to the Director’s stock unit account consisting of a number of stock units equal to the amount of such dividend per share (or the fair market value, on the date of payment, of dividends paid in stock or property), multiplied by the incremental number of stock units credited to such Director’s deferred compensation account, on the last business day prior to the date such dividend is payable to stockholders, attributable to meeting attendance fee(s), divided by the last closing price of the Corporation’s Common Stock (as reported for the New York State Exchange-Composite Transactions) prior to the date such dividend is payable to stockholders. After payment of deferred Compensation commences, dividend equivalents shall accrue on the unpaid balance thereof in the same manner until all such deferred Compensation has been paid.

     C. In the event of a dividend of Common Stock declared and paid by the Corporation, an additional credit shall be made to the Director’s stock unit account of a number of stock units equal to the number of shares of the Corporation’s Common Stock which the Director would have received as a stock dividend had he or she been the owner on the record date for the payment of such stock dividend of the number of shares of Common Stock equal to the number of units in such stock unit account on such date. After payment of deferred Compensation commences, additional credits for stock dividends shall accrue on the unpaid balance thereof in the same manner until all such deferred Compensation has been paid.

5.   ACCOUNTING.

No fund or escrow deposit shall be established by any deferred Compensation payable pursuant to this Plan, and the obligation to pay deferred Compensation hereunder shall be a general unsecured obligation of the Corporation, payable

- 3 -


 

out of its general account, and deferred Compensation shall accrue to the general account of the Corporation. However, the Controller of the Corporation shall maintain an account and properly credit Compensation to each such account, and keep a record of all sums which each participating Director has elected to have paid as deferred Compensation and of interest or dividend equivalents accrued thereon. Within sixty (60) days after the close of each calendar year the Controller shall furnish each Director who has participated in the Plan a statement of all sums and stock units, including interest and dividend equivalents, which have accrued to the account of such Director as of the end of such calendar year.

6.   PAYMENT FROM DIRECTORS’ ACCOUNTS.

     A. After a Director ceases to be a director of the Corporation, the aggregate amount of deferred compensation credited to a Director’s account, either in the form of cash or stock units, together with interest or dividend equivalents accrued thereon, shall be paid in a lump sum or, if the Director elects, in substantially equal quarterly, semi-annual, or annual installments over a period of years, not greater than ten (10), specified by the Director. Furthermore, with respect to each Director who is also a non-employee Director of Viad Corp, a participant shall not be considered, for purposes of the Plan, to have ceased to be a Director of the Corporation unless he or she is neither a Director of the Corporation nor a Director of Viad Corp. Such election must be made by written notice delivered to the Secretary of the Corporation prior to December 31 of the year preceding the year in which, and at least six months prior to the date on which, the Director ceases to be a director. The first installment (or the lump sum payment) shall be made promptly following the date on which the Director ceases to be a Director of the Corporation, and any subsequent installments shall be paid promptly at the beginning of each succeeding specified period until the entire amount credited to the Director’s account shall have been paid. To the extent installment payments are elected, and the Director’s account consists of cash as well as stock units, a pro rata portion of the cash, and the cash equivalent of a pro rata portion of the stock units, shall be paid with each installment. If the participating Director dies before receiving the balance of his or her deferred compensation account, then payment shall be made in a lump sum to any beneficiary or beneficiaries which may be designated, as provided in paragraph B of this Section 6, or in the absence of such designation, or, in the event that the beneficiary designated by such Director shall have predeceased such Director, to such Director’s estate.

     B. Each Director who elects to participate in this Plan may file with the Secretary of the Corporation a notice in writing designating one or more beneficiaries to whom payment shall be made in the event of such Director’s death prior to receiving payment of any or all of the deferred Compensation hereunder.

- 4 -


 

     C. If the Director has elected to defer Compensation in the form of cash, the Corporation shall distribute a sum in cash to such Director, pursuant to his or her election provided for in paragraph A of this Section 6. If the Director has elected to defer Compensation in the form of stock units, the Corporation shall distribute to such Director, pursuant to his or her election provided for in paragraph A of this Section 6, the cash equivalent of the portion of the stock units being distributed in such installment which will be calculated by multiplying (i) the average of the month-end closing prices of the Corporation’s Common Stock for the last 12 months preceding the date of each distribution, as reported for the New York Stock Exchange-Composite Transactions, by (ii) the number of stock units being distributed in such installment.

7.   CHANGE OF CONTROL OR CHANGE IN CAPITALIZATION.

     A. If a tender offer or exchange offer for shares of Common Stock of the Corporation (other than such an offer by the Corporation) is commenced, or if the stockholders of the Corporation shall approve an agreement providing either for a transaction in which the Corporation will cease to be an independent publicly owned corporation or for a sale or other disposition of all or substantially all the assets of the Corporation (Change of Control), a lump sum cash payment shall be made to each Director participating in the Plan of the aggregate current balance of his or her deferred compensation account accrued to the Director’s deferred compensation account on the date of the Change of Control, notwithstanding any other provision herein. If the Director has elected to defer Compensation in the form of stock units, the Corporation shall distribute to such Director the sum in cash equal to the closing price of the Corporation’s Common Stock on the day preceding the date of the Change of Control (as reported for the New York Stock Exchange-Composite Transactions) multiplied by the number of stock units in such account. Any notice by a Director to change or terminate his or her election to defer Compensation or before the date of the Change of Control shall be effective as of the date of the Change of Control, notwithstanding any other provision herein.

     B. Any recapitalization, reclassification, split up, sale of assets, combination or merger not otherwise provided for herein which affects the outstanding shares of Common Stock of the Corporation or any other relevant change in the capitalization of the Corporation shall be appropriately adjusted for by the Board of Directors of this Corporation, and any such adjustments shall be final, conclusive and binding.

8.   NONALIENATION OF BENEFITS.

No right or benefit under this Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to alienate, sell, assign, pledge, encumber or charge the same shall be void. To the extent permitted by law, no right or benefit hereunder shall in any manner be attachable

- 5 -


 

for or otherwise available to satisfy the debts, contracts, liabilities or torts of the person entitled to such right or benefit.

9.   APPLICABLE LAW.

The Plan will be construed and enforced according to the laws of the State of Delaware; provided that the obligations of the Corporation shall be subject to any applicable law relating to the property interests of the survivors of a deceased person and to any limitations on the power of the person to dispose of his or her interest in the deferred Compensation.

10.   AMENDMENT OR TERMINATION OF PLAN.

The Board of Directors of the Corporation may amend or terminate this Plan at any time, provided, however, any amendment or termination of this Plan shall not affect the rights of participating Directors or beneficiaries to payments, in accordance with Section 6 or 7, of amounts accrued to the credit of such Directors or beneficiaries at the time of such amendment or termination.

- 6 -

DIRECTOR'S MATCHING GIFT PROGRAM DESCRIPTION
 

Exhibit 10.13

VIAD CORP DIRECTOR’S CHARITABLE MATCHING PROGRAM

     The Director’s Charitable Matching Program provides for corporate matching of charitable contributions made by nonemployee directors, on a dollar-for-dollar basis, up to an aggregate maximum of $5,000 per year.

 

CHARITABLE AWARD PROGRAM
 

Exhibit 10.14

THE DIAL CORP

DIRECTOR’S CHARITABLE AWARD PROGRAM

1.   PURPOSE OF THE PROGRAM.
 
    The Dial Corp Director’s Charitable Award Program (the “Program”) allows each eligible Director of The Dial Corp (the “Corporation”) to recommend that the Corporation make a donation of $1,000,000 to the eligible tax-exempt organization(s) (the “Donee(s)”) selected by the Director, with the donation to be made, in the Director’s name, in ten equal annual installments, with the first installment to be made as soon as is practicable after the Director’s death. The purpose of the Program is to recognize the interest of the Corporation and its Directors in supporting worthy educational institutions and other charitable organizations.
 
2.   ELIGIBILITY.
 
    All persons serving as Directors of the Corporation as of February 15, 1995, shall be eligible to participate in the Program. All Directors who join the Corporation’s Board of Directors after that date shall be immediately eligible to participate in the Program upon election to the Board.
 
3.   RECOMMENDATION OF DONATION.
 
    When a Director becomes eligible to participate in the Program, he or she shall make a written recommendation to the Corporation, on a form approved by the Corporation for this purpose, designating the Donee(s) which he or she intends to be the recipient(s) of the Corporation donation to be made on his or her behalf. Unless he or she elects to make the recommendation irrevocable, a Director may revise or revoke any such recommendation prior to his or her death by signing a new recommendation form and submitting it to the Corporation.
 
4.   AMOUNT AND TIMING OF DONATION.
 
    Each eligible Director may choose one organization to receive a corporate donation of $1,000,000, or two or more organizations to receive donations aggregating $1,000,000. Each recommended organization must be recommended to receive a donation of at least $100,000. The donation will be made by the Corporation in ten equal annual installments, with the first installment to be made as soon as is practicable after the Director’s death. If a Director recommends more than one organization to receive a donation, each will receive a prorated portion of each annual installment. Each annual installment payment will be divided among the recommended organizations in the same proportions as the total donation amount has been allocated among the organizations by the Director.
 
5.   DONEES.
 
    In order to be eligible to receive a donation, a recommended organization must initially, and at the time a donation is to be made, qualify to receive tax-deductible donations under the Internal Revenue Code, and be reviewed and approved by the Corporate Contributions Committee. A recommendation will be approved unless it is determined, in the exercise of good faith judgment, that a donation to the organization would be detrimental to the best interests of the Corporation. A Director’s private foundation or a donor advised fund in a community fund (or a similar entity) is not eligible to receive donations under the Program. If an organization recommended by a Director ceases to qualify as a Donee, and if the Director does not submit a form to change the recommendation before his or her death, the amount recommended to be donated to the organization will

 


 

    instead be donated to the Director’s remaining recommended qualified Donee(s) on a prorated basis. If none of the recommended organizations qualify, the donation will be made to the organization(s) selected by the Corporation.
 
6.   VESTING.
 
    A Director will be vested in the Program when he or she completes five years of Board service, or in the event (a) he or she dies or becomes disabled while serving as a Director, (b) if not an employee of the Corporation, he or she retires at the mandatory retirement age for non-employee directors, (c) if an employee of the Corporation, he or she retires on or after his or her normal retirement date, or (d) there is a Change of Control of the Corporation. For persons serving as Directors on February 15, 1995, Board service prior to that date will count as vesting service. If a Director terminates Board service (other than due to death, disability or mandatory retirement) before becoming vested, no donation will be made on his or her behalf.
 
7.   FUNDING AND PROGRAM ASSETS.
 
    The Corporation may fund the Program or it may choose not to fund the Program. If the Corporation elects to fund the Program in any manner, neither the Directors nor their recommended Donee(s) shall have any rights or interests in any assets of the Corporation identified for such purpose. Nothing contained in the Program shall create, or be deemed to create, a trust, actual or constructive, for the benefit of a Director or any Donee recommended by a Director to receive a donation, or shall give, or be deemed to give, any Director or recommended Donee any interest in any assets of the Program or the Corporation. If the Corporation elects to fund the Program through life insurance policies, a participating Director agrees to cooperate and fulfill the enrollment requirements necessary to obtain insurance on his or her life.
 
8.   AMENDMENT OR TERMINATION.
 
    The Board of Directors of the Corporation may, at any time, without the consent of the Directors participating in the Program, amend, suspend, or terminate the Program. However, once a Director becomes vested in the Program, the Program may not be amended, suspended or terminated with respect to such Director without his or her consent; provided, the Board can elect, unless a change of control of the Corporation has occurred, to terminate the Program with respect to any Director whose Board service is terminated as a result of a felony conviction, or a conviction of a crime involving moral turpitude, fraud or dishonesty, whether or not he or she is vested.
 
9.   ADMINISTRATION.
 
    The Program shall be administered by the Executive Compensation Committee of the Board of Directors of the Corporation. The Committee shall have plenary authority in its discretion, but subject to the provisions of the Program, to prescribe, amend, and rescind rules, regulations and procedures relating to the Program. The determinations of the Committee on the foregoing matters shall be conclusive and binding on all interested parties.
 
10.   CHANGE OF CONTROL.
 
    If there is a Change of Control of the Corporation, all participants serving as Directors at the time of the Change of Control shall become immediately vested in the Program, and, notwithstanding the provisions of Section 8, the Program shall not thereafter be amended or terminated with respect to any person participating in the Program at the time of the Change of Control. For the purpose of the Program, the term “Change of Control” shall have the same meaning as is defined for that term in The Dial Corp 1992 Stock Incentive Plan.
 
11.   GOVERNING LAW.
 
    The Program shall be construed and enforced according to the laws of State of Arizona, and all provisions thereof shall be administered according to the laws of said state.

 


 

12.   EFFECTIVE DATE.
 
    The Program effective date is February 15, 1995. The recommendation of a Director will not be effective until he or she completes the Program enrollment requirements.

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 

Exhibit 10.15

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

Dated as of June 1, 2004

     AGREEMENT by and between Viad Corp, a Delaware corporation (the “Company”), and Robert H. Bohannon (the “Executive”), dated as of June 1, 2004.

     WHEREAS, the Board of Directors of the Company (“the Board”) has determined that it is in the best interests of the Company and its shareholders to separate the payment services business from the Company effective on or about June 30, 2004 (“Spin-Off”); and

     WHEREAS, the Board has determined that it is in the best interests of the Company and its shareholders to continue to employ the Executive as Chief Executive Officer (“CEO”) following the Spin-Off, and the Executive desires to continue to serve in that capacity; and

     WHEREAS, the Company and Executive desire to enter into this Amended and Restated Employment Agreement in connection with the Spin-Off, which Agreement amends, restates and supersedes the Employment Agreement between the Company and Executive dated as of the 1st day of April 1998;

     NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

     1. Employment Period. The Company shall employ the Executive, and the Executive shall serve the Company, on the terms and conditions set forth in this Agreement, for the Employment Period (as defined in the next sentence). The “Employment Period” shall mean the period beginning on the effective date of the

1


 

Spin-Off, and ending three years thereafter; provided, however, that the Employment Period shall be automatically extended by one year on the first anniversary of the spin-off and on each subsequent anniversary of such date (each such anniversary thereof being hereinafter referred to as a “Renewal Date”) unless (A) the Agreement has been terminated pursuant to Section 4 hereof or (B) notice of termination has been given in accordance with Section 1(b) hereof..

     (b) The automatic extension of the Employment Period provided for in Section 1(a) above can be terminated by the Board or Executive upon 60 days’ prior written notice to the other. If timely notice is given, the Agreement shall terminate upon expiration of the then current Employment Period.

     2. Position and Duties. (a) During the Employment Period, the Executive shall serve as Chairman and CEO of the Company and, subject to the direction of the Board, shall have full authority for management of the Company and all its operations, financial affairs, facilities and investments. The Executive shall serve as a member of the Board, and shall act as the duly authorized representative of the Board.

     (b) During the Employment Period, and excluding any periods of vacation and sick leave to which the Executive is entitled, the Executive shall devote reasonable attention and time during normal business hours to the business and affairs of the Company and, to the extent necessary to discharge the responsibilities assigned to the Executive under this Agreement, use the Executive’s reasonable best efforts to carry out such responsibilities faithfully and efficiently. It shall not be considered a violation of the foregoing for the Executive to (A) serve on corporate,

2


 

civic or charitable boards or committees, (B) deliver lectures, fulfill speaking engagements or teach at educational institutions and (C) manage personal investments, so long as such activities do not significantly interfere with the performance of the Executive’s responsibilities as an employee of the Company in accordance with this Agreement.

     (c) The Executive’s services shall be performed primarily at Viad Tower, Phoenix, Arizona, or such other location designated by the Board, as long as such location is not more than 25 miles from Executive’s residence on the date hereof.

     3. Compensation. (a) Base Salary. During the Employment Period, the Executive shall receive an annual base salary (“Annual Base Salary”) of $600,000.00, payable twice each month on a pro rata basis. During the Employment Period, the Annual Base Salary shall be reviewed for possible increase at least annually. Annual increases shall be no less than the lesser of 5% or the increase in the Consumer Price Index (“CPI”) for prior annual period. Any increase in the Annual Base Salary shall not limit or reduce any other obligation of the Company under this Agreement.

     (b) Annual Bonus. In addition to the Annual Base Salary, the Executive shall be awarded, for each calendar year or portion thereof, ending during the Employment Period, an annual bonus (the “Annual Bonus”) as determined by the Board. Each Annual Bonus or Management Incentive Plan (“MIP”), as it is sometimes called, shall be paid in a single cash lump sum no later than 90 days after the end of the calendar year for which the Annual Bonus is awarded.

3


 

     (c) Incentives. During the Employment Period, the Executive shall be eligible to participate in the long-term incentive plans and programs of the Company on the same basis as other senior executives of the Company, including, but not limited to, any program providing awards of Performance-Driven Restricted Stock, Performance-Based Restricted Stock and Restricted Stock (collectively, “Stock Awards”).

     (d) Other Benefits. During the Employment Period: (i) the Executive shall be entitled to participate in all savings and retirement plans, practices, policies and programs of the Company; and (ii) the Executive and/or the Executive’s family, as the case may be, shall be eligible for participation in, and shall receive all benefits under, all welfare benefit plans, practices, policies and programs provided by the Company (including, without limitation, medical, limited medical, prescription, vision, dental, disability, salary continuance, employee life insurance, group life insurance, accidental death and travel accident insurance plans and programs), in each case to the same extent as other senior executives of the Company, but to no lesser extent than that which he and his family participated prior to the Spin-Off.

     (e) Expenses. During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in carrying out the Executive’s duties under this Agreement, provided that the Executive complies with the policies, practices and procedures of the Company for submission of expense reports, receipts, or similar documentation of such expenses.

4


 

     (f) Fringe Benefits. During the Employment Period, the Executive shall be entitled to fringe benefits, such as tax and financial planning services, payment of lunch and country club dues, use of an automobile and payment of related expenses, an annual physical, home security system, and mobile and cellular phones.

     (g) Vacation. During the Employment Period, the Executive shall be entitled to paid vacation of five weeks per year, with any unused vacation to be accrued and available in subsequent years.

     (h) Calculation of Certain Awards and Benefits. Determination of Executive’s (i) Annual Bonus, ii) incentive award grants where the value of such grant is based on annual salary, and (iii) benefits (including but not limited to the Supplemental Executive Retirement Plan and
Long-Term and Short-Term Disability Plans) under all health and welfare benefit plans for which a benefit obligation is based on annual salary, shall in each case be calculated using 150% of Annual Base Salary.

     4. Early Termination of Employment. (a) Death or Disability. The Executive’s employment shall terminate automatically upon the Executive’s death during the Employment Period. The Company shall be entitled to terminate the Executive’s employment because of the Executive’s Disability during the Employment Period. “Disability” means that (i) the Executive has been unable, for a period of 180 consecutive business days, to perform the Executive’s duties under this Agreement, as a result of physical or mental illness or injury, and ii) a physician selected by the Company or its insurers, and acceptable to the Executive or the

5


 

Executive’s legal representative, has determined that the Executive’s incapacity is total and permanent. A termination of the Executive’s employment by the Company for Disability shall be communicated to the Executive by written notice, and shall be effective on the 30th day after receipt of such notice by the Executive (the “Disability Effective Date”), unless the Executive returns to full-time performance of the Executive’s duties before the Disability Effective Date.

     (b) Early Termination by the Company. The Company may terminate the Executive’s employment during the Employment Period at any time, without a stated reason, by a vote of a majority of the Board, excluding Executive. The Board shall also determine the date of Early Termination.

     (c) Early Termination for Cause. The Company may terminate the Executive’s employment for cause as defined below in accordance with the following procedure:

Cause defined: For purposes of the Agreement, the Company shall have “Cause” to terminate the Executive’s employment upon (A) the willful and continued failure by the Executive to substantially perform his duties (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness) after demand for substantial performance is delivered by the Company specifically identifying the manner in which the Company believes the Executive has not substantially performed his duties, or (B) the willful engaging by the Executive in misconduct which is materially injurious to the Company, monetarily or otherwise. No act, or failure to act, on the Executive’s part shall be considered “willful” unless done, or omitted to be

6


 

done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until there shall have been delivered to the Executive a copy of a resolution, duly adopted by the affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board, excluding Executive, at a meeting of the Board called and held for such purposes (after reasonable notice to the Executive and an opportunity for him, together with his counsel, to be heard before the Board), finding that in the good faith opinion of the Board, the Executive was guilty of conduct set forth above in clause (A) or (B).

     (d) Early Termination by Executive. The Executive may terminate employment voluntarily at any time after giving the Company at least 180 days’ advance written notice.

     5. Obligations of the Company. (a) Death or Disability. If the Executive’s employment is terminated by reason of the Executive’s death during the Employment Period, the Company shall pay the pro rata benefits or obligations to the Executive or the Executive’s estate or legal representative, as applicable, in a lump sum in cash within 90 days after the Date of Death or Disability Termination. If the Executive’s employment is terminated by reason of Disability during the Employment Period, the Company shall pay benefits and obligations to the Executive, as provided in the Long-Term Disability Plan of the Company.

7


 

     Stock options and Stock Awards shall be subject to the terms and conditions of the corresponding agreements.

     (b) Early Termination by the Board. If, during the Employment Period, the Company terminates the Executive’s employment, other than for Death or Disability or Cause, the Company shall pay the amounts and provide the benefits described below to the Executive and shall, at its sole expense as incurred, provide the Executive with outplacement services, the scope and provider of which shall be selected by the Executive in the Executive’s sole discretion. The payments and benefits provided pursuant to this paragraph (b) of Section 5 are intended as liquidated damages for a termination of the Executive’s employment by the Company (other than termination for Cause) and shall be the sole and exclusive remedy therefor.

     The amounts to be paid and the benefits to be provided as described above are:

(i) Severance pay equal to three times the sum of (1) 150% of the then current Annual Base Salary and (2) the average of the last three Annual Bonus or MIP awards paid to Executive, such payment to be made in a lump sum;

(ii) Stock Awards shall be subject to the terms and conditions of the corresponding agreements;

(iii) All stock options awarded to Executive shall vest as of the day of Early Termination;

8


 

(iv) Lifetime Limited Executive Medical benefits for Executive and his family (dependent children to receive benefits until age 19, or until age 25 if documented full-time students);

(v) Executive shall be entitled to a credit for an additional three years of age from the date of Early Termination for purposes of determining Executive’s retirement benefits in accordance with the Company’s pension plans; and

(vi) A lump sum payment for all unused and accrued vacation.

     (c) Upon Early Termination for Cause. The Executive shall be paid:

(i) 150% of Annual Base Salary.

(ii) Accrued MIP prorated to date of Early Termination.

(iii) Stock Awards shall terminate without any further payments or further vesting.

(iv) A lump sum payment for all unused and accrued vacation.

(v) Executive’s participation in all health and welfare plans described in Section 3(d) will cease upon Early Termination and Executive will be eligible for benefits under Cobra.

     (d) Upon Early Termination by Executive. The Executive shall be paid:

(i) 150% of Annual Base Salary and shall be credited with one additional year of age for purposes of determining Executive’s

9


 

retirement benefits in accordance with the Company’s pension plans.

(ii) Prorated MIP to date of Early Termination.

(iii) Stock Awards outstanding and unvested as of the date of Early Termination shall lapse and no additional vesting of such Stock Awards shall occur.

(iv) Executive shall be entitled to exercise only stock options which have vested prior to Early Termination by Executive.

     (e) Upon Ordinary Retirement. The Executive shall be paid or receive benefits as follows:

(i) Salary and accrued MIP prorated to the date of Retirement.

(ii) Stock options and Stock Awards shall be subject to the terms and conditions of the corresponding agreements, provided, however, that all Stock Awards shall vest 100% at time of Retirement if Executive retires at age 65 or older.

(iii) All other accrued benefits as of the date of Retirement shall be paid to the Executive in accordance with their respective plans.

(iv Lifetime Limited Executive Medical benefits for Executive and his family (dependent children to receive benefits until age 19, or until age 25 if documented full-time students).

(v) Other benefits as may be determined by the Board.

(vi) Executive shall be provided with suitable office space and equipment for so long as Executive has a reasonable need for

10


 

office facilities, and with an administrative assistant for five years. Executive shall also be entitled to use of a leased automobile for a period of five years following Retirement, such automobile to be comparable to the automobile currently leased for Executive.

     6. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation in any plan, program, policy or practice provided by the Company or any of its affiliated companies for which the Executive may qualify, nor, subject to paragraph (f) of Section 10, shall anything in this Agreement limit or otherwise affect such rights as the Executive may have under any contract or agreement with the Company or any of its affiliated companies. Vested benefits and other amounts that the Executive is otherwise entitled to receive under any plan, policy, practice or program of, or any contract or agreement with, the Company or any of its affiliated companies on or after the Date of Termination shall be payable in accordance with such plan, policy, practice, program, contract or agreement. Specifically, in the event of a “Change of Control,” as defined in the Executive Severance Agreement applicable to the Executive, the terms of the Executive Severance Agreement shall control to the extent they provide an additional or enhanced benefit.

     7. Full Settlement. The Company’s obligation to make the payments provided for in, and otherwise to perform its obligations under, this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action that the Company may have against the Executive or others. In no event shall the Executive be obligated to seek other employment or take any other

11


 

action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement.

     8. Confidential Information; Noncompetition. (a) The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge or data relating to the Company or any of its affiliated companies and their respective businesses that the Executive obtains during the Executive’s employment by the Company or any of its affiliated companies and that is not public knowledge (other than as a result of the Executive’s violation of this paragraph (a) of Section 8) (“Confidential Information”). The Executive shall not communicate, divulge or disseminate Confidential Information at any time during or after the Executive’s employment with the Company, except with the prior written consent of the Company or as otherwise required by law or legal process.

     (b) During the Noncompetition Period (as defined below), the Executive shall not, without the prior written consent of the Board, engage in or become associated with a Competitive Activity. For purposes of this paragraph (b) of Section 8: (I) the “Noncompetition Period” means three (3) years from the date of Early Termination or Ordinary Retirement; (ii) a “Competitive Activity” means any business or other endeavor that engages in businesses similar to those conducted by the Company; and (iii) the Executive shall be considered to have become “associated with a Competitive Activity” if he becomes directly or indirectly involved as an owner, employee, officer, director, independent contractor, agent, partner, advisor, or in any other capacity calling for the rendition of the Executive’s personal

12


 

services, with any individual, partnership, corporation or other organization that is engaged in a Competitive Activity. Notwithstanding the foregoing, the Executive may make and retain investments during the Employment Period in not more than five percent of the equity of any entity engaged in a Competitive Activity, if such equity is listed on a national securities exchange or regularly traded in an over-the-counter market.

     (c) Executive’s service as Chairman of the Board of MoneyGram International, Inc. following the Spin-Off will not be considered a violation of this Agreement.

     9. Successors. (a) This Agreement is personal to the Executive and, without the prior written consent of the Company, shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

     (b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors and assigns.

     (c) The Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would have been required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean both the Company as

13


 

defined above and any such successor that assumes and agrees to perform this Agreement, by operation of law or otherwise.

     10. Miscellaneous. (a) This Agreement shall be governed by, and construed in accordance with, the laws of the State of Arizona, without reference to principles of conflict of laws. The captions of this Agreement are not part of the provisions hereof and shall have no force or effect. This Agreement may not be amended or modified except by a written agreement executed by the parties hereto or their respective successors and legal representatives.

     (b) All notices and other communications under this Agreement shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

     If to the Executive:

      Robert H. Bohannon
      0810 Viad Tower
      1850 N. Central Avenue
      Phoenix, AZ 85077

     If to the Company:

     Viad Corp

      1012 Viad Tower
      1850 N. Central Avenue
      Phoenix, AZ 85077
      Attention: General Counsel

or to such other address as either party furnishes to the other in writing in accordance with this paragraph (b) of Section 10. Notices and communications shall be effective when actually received by the addressee.

14


 

     (c) The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. If any provision of this Agreement shall be held invalid or unenforceable in part, the remaining portion of such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and continue in full force and effect to the fullest extent consistent with law.

     (d) Notwithstanding any other provision of this Agreement, the Company may withhold from amounts payable under this Agreement all federal, state, local and foreign taxes that are required to be withheld by applicable laws or regulations.

     (e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision of, or to assert any right under, this Agreement shall not be deemed to be a waiver of such provision or right or of any other provision of or right under this Agreement.

     (f) The Executive and the Company acknowledge that this Agreement supersedes any other agreement between them concerning the subject matter hereof.

     (g) This Agreement may be executed in several counterparts, each of which shall be deemed an original, and said counterparts shall constitute but one and the same instrument.

     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the authorization of its Board of Directors, the

15


 

Company has caused this Agreement to be executed in its name on its behalf, all as of the day and year first above written.

         
    s/b Robert H. Bohannon
   
 
    Robert H. Bohannon
 
       
    VIAD CORP
 
       
  By   s/b Scott E. Sayre
     
 
      Scott E. Sayre
      Vice President & General Counsel

16

CODE OF ETHICS
 

Exhibit 14.1

MONEYGRAM INTERNATIONAL, INC.
Code of Ethics

This Code of Ethics sets out the minimum ethical standards for all directors, officers and employees of MoneyGram International, Inc. and its subsidiaries (referred to collectively as “MoneyGram”). MoneyGram is committed to enforcing these standards through effective internal systems reporting structures and MoneyGram’s Always Honest compliance program. Violators will be subject to disciplinary action.

MoneyGram’s directors, officers and employees, in conducting the business of the company, will:

  Obey the law, including all applicable rules and regulations, and conduct themselves with honesty and integrity.
 
  Avoid engaging in any conduct where their personal interests interfere or appear to interfere with those of MoneyGram.
 
  Advance the legitimate interests of MoneyGram when the opportunity arises and avoid competing with MoneyGram directly or indirectly or using MoneyGram property, information, or their positions with MoneyGram for improper personal gain.
 
  Respect the rights of and deal fairly with MoneyGram’s customers, suppliers, competitors and employees.
 
  Not offer or accept bribes or kickbacks either directly or indirectly.
 
  Report to work in condition to perform their duties, free from the influence of alcohol or illegal drugs.
 
  Keep honest and accurate records and reports of company information.
 
  Make full, fair, accurate, timely and understandable disclosures in reports and documents that MoneyGram provides to any governmental authority and in all other public communications made by MoneyGram.
 
  Respect the diversity of MoneyGram’s employees and not engage in wrongful discrimination or harassment.
 
  Preserve the confidentiality of nonpublic company information and any other information entrusted to them in confidence by MoneyGram or its customers, except when disclosure is authorized or is legally mandated.
 
  Not use or share confidential information for stock trading purposes or any other purpose except to conduct MoneyGram’s business.
 
  Protect MoneyGram’s assets and ensure their proper and efficient use, including property, equipment, products and other tangible assets, and proprietary information such as trade secrets, patents, trademarks, and copyrights, as well as business, marketing and service plans, engineering and manufacturing ideas, designs, databases, records, salary information and any unpublished financial data and reports.
 
  Maintain a safe and healthy workplace for all employees by following safety and health rules and practices and reporting accidents, injuries and unsafe equipment, practices or conditions.
 
  Promptly report concerns regarding accounting, auditing and internal controls matters on a confidential basis to the General Counsel of MoneyGram Corp, the “Always Honest” Hotline, the head of Internal Audit, or the Chairman of the Audit Committee of MoneyGram Corp’s Board of Directors. Such reports will be investigated by MoneyGram Corp under the direction of the Board’s Audit Committee.
 
  Promptly report work-related activities by company personnel that violate the law, this Code and any other company policy. Reports of violations may be made to a supervisor, the Compliance Officer, an executive officer of MoneyGram, the Law Department or a member of MoneyGram Corp’s Compliance Committee, or by calling the toll-free “Always Honest” Hotline (                                ) to make anonymous or confidential reports. Reports of violations by executive officers or senior financial personnel must be made to the General Counsel or the Chairman of the Audit Committee of MoneyGram Corp’s Board of Directors.

MoneyGram does not permit retaliation of any kind for reports of misconduct made in good faith. If you have questions about this Code, MoneyGram’s compliance programs or whether conduct may violate this Code, the law or a compliance program, you should consult with a supervisor, the Compliance Officer, an executive officer of MoneyGram, the Law Department or a member of MoneyGram Corp’s Compliance Committee.

 


 

Waivers of this Code may be made only upon written request submitted to and approved by MoneyGram Corp’s Board of Directors. Changes in or waivers of the Code will be promptly disclosed as required by applicable law or regulation.

 

INFORMATION STATEMENT
Table of Contents

(VIAD LOGO)

, 2004

Dear Fellow Viad Stockholder:

      On                     , 2004, our board of directors approved a pro rata distribution to Viad stockholders of all of the shares of MoneyGram International, Inc., a wholly-owned subsidiary of Viad Corp that conducts Viad’s global payment services business. If you were a Viad stockholder at the close of business on                     , 2004, the record date for the distribution, you will become a stockholder of MoneyGram.

      We believe that the spin-off will create two strong and focused businesses with promising opportunities for growth and enhanced stockholder value. As a separate, independent company, MoneyGram will be better positioned to provide consumers and businesses with affordable, reliable and convenient payment services. Our remaining businesses will continue to provide high-quality services addressing the needs of trade show and exhibit customers, as well as unique travel and recreation opportunities in the northern United States and Canada.

      In the distribution, you will receive one share of MoneyGram common stock for each share of Viad common stock that you held at the close of business on the record date.

      Your current shares of Viad common stock will continue to represent your equity ownership in our remaining businesses, which we refer to as “New Viad.” At Viad’s 2004 annual meeting of stockholders, Viad received stockholder approval for a one-for-four reverse stock split. The reverse stock split will be effective immediately following the spin-off. When the reverse stock split is effected, you will receive one share of Viad common stock for every four shares of Viad common stock that you held on the record date. We expect that shares of MoneyGram common stock will trade on the New York Stock Exchange, Inc. under the ticker symbol “MGI.” Viad common stock will continue to trade under the ticker symbol “VVI.”

      The enclosed information statement is being sent to you to explain the distribution in detail and provide important information regarding MoneyGram and New Viad. We urge you to read it carefully. Please note that stockholder approval is not required for the distribution, and holders of Viad common stock are not required to take any action to participate in the distribution. Thus, we are not asking you for a proxy.

      We look forward to your continued support as a stockholder in Viad and MoneyGram.

  Very truly yours,
 
  Robert H. Bohannon
  Chairman, President and Chief Executive Officer


Table of Contents

(MONEYGRAM LOGO)

, 2004

Dear Fellow MoneyGram Stockholder:

      On behalf of the entire team at MoneyGram International, Inc., I wish to welcome you as a stockholder in our company.

      The board of directors of Viad Corp has approved the distribution to Viad stockholders of all the outstanding shares of MoneyGram common stock. Upon completion of the distribution, MoneyGram International, Inc. will be a separate, independent public company. Following the spin-off, we expect that MoneyGram common stock will be listed on the New York Stock Exchange, Inc. and will trade under the symbol “MGI.”

      We would like to take this opportunity to introduce you to our company. We conduct a leading global payment services business with over 60 years of operating performance, and our mission is to provide consumers and businesses with affordable, reliable and convenient payment services.

      We are very excited about our prospects as an independent company. We are committed to building value for you, our stockholders, by expanding our core businesses through focused growth strategies.

      I invite you to learn more about us and our business by reviewing the enclosed information statement.

      Welcome, again, to our company.

  Very truly yours,
 
  Philip W. Milne
  President and Chief Executive Officer


Table of Contents

Preliminary Information Statement
(Subject to Completion, Dated June 3, 2004)
     
(VIAD LOGO)
  (MONEYGRAM LOGO)

      Viad Corp is furnishing this information statement to its stockholders in connection with the distribution by Viad to its stockholders of all of the issued and outstanding shares of common stock of MoneyGram International, Inc. The distribution will result in the separation of Viad’s global payment services business from its other businesses. As of the date of this information statement, Viad owns all of the MoneyGram common stock.

      In the distribution, Viad will distribute all of the MoneyGram common stock on a pro rata basis to Viad stockholders. Each of you, as a Viad stockholder, will receive one share of MoneyGram common stock, together with the attached preferred share purchase right, for each share of Viad common stock that you hold at the close of business on                     , 2004, the record date. The distribution will be effective at 11:59 p.m. on                     , 2004. The distribution is intended to be tax-free to Viad and its stockholders for U.S. federal income tax purposes, and Viad has received a favorable ruling from the U.S. Internal Revenue Service to that effect.

      No vote of Viad stockholders is required in connection with the distribution.

      There is no current trading market for MoneyGram common stock. However, we expect that a limited market, commonly known as a when-issued trading market, for MoneyGram common stock will develop on or shortly before the record date for the distribution, and we expect regular way trading of MoneyGram common stock will begin on the first trading day after the distribution. We have applied to the New York Stock Exchange, Inc. to list MoneyGram common stock for trading under the symbol “MGI.”

      At its 2004 annual meeting of stockholders, Viad received stockholder approval for a one-for-four reverse stock split of Viad common stock. The reverse stock split will be effective immediately following the spin-off.

      In reviewing this information statement, you should carefully consider the matters described under “Risk Factors” beginning on page 22.


WE ARE NOT ASKING YOU FOR A PROXY AND

YOU ARE REQUESTED NOT TO SEND US A PROXY.


      Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this information statement is truthful or complete. Any representation to the contrary is a criminal offense.


The date of this information statement is                     , 2004.

Viad first mailed this information statement to its stockholders on                     , 2004.


Table of Contents

QUESTIONS AND ANSWERS

What is the spin-off?

      The spin-off is the method through which Viad Corp will separate its existing businesses into two independent, publicly-traded companies:

  •  MoneyGram International, Inc., consisting of Viad’s global payment services business; and
 
  •  New Viad, consisting of Viad’s convention and event services, exhibit design and construction and travel and recreation services businesses.

See “The Spin-Off.”

Why is Viad separating MoneyGram and New Viad?

      Viad believes that the separation will allow each of MoneyGram’s and New Viad’s management to focus more clearly on each business and create promising opportunities for growth and enhanced stockholder value. Further, the separation will eliminate any competition for capital between Viad’s businesses, which MoneyGram and Viad believe will enhance the businesses’ opportunities for growth. As an independent public company, MoneyGram expects to have direct access to the capital markets, enabling it to issue equity and debt more easily and on more favorable terms. As a “pure-play” payment services company, MoneyGram expects that its ability to pursue acquisitions and joint ventures will be enhanced as a result of having a more focused equity currency. Finally, the separation will enable each of MoneyGram and New Viad to offer its key employees compensation directly linked to the performance of its business, which they expect will enhance their ability to attract, retain and motivate qualified personnel.

What steps will Viad take to complete the spin-off?

      Prior to the spin-off, Travelers Express Company, Inc., a direct, wholly-owned subsidiary of Viad Corp that currently conducts the global payments services business, will be merged with a subsidiary of MoneyGram International, Inc. and MoneyGram will make a cash payment to Viad Corp of $150 million. In addition, Travelers Express Company, Inc. will pay Viad a cash dividend in the amount of the net income of Travelers Express Company, Inc. in 2004 to the date of the spin-off, less the amount of dividends already paid in respect of such net income (other than the $7.25 million dividend described below). For the quarter ended March 31, 2004, Travelers Express Company, Inc. paid Viad a dividend in respect of net income for that quarter of approximately $34 million, of which $11 million related to a gain from the sale of a subsidiary and approximately $23 million related to net income exclusive of such gain. Assuming the spin-off is completed on June 30, 2004, Travelers Express Company, Inc. expects to pay a similar amount (approximately $23 million) based on its net income for the quarter ending on that date. However, we do not currently know when the distribution will occur or how Travelers Express Company, Inc.’s business will perform during that time.

      Viad and MoneyGram will enter into a separation and distribution agreement, a tax sharing agreement, an employee benefits agreement and an interim services agreement, each of which will govern the relationship between Viad and MoneyGram following the spin-off.

      In connection with the spin-off, Viad will redeem all currently outstanding shares of its preferred stock and is making tender offers to purchase its outstanding public notes and subordinated debentures and seeking to eliminate substantially all of the restrictive covenants in the instruments governing this indebtedness. Viad also expects that all of its outstanding commercial paper and certain other previously existing indebtedness will be repaid at or prior to the time of the spin-off. In addition, Travelers Express Company, Inc. will pay Viad a dividend of $7.25 million prior to the spin-off in connection with Viad’s payment of certain deferred compensation liabilities, which amount Viad will use to pay its creditors.

      For further information concerning all of the transactions that are being effected in connection with the spin-off, see “Relationship Between New Viad and MoneyGram — The Separation.”

i


Table of Contents

Are there any conditions to the spin-off being completed?

      Viad may decide not to complete the distribution if, at any time prior to the distribution, Viad’s board of directors determines, in its sole discretion, that the distribution is not in the best interests of Viad or its stockholders. In addition, Viad’s intention to complete the distribution is contingent on the satisfaction of the conditions described below, any of which (other than those set forth in the first, second, sixth and seventh bullet points below) may be waived by Viad:

  •  the MoneyGram common stock to be distributed in the distribution must be approved for listing on the New York Stock Exchange;
 
  •  the registration statement filed in respect of the MoneyGram common stock to be distributed must be effective;
 
  •  any material governmental consents and authorizations necessary for the distribution must have been obtained, without any conditions that would have a material adverse effect on MoneyGram or Viad;
 
  •  all statutory requirements for the consummation of the distribution must have been satisfied;
 
  •  the consummation of the distribution must not conflict with or require any consent under any material contract of Viad or MoneyGram and no legal constraint prevents the consummation of the distribution;
 
  •  the distribution must be payable in accordance with applicable law;
 
  •  no injunction or court order and no law or regulation shall be in effect preventing the completion of the distribution;
 
  •  Viad and MoneyGram must have in place new credit agreements that are acceptable to their respective boards of directors, and the employee benefits agreements, the interim services agreements and the tax sharing agreement must be in effect;
 
  •  there shall not have occurred any material adverse effect on the business, assets, liabilities, financial condition, results of operations or prospects of MoneyGram or New Viad, including among other things, any such effect resulting from or arising in connection with any terrorist attacks or the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or the occurrence of any similar calamity or crises, or any event or circumstance that could reasonably be expected to have an adverse effect on the ruling that Viad received from the Internal Revenue Service that the distribution will qualify as a tax-free distribution for federal income tax purposes; and
 
  •  indications received from the relevant ratings agencies with respect to the expected investment grade long-term credit rating for MoneyGram must not have been revoked or adversely revised.

      See “The Spin-Off” and “Relationship between New Viad and MoneyGram — Agreements between Viad and MoneyGram.”

What will I receive in the spin-off?

      For every one share of Viad common stock that you hold at the close of business on                     , 2004, you will receive one share of MoneyGram common stock, together with the attached preferred share purchase right. See “The Spin-Off.” Because you will receive one share of MoneyGram common stock for each share of Viad common stock that you hold, Viad will not need to issue or pay cash in lieu of any fractional shares of MoneyGram common stock.

      In addition, at its 2004 annual meeting of stockholders, Viad received stockholder approval for a one-for-four reverse stock split of Viad common stock. The reverse stock split will be effective immediately following the spin-off. When the reverse stock split is effected, the number of shares of Viad common stock that you hold would be reduced by a factor of four.

ii


Table of Contents

What will happen to Viad and my existing Viad common stock as a result of the spin-off?

      After the spin-off, Viad will continue to own and operate its convention and event services, exhibit design and construction and travel and recreation services businesses, which we refer to as “New Viad.” Viad common stock will continue to trade on the New York Stock Exchange, Inc. under the symbol “VVI.”

      At Viad’s 2004 annual meeting of stockholders, Viad received stockholder approval for a one-for-four reverse stock split. The reverse stock split will be effective immediately following the spin-off. When the reverse stock split is effected, you will receive one share of Viad common stock for every four shares of Viad common stock that you held on the record date. As soon as practicable after the record date, New Viad will notify you as to how and when to surrender your certificates representing shares of New Viad common stock. This reverse stock split will have no effect on shares of MoneyGram common stock or the one-for-one distribution ratio for the distribution.

      Information concerning this reverse stock split is contained in the proxy statement that was provided to you in connection with Viad’s 2004 annual meeting of stockholders. You do not need to take any action at this time in connection with the reverse stock split.

What is the accounting treatment for the spin-off?

      Despite the fact that MoneyGram International, Inc. is being spun-off from Viad Corp, for accounting purposes, due to the relative significance of MoneyGram International, Inc. to Viad Corp, MoneyGram International, Inc. will be considered the divesting entity. As a result, MoneyGram International, Inc. will be the “accounting successor” to Viad Corp, and we have presented the historical financial information of Viad Corp as the financial information for MoneyGram International, Inc. in this information statement. See “Unaudited Pro Forma Consolidated Financial Information of MoneyGram International, Inc.”

Will I be taxed on the shares of MoneyGram that I receive in the spin-off?

      Viad has received a favorable private letter ruling from the Internal Revenue Service to the effect that, for U.S. federal income tax purposes, the spin-off generally will be tax-free to Viad stockholders. See “The Spin-Off.”

      This tax ruling, however, does not address state, local or foreign tax consequences for Viad stockholders. You should consult your tax advisor as to the particular tax consequences to you of the spin-off.

What do I have to do to participate in the spin-off?

      Nothing, except to have owned Viad common stock on the record date. We intend to use a book-entry system to distribute shares of MoneyGram common stock. This means that your ownership of MoneyGram common stock will be recorded in the records maintained by our transfer agent. MoneyGram stock certificates will not be issued unless you request one. You do not need to, and should not, mail in your certificates of Viad common stock to receive your MoneyGram common stock in the spin-off.

      In connection with the reverse stock split, Viad will send you a letter of transmittal shortly after that reverse stock split becomes effective instructing you to mail your certificates representing shares of New Viad common stock to New Viad’s transfer agent. You should send these stock certificates only after you have received that letter of transmittal.

When will the spin-off occur?

      The spin-off will be effective at 11:59 p.m. on                     , 2004.

On which exchange will MoneyGram common stock trade?

      We have applied to list the shares of MoneyGram on the New York Stock Exchange, Inc. under the symbol “MGI.”

iii


Table of Contents

When will I be able to buy and sell MoneyGram common stock?

      Regular trading of MoneyGram common stock will begin on                     , 2004. A form of interim trading, called when-issued trading, may occur for MoneyGram common stock on or before                     , 2004. “When-issued” trading reflects the value at which the market expects the MoneyGram common stock to trade after the spin-off. If when-issued trading develops, you will be able to buy and sell MoneyGram common stock before the spin-off. None of these trades, however, will settle until after the spin-off, when regular trading in MoneyGram common stock will begin. If the spin-off does not occur, all when-issued trading will be null and void. If when-issued trading occurs, the listing for MoneyGram common stock will be under the trading symbol “MGI” and accompanied by the letters “wi.” See “The Spin-Off — Trading between the Record Date and the Distribution Date.”

How will New Viad common stock trade?

      Viad common stock will continue to trade on a regular basis through the date of the spin-off.

      We expect that ex-distribution trading for Viad common stock may develop before the spin-off. “Ex-distribution” trading means that you may trade Viad common stock before the spin-off, but on a basis that reflects the value at which the market expects the Viad common stock to trade after the spin-off. If ex-distribution trading develops, you may buy and sell those shares before the spin-off. None of these trades, however, will settle until after the spin-off, when regular trading in Viad common stock has begun. If the spin-off does not occur, all ex-distribution trading will be null and void.

      If ex-distribution trading occurs, the listing for Viad common stock will be accompanied by the letters “wi.”

Will the MoneyGram common stock distributed be freely tradable?

      The shares of MoneyGram common stock to be distributed will be freely tradable, except for shares received by persons that may have a special relationship or affiliation with MoneyGram. See “The Spin-Off — Listing and Trading of MoneyGram and Viad Common Stock.”

What will be the relationship between New Viad and MoneyGram after the spin-off?

      After the spin-off, Viad will not own any MoneyGram common stock, MoneyGram will not own any Viad common stock, and the two companies will be separate, independent public companies. Prior to the spin-off, MoneyGram will enter into the following agreements with Viad:

  •  a separation and distribution agreement;
 
  •  an employee benefits agreement;
 
  •  an interim services agreement; and
 
  •  a tax sharing agreement.

These agreements will outline the specifics of the spin-off itself and govern the ongoing relationship between MoneyGram and Viad after the completion of the spin-off. See “Relationship between New Viad and MoneyGram.”

Do MoneyGram or New Viad plan to pay dividends?

      Neither MoneyGram nor New Viad has made any determination as to whether it will pay any dividends after the spin-off. Any decision to pay dividends will be at the discretion of the board of directors of MoneyGram and New Viad in accordance with applicable law.

Are there risks to owning New Viad or MoneyGram common stock?

      You should read this entire information statement carefully. MoneyGram’s global payment services business and New Viad’s convention and event services, exhibit design and construction and travel and recreation services

iv


Table of Contents

businesses are subject to general and specific business risks. In addition, the spin-off presents other risks resulting from the spin-off transaction itself, risks relating to MoneyGram being an independent public company, and risks relating to New Viad’s businesses after the spin-off. These risks are described under “Risk Factors.” We encourage you to read that section carefully when evaluating whether and for how long you should retain your Viad common stock and the MoneyGram common stock you will receive in the spin-off.

Where can Viad stockholders get more information?

      Before the spin-off, you should direct inquiries relating to the spin-off to:

  Viad Corp
       Investor Relations Department
       1850 N. Central Ave. MS# 820
       Phoenix, AZ 85004
       phone: 602-207-2681
       fax: 602-207-2832
       www.viad.com

      After the spin-off, you should direct inquiries relating to your investment in MoneyGram common stock to:

  MoneyGram International, Inc.
       Investor Relations Department
       MoneyGram National Headquarters
       1550 Utica Avenue South
       Minneapolis, MN 55416
       www.moneygram.com

and inquiries relating to your investment in New Viad common stock to:

  Viad Corp
       Investor Relations Department
       1850 N. Central Ave. MS# 820
       Phoenix, AZ 85004
       phone: 602-207-2681
       fax: 602-207-2832
       www.viad.com

      Information on the websites listed above does not constitute part of this information statement.

v


TABLE OF CONTENTS

SUMMARY
RISK FACTORS
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
THE SPIN-OFF
DIVIDEND POLICY OF MONEYGRAM
CAPITALIZATION OF VIAD CORP (Accounting Predecessor to MoneyGram International, Inc.)
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF MONEYGRAM INTERNATIONAL, INC. (Accounting Successor to Viad Corp)
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA OF VIAD CORP (Accounting Predecessor to MoneyGram International, Inc.)
BUSINESS OF MONEYGRAM
MANAGEMENT OF MONEYGRAM
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF MONEYGRAM
DESCRIPTION OF CAPITAL STOCK OF MONEYGRAM
FINANCING ARRANGEMENTS OF MONEYGRAM
DIVIDEND POLICY OF NEW VIAD
CAPITALIZATION OF NEW VIAD
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION OF NEW VIAD
SELECTED HISTORICAL COMBINED FINANCIAL AND OTHER DATA OF NEW VIAD
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF NEW VIAD
BUSINESS OF NEW VIAD
MANAGEMENT OF NEW VIAD
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF NEW VIAD
DESCRIPTION OF CAPITAL STOCK OF NEW VIAD
FINANCING ARRANGEMENTS OF NEW VIAD
INDEMNIFICATION OF DIRECTORS AND OFFICERS OF MONEYGRAM AND NEW VIAD
RELATIONSHIP BETWEEN NEW VIAD AND MONEYGRAM
WHERE YOU CAN FIND MORE INFORMATION ABOUT MONEYGRAM
WHERE YOU CAN FIND MORE INFORMATION ABOUT NEW VIAD
INDEX TO FINANCIAL STATEMENTS
OMNIBUS INCENTIVE PLAN
FORM OF INDEMNIFICATION AGREEMENT
MANAGEMENT INCENTIVE PLAN
DEFERRED COMPENSATION PLAN
TIER I EXECUTIVE SEVERANCE PLAN
TIER II EXECUTIVE SEVERANCE PLAN
SUPPLEMENTAL 401(K) PLAN
SUPPLEMENTAL PENSION PLAN
DEFERRED COMPENSATION PLAN FOR DIRECTORS
DIRECTOR'S MATCHING GIFT PROGRAM DESCRIPTION
CHARITABLE AWARD PROGRAM
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
CODE OF ETHICS
INFORMATION STATEMENT


Table of Contents

TABLE OF CONTENTS

         
Page

Summary
    1  
Risk Factors
    22  
Special Note About Forward-Looking Statements
    37  
The Spin-Off
    38  
Dividend Policy of MoneyGram
    44  
Capitalization of Viad Corp
    45  
Unaudited Pro Forma Consolidated Financial Information of MoneyGram International, Inc.  
    47  
Selected Historical Consolidated Financial and Other Data of Viad Corp
    62  
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp.
    64  
Business of MoneyGram
    94  
Management of MoneyGram
    113  
Security Ownership of Certain Beneficial Owners and Management of MoneyGram
    125  
Description of Capital Stock of MoneyGram
    127  
Financing Arrangements of MoneyGram
    132  
Dividend Policy of New Viad
    133  
Capitalization of New Viad
    134  
Unaudited Pro Forma Combined Financial Information of New Viad
    135  
Selected Historical Combined Financial and Other Data of New Viad
    140  
Management’s Discussion and Analysis of Financial Condition and Results of Operations of New Viad
    142  
Business of New Viad
    153  
Management of New Viad
    168  
Security Ownership of Certain Beneficial Owners and Management of New Viad
    177  
Description of Capital Stock of New Viad
    179  
Financing Arrangements of New Viad
    184  
Indemnification of Directors and Officers of MoneyGram and New Viad
    185  
Relationship Between New Viad and MoneyGram
    187  
Where You Can Find More Information About MoneyGram
    195  
Where you Can Find More Information About New Viad
    195  
Index to Financial Statements
    F-1  

vi


Table of Contents

      In this information statement, unless the context requires otherwise, (1) all references to the “spin-off” or the “distribution” are to the pro rata distribution by Viad Corp to its stockholders of all of the issued and outstanding shares of MoneyGram common stock, (2) “Viad” refers to Viad Corp, (3) “MoneyGram” refers to the businesses that are currently conducted by Travelers Express Company, Inc., as if such business were a separate, independent company and, with respect to periods following the spin-off, refers to MoneyGram International, Inc., (4) “we,” “us” and “our” refer to MoneyGram or Viad, as the context requires, and (5) “New Viad” refers to the businesses that will continue to be conducted by Viad following the spin-off and, with respect to periods following the spin-off, refers to Viad Corp. In this information statement, information concerning MoneyGram has been provided by MoneyGram and information concerning New Viad has been provided by Viad.


      MoneyGram®, AgentConnect®, DeltaWorks®, ExpressPaymentsm, Flash Pay®, GameCash®, PrimeLink®, PrimeLinkplus® and Travelers Express® are trademarks of MoneyGram. GES®, GES Canadasm, ExhibitSelectsm, INTERKIT®, GES at Your Service!®, GES Servicentersm, GES National Servicentersm, HANG:RX®, Trade Show Electrical®, Exhibitgroup/ Giltspur®, ExpoTech®, Exhibitgroup®, Maxim®, E’LANsm, EMAX®, egXpresssm, eg@worksm, LUMA2 & Design®, Royal Glacier Tours®, Red Bus designsm, Jammer Amber® and WAM! The Wireless Ambassador® are trademarks of Viad. This information statement also includes references to trademarks, service marks and trade names of other entities.

vii


Table of Contents

SUMMARY

      This summary highlights selected information from this information statement concerning MoneyGram, New Viad and the spin-off. More detailed discussions of the information summarized below are contained elsewhere in this information statement. You should read this entire information statement carefully, including the risk factors and the historical and pro forma financial statements and notes to those statements included in this information statement.

The Spin-Off

      The following is a brief summary of the terms of the spin-off:

 
Distributing Company Viad Corp. After the spin-off, New Viad will not own any shares of MoneyGram common stock.
 
Distributed Company MoneyGram International, Inc., currently a wholly-owned subsidiary of Viad Corp. After the spin-off, MoneyGram will be a separate, independent public company and will not own any shares of New Viad common stock.
 
Shares to Be Distributed Approximately                    shares of MoneyGram common stock, par value $0.01 per share, together with the attached preferred share purchase rights. The shares of MoneyGram common stock to be distributed will constitute all of the outstanding shares of MoneyGram common stock immediately after the spin-off.
 
Distribution Ratio One share of MoneyGram common stock for each share of Viad common stock that you hold at the close of business on the record date for the distribution.
 
Record Date Close of business on                     , 2004
 
Distribution Date                     , 2004
 
Distribution Shortly after the distribution date, the transfer agent will distribute the shares of MoneyGram common stock by crediting these shares to book-entry accounts established by the transfer agent for persons that were Viad stockholders on the record date. You will not be required to make any payment or to surrender or exchange your Viad common stock or take any other action to receive your shares of MoneyGram common stock.
 
Under the separation and distribution agreement between MoneyGram and Viad, Viad may terminate the distribution without liability at any time prior to the time that the distribution is effected. See “The Spin-Off.”
 
Reverse Stock Split At Viad’s 2004 annual meeting of stockholders, Viad received stockholder approval for a one-for-four reverse stock split. The reverse stock split will be effective immediately after the spin-off. When the reverse stock split is effected, you will receive one share of Viad common stock for every four shares of Viad common stock that you held on the record date. In connection with the reverse stock split, New Viad will send you a letter of transmittal shortly after that reverse stock split becomes effective instructing you to mail your certificates representing shares of New Viad common stock to New Viad’s transfer agent. You should send these stock certificates only after you have received that letter of transmittal.
 
Transfer Agent Wells Fargo Shareowner Services

1


Table of Contents

 
New York Stock Exchange Symbol for MoneyGram MoneyGram has applied to have MoneyGram common stock listed on the New York Stock Exchange, Inc. under the symbol “MGI.”
 
New York Stock Exchange Symbol for New Viad After the spin-off, New Viad common stock will continue to trade on the New York Stock Exchange, Inc. under the symbol “VVI.”
 
Trading Market We expect when-issued trading for MoneyGram common stock and ex-distribution trading for Viad common stock to occur before the distribution date. See “The Spin-Off — Trading between the Record Date and Distribution Date.”
 
Risk Factors The distribution and ownership of MoneyGram and Viad common stock involve various risks. See “Risk Factors.”
 
Tax Consequences Viad has received a favorable private letter ruling from the Internal Revenue Service to the effect that the spin-off qualifies as a tax-free distribution for U.S. federal income tax purposes. See “The Spin-Off — Material U.S. Federal Income Tax Consequences of the Spin-Off.”
 
Trading of MoneyGram Common Stock The shares of MoneyGram common stock to be distributed will be freely transferable, except for shares received by persons that may have a special relationship or affiliation with MoneyGram. See “The Spin-Off — Listing and Trading of MoneyGram and Viad Common Stock.”
 
Relationship Between New Viad and MoneyGram After the Spin-Off After the spin-off, New Viad and MoneyGram will be independent, publicly owned companies. Viad and MoneyGram have entered into several agreements to define their ongoing relationship after the spin-off. See “Relationship between New Viad and MoneyGram.”
 
Stock Options and Restricted Stock Grants At the time of the spin-off, all outstanding options to purchase Viad common stock will be adjusted to consist of options to purchase the same number of shares of New Viad common stock (subject to adjustment for the reverse stock split) and options to purchase the same number of shares of MoneyGram common stock, and all holders of outstanding shares of Viad restricted stock will receive shares of MoneyGram common stock, which will also be subject to restrictions. The adjustments to the outstanding options are designed to preserve the intrinsic economic value of those options. See “Relationship between New Viad and MoneyGram — Agreements between Viad and MoneyGram — Employee Benefits Agreement.”
 
Anti-Takeover Effects New Viad would be subject to tax if an acquisition or issuance of New Viad common stock or MoneyGram common stock triggers the application of Section 355(e) of the U.S. Internal Revenue Code of 1986, as amended, or the “Code.” MoneyGram has agreed to indemnify New Viad from any tax resulting from any acquisition or issuance of MoneyGram common stock that triggers the application of Section 355(e). Thus, Section 355(e) of the Code could discourage, delay or prevent a change of control of New Viad or MoneyGram.

2


Table of Contents

 
In addition, some provisions of MoneyGram’s amended and restated certificate of incorporation and amended and restated by-laws and Delaware law may also have the effect of making more difficult an acquisition of control of MoneyGram in a transaction not approved by its board of directors. See “Relationship between New Viad and MoneyGram” and “Description of Capital Stock of MoneyGram.”
 
Prior to the spin-off, MoneyGram’s board of directors expects to adopt a rights agreement, with Wells Fargo Bank, N.A. as rights agent, to protect its stockholders from coercive or otherwise unfair takeover tactics. The preferred share purchase rights issuable under the rights agreement will be attached to the shares of MoneyGram common stock that you receive in the spin-off. See “Description of Capital Stock of MoneyGram — The Rights Agreement.”
 
Similarly, some provisions of Viad’s amended and restated certificate of incorporation and by-laws and Delaware law, as well as the existing rights agreement between Viad and Wells Fargo Bank Minnesota, N.A., as rights agent, may have the effect of making more difficult an acquisition of control of New Viad in a transaction not approved by Viad’s board of directors. See “Description of Capital Stock of New Viad.”

3


Table of Contents

MoneyGram International, Inc.

      MoneyGram is a leading global payment services company. Our mission is to provide consumers and businesses with affordable, reliable and convenient payment services worldwide. We offer our products and services to consumers through our network of agents and our financial institution customers. The diverse array of products and services we offer enables consumers, most of whom are not fully served by traditional financial institutions, to make payments and to transfer money around the world, helping them meet the financial demands of their daily lives.

      Our business, which is conducted through Travelers Express Company, Inc. and its subsidiaries, including MoneyGram Payment Systems, Inc., has been in operation since 1940. In the last six years, we have added important new products and services and have expanded our business domestically and internationally. Following the spin-off, our business will consist of two operating segments: our global funds transfer segment and our payment services segment. Our global funds transfer segment provides consumers with domestic and international money transfers, money orders and bill payment services through our network of agents. Our payment services segment provides official check outsourcing services to financial institutions and related payment solutions to businesses. In both operating segments, our primary sources of revenue are transaction fees and revenue generated from our investment of the funds underlying the payment instruments from the time those funds are remitted to us until the transaction is completed.

      Our primary channel of distribution to consumers of our global funds transfer segment is a worldwide network of agents currently consisting of more than 100,000 locations. Currently, more than 68,000 locations around the world offer our money transfer services and more than 63,500 locations in the United States offer our money orders. Our payment services segment provides official check services through more than 16,000 branch locations of our financial institution customers. Based on the number of our transactions in 2003, we are:

  •  a leading global provider of consumer money transfers, offering our MoneyGram-branded money transfer services in approximately 160 countries around the world;
 
  •  the largest issuer of money orders in the United States, with approximately 295 million money orders issued;
 
  •  the second largest provider of urgent bill payment services in the United States; and
 
  •  the second largest provider of official check outsourcing services to financial institutions in the United States.

      From 1997 through 2003, our business has grown through:

  •  our June 1998 acquisition of MoneyGram Payment Systems, Inc., which today forms the foundation of our consumer money transfer business and has grown from serving approximately 105 countries in 1997 to approximately 160 countries in 2003;
 
  •  increasing the number of consumer money transfer agent locations from approximately 21,000 in 1997 to over 63,000 in 2003;
 
  •  increasing the number of money order agent and financial institution locations from approximately 41,000 in 1997 to over 63,500 in 2003; and
 
  •  increasing our average daily balance of investments, primarily attributable to our official check outsourcing services, from approximately $1.6 billion in 1997 to approximately $7.0 billion in 2003.
 
MoneyGram Competitive Advantages

      We believe that our success results from a combination of key assets and competencies, including:

  •  Strong Value Proposition. We believe that our products and services provide consumers, as well as our agents and financial institution customers, with a recognizable value. We offer consumer money transfer and urgent bill payment services that we believe are generally less expensive than those offered by our primary competitor, First Data Corporation and its subsidiaries, including Western Union. Our services

4


Table of Contents

  include features that we believe are not typically found with smaller, niche competitors, including delivery in as little as ten minutes, 24 hours a day, seven days a week customer service and receiver choice of delivery location. Our official check outsourcing services provide our financial institution customers with a suite of services, including imaged checks and branch level and internet reporting of activity, generally at a lower cost than the financial institutions would incur if they were to perform these services themselves.
 
 
  •  Advanced Proprietary Technology. We believe that our advanced proprietary technology in each of our operating segments gives us a significant competitive advantage. The technology that we use in our central processing functions is both flexible and scalable and can support increased transaction volume and continued innovation without requiring fundamental change. In addition, our flexible point-of-sale technology options provide our agents with a variety of means to efficiently provide money transfers, bill payment services and money orders.
 
 
  •  Broad Consumer Recognition and Consumer Loyalty. We believe that our key brands — MoneyGram and Travelers Express — are well-known and established, and that the primary consumers of our products and services associate our brands with quality payment services at an affordable price. As a result, we believe that these consumers are loyal to our products and services.
 
 
  •  Extensive Domestic and International Retail Agent Network. Currently, we offer money orders through over 63,500 retail agent and bank locations in the United States, and offer money transfer services through a network of over 68,000 agent locations in approximately 160 countries. Our money transfer agent locations in the United States are focused in ethnic neighborhoods, allowing us to compete effectively for money transfers that are originated in the United States, while our international agent locations include key agents in high-volume markets around the world, including many in remote areas not well served by traditional financial institutions. International money transfers, including money transfers that originate outside of the United States, are a rapidly growing part of the money transfer industry and we believe that our international agent locations provide us with the ability to take advantage of this growth.
 
 
  •  Strong Relationships with Agents and Financial Institution Customers. In our global funds transfer segment, we have long-term contracts with some of the largest and most recognized retail chains, financial institutions and post offices in the world, including: Wal-Mart Stores, Albertson’s, Safeway, Publix, Harris Teeter, Circle K, Ace Cash Express, Bancomer, the United Kingdom Post Office, the Canadian Post Office and the Italian Postal Service. Customers of our payment systems segment include a variety of U.S. financial institutions, such as major retail banks, regional banks, community banks, savings banks and credit unions, including Wachovia, U.S. Bancorp, Compass Bankshares, Huntington, Branch Banking and Trust Company (or BB&T) and Charter One Bank.
 
MoneyGram Growth Strategies

      Our growth strategies include:

  •  Continuing to Provide Consumers, Agents and Financial Institution Customers with a Strong Value Proposition. We believe that the products and services we offer provide consumers, agents and financial institution customers with recognizable value. We intend to continue to capitalize on this value proposition by developing and implementing marketing and other communication programs targeting consumers and businesses that reinforce this value proposition. In addition, we will continue to implement multiple pricing strategies to customize our pricing for different send and receive corridors in response to changes in competition, and we will continue to introduce our multi-currency system, which allows consumers to know the exact amount of currency that will be available for delivery. We also intend to develop loyalty programs that reward our most productive and loyal consumers and agents.
 
  •  Expanding Our Distribution Channels and Creating New Delivery Methods. We intend to take advantage of the growth potential that we believe exists in our industry by expanding our distribution channels, creating new delivery methods and targeting the rapidly growing immigrant populations in host

5


Table of Contents

  countries. We plan to maintain and expand our existing relationships with agents and enter into relationships with new agents by expanding our international agent base and our relationships with businesses that have not traditionally offered money transfer services through the use of technologies, such as our FormFree system. We intend to support our international expansion by increased staffing at our London office and our nine regional offices around the world. We also believe that there are opportunities to increase our distribution channels and enhance delivery methods by increasing the number of billers that participate in our urgent bill payment services, and in new ways, such as offering our products and services through the internet, ATM networks and self-service kiosks.
 
  •  Delivering New Payment Products and Related Financial Services. We closely monitor consumer trends, and intend to develop new payment products and related financial services to meet consumer needs. The products that we expect to offer in the future are generally consumer focused and are intended to take advantage of existing payment networks such as the automated clearing house and debit networks. We expect these products to include a suite of stored-value card and other electronic payment products.
 
  •  Continuing to Deliver an Integrated, Reliable, Low-Cost Service Platform to Our Consumers, Agents and Financial Institution Customers. We believe that we can increase our transaction volume by making it easier for our agents, financial institution customers and consumers to do business with us. We intend to continue to provide regular enhancements to our point-of-sale platforms that simplify transactions while increasing speed for both the consumer and agent. Additionally, we will seek ways to improve our settlement and reporting mechanisms to our agents and financial institution customers. We also intend to support our consumer value proposition by further reducing our delivery costs by focusing on agent automation and improving our operational efficiency.
 
  •  Pursuing Strategic Acquisitions and Alliances. We intend to actively evaluate strategic acquisitions and alliances and aggressively pursue those opportunities that we believe further our strategic goals. We plan to pursue opportunities that would allow us to acquire new or complementary products and services, expand our distribution channels, broaden our market presence or increase our market penetration.
 
  •  Continuing to Recruit, Retain and Reward Solution-Oriented Employees Who Share Our Corporate Values. We intend to continue recruiting, retaining and rewarding employees and executives at all levels who have the experience and talent necessary to implement our growth strategies. These employees must share our corporate values: respect, courage, passion, integrity and teamwork. We plan to accomplish this goal by actively developing the skills of our employees, creating career opportunities, providing competitive compensation and implementing employee communication programs that celebrate success and recognize contributors and leaders.
 
Risks Relating to MoneyGram

      There are a number of risks associated with an investment in MoneyGram common stock, including:

  •  Our financial condition and results of operation could be adversely affected by fluctuations in interest rates.
 
  •  Our business may require cash in amounts greater than the amount of available credit facilities and liquid assets that we have on hand at a particular time, and if we were forced to ultimately liquidate assets or secure other financing as a result of unexpected liquidity needs, our earnings could be reduced.
 
  •  We are subject to credit risks related to our investment portfolio and our use of derivatives.
 
  •  If our credit ratings were to be downgraded, or if the ratings agencies were to indicate that a lowering may occur, our business would be harmed.
 
  •  We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operation would be adversely affected.
 
  •  If we lost key retail agents in our global funds transfer segment, our business and results of operations could be adversely affected.
 
  •  If we lost large financial institution customers in our payment systems segment, our business and results of operation could be adversely affected.

6


Table of Contents

      There are also a number of risks associated with the spin-off, including:

  •  The historical financial information of MoneyGram may not be representative of its results as a separate, independent company.
 
  •  If the spin-off is determined to be a taxable transaction, you could be subject to tax on the value of the MoneyGram common stock you receive in the distribution.
 
  •  If MoneyGram takes actions that cause the spin-off to fail to qualify as a tax-free transaction, it will be required to indemnify New Viad for any resulting taxes and related losses.
 
  •  The ability of MoneyGram to engage in financings and acquisitions and other strategic transactions using equity securities is subject to limitations because of the U.S. federal income tax requirements for a tax-free distribution.
 
  •  MoneyGram could incur significant tax liability if New Viad fails to pay the tax liabilities attributable to it under the tax sharing agreement.

      For more information on these and other risks that we face, including risks relating to our development of new products and services, agent credit and fraud risk, operation of our computer systems and data centers, the amount of money that we move, the anticipated terms of our credit agreements, our expansion plans, our intellectual property, our reliance on third party vendors, litigation that we may face, risks affecting the payment systems industry generally, potential challenges of the spin-off as a fraudulent transfer or a legal dividend, potential conflicts of interests involving our management and directors and relating to securities markets and ownership of MoneyGram common stock, see “Risk Factors” beginning on page 22 of this information statement.

     History of MoneyGram

      The businesses conducted by MoneyGram date to 1940 when Travelers Express Company, Inc. began offering what are now known as money orders. Travelers Express Company, Inc. was acquired by a predecessor of Viad Corp in 1965. In 1998, Travelers Express Company, Inc. acquired MoneyGram Payment Systems, Inc., a provider of worldwide money transfers.

      Currently, both MoneyGram International, Inc., which was incorporated in Delaware in December 2003 in connection with the spin-off, and Travelers Express Company, Inc. are direct, wholly owned subsidiaries of Viad. Prior to the completion of the spin-off, Travelers Express Company, Inc. will be merged with a direct, wholly owned subsidiary of MoneyGram International, Inc., with Travelers Express Company, Inc. as the surviving corporation. As a result of the merger, Travelers Express Company, Inc. will become a direct, wholly owned subsidiary of MoneyGram International, Inc.

      *          *          *

      MoneyGram’s principal executive offices are located at 1550 Utica Avenue South, Minneapolis, Minnesota 55416, and our telephone number is (952) 591-3000. Our internet address is www.moneygram.com. The information contained on our website, or connected to that website, is not a part of this information statement or the registration statement of which this information statement is a part. After the registration statement of which this information statement is a part becomes effective, MoneyGram will make available free of charge on www.moneygram.com its annual, quarterly and current reports and amendments to those reports, as soon as reasonably practicable after it electronically files those reports with, or furnishes them to, the Securities and Exchange Commission.

7


Table of Contents

New Viad

      Following the spin-off, Viad will continue to be a leading provider of high-quality services that address the needs of trade show organizers and exhibitors, as well as travel and recreation services in the United States and Canada. These businesses, which we refer to as “New Viad,” will be operated through three segments:

  •  GES — GES Exposition Services, Inc., GES Exposition Services (Canada) Limited and their respective subsidiaries, which we collectively refer to as “GES,” provide various convention and trade show services throughout North America, such as freight handling, transportation, installation, dismantling and management services to trade show management companies, trade associations and exhibitors. GES also provides certain exhibit design and construction services;
 
  •  Exhibitgroup — the Exhibitgroup/ Giltspur division of New Viad, David H. Gibson Company, Inc., Giltspur Exhibits of Canada, Inc., Viad Holding GmbH, Viad Services Companies Limited and their respective subsidiaries, which we collectively refer to as “Exhibitgroup,” specialize in design, construction, installation and warehousing of convention and trade show exhibits and displays, primarily for corporate customers in North America, and, to a lesser extent, in Europe. Exhibitgroup also provides various trade show services to its corporate customers; and
 
  •  Travel and Recreation Services — Brewster Transport Company Limited, Brewster Tours Inc., and Brewster Inc., which we collectively refer to as “Brewster,” and Glacier Park, Inc., and Waterton Transport Company, Limited, which we collectively refer to as “Glacier Park,” provide tour and charter operations in the Canadian Rockies and operate historic lodges and food services in certain national parks in North America.

      GES is a leading provider of a diverse array of services in connection with the planning, design and execution of conventions, trade shows and special events. The core customers of GES are trade show organizers and exhibitors at the trade shows of these organizers, which are required by the organizer to use GES for certain services. GES also provides services to exhibitors on an elective basis. GES provides services at an estimated 2,000 trade shows and events annually, including some of the most visible and influential events in the trade show industry. GES’s principal services include trade show layout and design, logistics planning and show execution. GES was the primary service provider for five of the top ten trade shows (based on square footage) in North America in 2003, and was the primary service provider for approximately a third of the top 200 trade shows (based on square footage) in North America during 2000 through 2003.

      Exhibitgroup is one of the most experienced and largest exhibit designers and fabricators in the world, with an over 60-year operating history of providing custom exhibit design and construction and related services to large companies. Exhibitgroup is also a highly-specialized exhibit program manager, working closely with its core client base of Fortune 1000 and large private company clients with one-stop management and production of an entire exhibit campaign over a series of trade shows or events. Exhibitgroup’s core competencies include three-dimensional design, custom construction, exhibitor show program management, installation and dismantle services and innovative technology. Exhibitgroup has won over 50 design awards since 1997, including 28 prestigious “Best of Show” awards for exhibits that its clients have presented at particular trade shows.

      Brewster provides a variety of tourism services in the Rocky Mountains of southern Alberta, Canada, including two world-class attractions, the Banff Gondola and the Columbia Icefield, as well as “snocoach” tours, motorcoach services, charter and sightseeing services, hotel operations and travel agencies in Alberta, Canada. Brewster’s services also include package tour agency operations for destinations throughout Canada.

      Glacier Park is the largest concessionaire in Glacier National Park in Montana. Glacier Park operates, among other things, four historic lodges and three motor inns in and around Glacier National Park and Waterton Lakes National Park in southern Alberta, Canada.

8


Table of Contents

 
New Viad Competitive Advantages

      We believe that a number of competitive advantages distinguish us from competitors in our various businesses, including:

  •  Leading Market Position. Each of GES and Exhibitgroup occupies a leading position in its industry. We believe that these leadership positions are due largely to strong, experienced and talented personnel, equipment resources, innovative technology and process improvements. These capabilities allow GES and Exhibitgroup to provide what we believe to be top quality products and services at competitive rates and be recognized as world-class providers in their respective marketplaces.
 
  •  Ability to Offer an Integrated Suite of Service Offerings. The distinct yet synergistic services provided by GES and Exhibitgroup allow us to service virtually all needs of exhibit and trade show customers. Exhibitgroup provides one-stop shopping for exhibit program clients, providing all exhibit-related services required in the context of a client’s overall marketing strategy. GES is similarly positioned to address all the needs of the trade show, convention and event customer, from the planning stages to all aspects of execution of a successful trade show.
 
  •  Strong Customer Relationships. GES and Exhibitgroup pride themselves on their level of customer service, which has allowed them to develop long-standing relationships with a wide range of customers in various industries and has resulted in a high percentage of contract renewals. Our highly skilled and experienced team of sales, design and service professionals work hard to understand and bring to life the goals of both long-standing and new design clients and trade show customers.
 
  •  Well-Positioned in Major Trade Show Markets. GES and Exhibitgroup have a well-established presence in North America’s most active convention and event services markets, as well as production facilities and warehouses in strategic locations throughout North America. This geographic presence allows GES and Exhibitgroup to efficiently and simultaneously service customers throughout the United States. Exhibitgroup also has a strong presence in certain markets outside North America, with European operations and strategic global alliances that distinguish Exhibitgroup from its competitors around the world. In addition, GES is the leading participant in the Las Vegas trade show market, which is the premier venue for national trade shows. GES is headquartered and has extensive facilities in Las Vegas, Nevada.
 
  •  Technology Leadership. We believe that both Exhibitgroup and GES are industry leaders and innovators in technologies used to address customers’ needs. From design software to logistics and construction technologies, Exhibitgroup and GES’s technologies are often benchmarks in their respective industries.
 
  •  Operations in Internationally Recognized Travel and Recreation Sites. We believe that Glacier National Park and the Canadian Rockies are internationally recognized as vacation destinations. Glacier National Park is regarded as one of the “jewels” of the U.S. National Park system. The Columbia Icefield and the Canadian Rockies in general are also internationally recognized for their spectacular landscapes and unique tourism opportunities.
 
New Viad Growth Strategies

      Our strategy is to enhance our leadership role in our key markets. To achieve this goal, we have several key business strategies:

  •  Maximizing Revenue Opportunities Through Enhanced Service Offerings and Geographic Expansion. GES intends to drive revenue growth by increasing sales of elective exhibitor services through its Exhibitor Value Program. GES and Exhibitgroup intend to expand their presence in high-growth geographic areas and industries for which trade shows and events are an important marketing tool. Exhibitgroup intends to increase its international revenue by expanding its network of global strategic alliances to service clients worldwide.
 
  •  Leveraging the Relationship between GES and Exhibitgroup. Although GES and Exhibitgroup are distinct businesses, we plan to leverage the core competencies of each to provide customers with additional value, including capitalizing on the growth in corporate specialty events by offering integrated

9


Table of Contents

  services from GES and Exhibitgroup to the large companies that sponsor these events. We plan to optimize the unique talents of these businesses, with Exhibitgroup designing the event theme and exhibits and GES providing general contractor services to produce the corporate event. For example, in the 2003 Ford Centennial Celebration, Exhibitgroup provided its design expertise to bring the event theme to life and to design specific exhibits and GES acted as the general services contractor to stage the event.
 
  •  Increasing Efficiencies. To increase value to customers and stockholders, we intend to continue centralizing operations. During 2003, Exhibitgroup consolidated production facilities and certain accounting and finance functions, and strategically relocated sales and design offices. GES has developed, and continues to train its staff in, best practice processes for all key elements of show execution, including labor planning, equipment distribution, product delivery and freight management. The end result of these best practices is higher service levels to the trade show organizer and exhibitors and more effective cost controls.
 
  •  Making Selective Investments and Focused Acquisitions. We intend to make selective investments in projects, including technology, and to make acquisitions that we believe will improve financial returns, enhance our range of capabilities and improve client service levels. We plan to refine our planning, inventory management and billing systems, as well as the internal systems that support our operations.
 
Risks Relating to New Viad

      There are a number of risks associated with an investment in New Viad common stock, including:

  •  Our businesses and operating results are adversely affected by deterioration in general economic conditions.
 
  •  Our businesses are adversely affected by disruptions in the travel industry, particularly those adversely affecting the hotel and airline industries.
 
  •  Our businesses are seasonal, which causes our results of operations to fluctuate and makes our results of operations particularly sensitive to adverse events during peak periods.
 
  •  Trade show rotation may impact our overall profitability and makes comparisons between periods difficult.
 
  •  Transportation disruptions could adversely affect our business and operating results.
 
  •  Union-represented labor creates an increased risk of work stoppages and higher labor costs.

      There are also a number of risks associated with the spin-off, including:

  •  The historical financial information of New Viad may not be representative of its results as a separate, independent company.
 
  •  If the spin-off is determined to be a taxable transaction, New Viad could be subject to material amounts of taxes.
 
  •  If New Viad takes actions that cause the spin-off to fail to qualify as a tax-free transaction, it will be required to indemnify MoneyGram for any resulting taxes and related losses.
 
  •  The ability of New Viad to engage in financings and acquisitions and other strategic transactions using equity securities is subject to limitations because of the U.S. federal income tax requirements for a tax-free distribution.
 
  •  New Viad could incur significant tax liability if MoneyGram fails to pay the tax liabilities attributable to it under the tax sharing agreement.

      For more information on these and other risks that we face, including risks relating to competition, the loss of large customers, the relationship driven nature or our businesses, liabilities relating to prior and discontinued operations, our credit ratings, our concession agreement for Glacier Park, potential challenges of the spin-off as a fraudulent transfer or a legal dividend, potential conflicts of interests involving our management and directors and

10


Table of Contents

relating to securities markets and ownership of New Viad common stock, see “Risk Factors” beginning on page 22 of this information statement.
 
History of New Viad

      Viad Corp has a corporate history dating to 1926 when its predecessor, The Greyhound Corporation, was formed. The Greyhound Corporation was the largest bus company in the world and began a series of diversifying acquisitions in the 1960’s that continued through the 1980’s. These acquisitions included predecessors to both MoneyGram and New Viad, as well as food, and consumer products and airport services businesses.

      In the late 1980’s, Viad Corp separated its bus transportation operations from its other businesses. In connection with this separation the name of The Greyhound Corporation was changed, eventually to The Dial Corp., The Dial Corp was formed as a Delaware corporation in December 1991. In 1996, The Dial Corp changed its name to Viad Corp in connection with the disposition of its consumer products businesses.

*     *     *

      New Viad’s principal executive offices will continue to be located at 1850 North Central Avenue, Phoenix, Arizona 85004 with the telephone number of (602) 207-4000. New Viad’s internet address will remain as www.viad.com. New Viad will make available free of charge on www.viad.com its annual, quarterly and current reports, and amendments to those reports, as soon as reasonably practicable after it electronically files this material with, or furnishes it to, the SEC. The information contained on New Viad’s website, or connected to that site, is not a part of this information statement or the registration statement of which this information statement forms a part.

11


Table of Contents

Relationship between New Viad and MoneyGram

      Prior to the spin-off, New Viad and MoneyGram will enter into a number of agreements that will govern their relationship following the spin-off. These agreements include a separation and distribution agreement, a tax sharing agreement and an employee benefits agreement. The separation and distribution agreement will provide for the principal corporate transactions required to effect the separation of MoneyGram from Viad and the spin-off and other matters governing their relationship following the spin-off. Under the separation and distribution agreement, among other things:

  •  assets, personnel and liabilities currently associated with Viad’s payment services business and other specified liabilities will be allocated to MoneyGram, while all other assets, personnel and liabilities will be allocated to New Viad;
 
  •  Viad agrees to redeem its outstanding preferred stock and to repay its outstanding commercial paper;
 
  •  Viad agrees to make the distribution on the terms described in this information statement; and
 
  •  MoneyGram indemnifies New Viad against liabilities related to MoneyGram’s business and other specified liabilities, and New Viad indemnifies MoneyGram against liabilities related to New Viad’s business.

      The employee benefits agreement will provide for the allocation of employees, employee benefit plans and associated liabilities and related assets between MoneyGram and Viad. Generally, Viad will remain responsible for compensation and benefit liabilities for employees and former employees assigned to it, and MoneyGram will be responsible for compensation and benefit liabilities for employees and former employees assigned to it. However, MoneyGram will assume specified liabilities relating to employees and former employees of Viad under its primary defined benefit pension plan, supplemental executive retirement plans and specified executive medical benefits.

      The tax sharing agreement will provide for the allocation between Viad and MoneyGram of federal, state, local and foreign tax liabilities for all periods through the spin-off. In general, the tax sharing agreement provides that MoneyGram will be liable for all federal, state, local and foreign tax liabilities, including any such liabilities resulting from the audit of or other adjustment to previously filed tax returns, that are attributable to the business of MoneyGram for all periods through the spin-off, and Viad will be responsible for all other of these taxes through the spin-off.

      Under the interim services agreement, Viad will provide a number of specified services to MoneyGram on an interim basis. Viad will generally provide these services until the earlier of two years from the spin-off or termination of all services under the interim services agreement. Viad will charge a fee for the services provided, which fee will be determined and allocated according to methods consistent with those in place prior to the spin-off. Generally, Viad will not be liable to MoneyGram for any failure to perform its obligations under the interim services agreement, except in the case of intentional misconduct or gross negligence. MoneyGram will indemnify Viad for any liability to any third party arising out of provision of services.

      For a more complete description of the terms of these agreements, see “Relationship between New Viad and MoneyGram — Agreements Between New Viad and MoneyGram.”

Actions Prior to the Spin-Off

      Immediately prior to the spin-off, Travelers Express Company, Inc., a wholly-owned subsidiary of Viad Corp, will be merged with a subsidiary of MoneyGram International, Inc., and MoneyGram International, Inc. will make a cash payment to Viad Corp of $150 million. The amount of this payment was determined based on review of historical cash flows, and the near-term and medium-term expected cash flows of MoneyGram and New Viad subsequent to the spin-off, and is intended to ensure that each of Viad and MoneyGram are adequately capitalized and has the appropriate level of cash resources at the time of the separation, while obtaining an investment grade long-term credit rating for MoneyGram. In addition, prior to the spin-off, Travelers Express

12


Table of Contents

Company, Inc. will pay Viad cash dividends in the amount of the net income of Travelers Express Company, Inc. in 2004 to the date of the spin-off, less the amount of dividends already paid in respect of such net income (other than the $7.25 million dividend described below). For the quarter ended March 31, 2004, Travelers Express Company, Inc. paid Viad a dividend in respect of net income for that quarter of approximately $34 million, of which $11 million related to a gain from the sale of a subsidiary and approximately $23 million related to net income exclusive of such gain. Assuming the spin-off is completed on June 30, 2004, Travelers Express Company, Inc. expects to pay a similar amount (approximately $23 million) based on its net income for the quarter ending on that date. However, we do not currently know when the distribution will occur or how Travelers Express Company, Inc.’s business will perform during that time, we cannot provide an estimate of the amount of the dividend.

      In connection with the spin-off, Viad expects to redeem all currently outstanding shares of its preferred stock. Viad has also repaid industrial revenue bonds for which it is responsible and is making tender offers to purchase its outstanding public notes and subordinated debentures and seeking consents to eliminate substantially all of the restrictive covenants in the instruments governing that indebtedness. In addition, in connection with the spin-off, Viad expects to repay all of its outstanding commercial paper, and each of MoneyGram and New Viad expect to enter into new credit facilities. See “Financing Arrangements of MoneyGram” and “Financing Arrangements of New Viad.” The total amount of cash required to fund the repayment of commercial paper, preferred stock redemptions and debt retirement described above, including the redemption of the industrial revenue bond, is expected to be $262.2 million.

      In addition, Travelers Express Company, Inc. will pay Viad a dividend of $7.25 million prior to the spin-off in connection with Viad’s payment of certain deferred compensation liabilities, which amount Viad will use to pay its creditors. For further information concerning all of the transactions that are being effected in connection with the spin-off, see “Relationship Between New Viad and MoneyGram — The Separation.”

13


Table of Contents

Summary Unaudited Pro Forma Consolidated Financial and Other Data

of MoneyGram International, Inc.
(Accounting Successor to Viad Corp)

      The summary unaudited pro forma consolidated financial data for MoneyGram International, Inc. (accounting successor to Viad Corp) set forth below is derived from the unaudited pro forma consolidated financial information of MoneyGram International, Inc. (accounting successor to Viad Corp) included elsewhere in this information statement. Notwithstanding the legal form of the spin-off, because of the relative significance of MoneyGram International, Inc. to Viad Corp, MoneyGram International, Inc. will be considered the divesting entity and treated as the “accounting successor” to Viad Corp for financial reporting purposes in accordance with Emerging Issues Task Force (EITF) Issue No. 02-11, “Accounting for Reverse Spin-offs” (EITF No. 02-11).

      The following summary unaudited pro forma consolidated financial data at and for the three months ended March 31, 2004 and for the year ended December 31, 2003 reflect the continuing impact of the effects of the anticipated Viad preferred stock redemption, debt refinancings and the spin-off transaction on the historical financial data of MoneyGram International, Inc. The summary unaudited pro forma consolidated financial data for the years ended December 31, 2002 and 2001 reflect the historical financial data of MoneyGram International, Inc. giving effect to the recording of the spin-off transaction only. The capital structure that existed when the businesses that will be held by MoneyGram International, Inc. operated as part of Viad Corp is not relevant because it does not reflect MoneyGram International, Inc.’s expected future capital structure as a separate, independent public company. The basic weighted average shares outstanding were calculated by applying the distribution ratio (one share of MoneyGram common stock for every one share of Viad common stock) to Viad Corp’s basic weighted average shares outstanding during each period.

      The pro forma data does not represent what MoneyGram International, Inc.’s financial position or results of operations would have been had MoneyGram International, Inc. operated as a separate, independent public company, nor does the pro forma data give effect to any events other than those discussed in the related notes. The pro forma data also does not project MoneyGram International, Inc.’s financial position or results of operations at any future date or for any future period.

14


Table of Contents

                                 
Three months
ended Year ended December 31,
March 31,
2004 2003 2002 2001




(in thousands, except per share data)
Statement of Income Data
                               
Revenues:
                               
Payment services transaction fees
  $ 113,622     $ 419,003     $ 365,636     $ 322,128  
Payment services investment income
    76,654       323,098       351,331       306,145  
Payment services investment gains (losses)
    1,046       (4,877 )     (9,276 )     7,287  
     
     
     
     
 
Total revenues
  $ 191,322     $ 737,224     $ 707,691     $ 635,560  
     
     
     
     
 
Income from continuing operations(1),(2)
  $ 21,486     $ 88,412     $ 77,252     $ 72,155  
     
     
     
     
 
Unaudited pro forma diluted income from continuing operations per common share(3)
  $ 0.25     $ 1.02     $ 0.89     $ 0.84  
     
     
     
     
 
Average outstanding and potentially dilutive common shares(4)
    87,217       86,619       86,716       86,322  
     
     
     
     
 
Unaudited pro forma basic income from continuing operations per common share(3)
  $ 0.25     $ 1.03     $ 0.90     $ 0.84  
     
     
     
     
 
Average outstanding common shares
    86,710       86,223       86,178       85,503  
     
     
     
     
 
Other Data
                               
Average investable balances
  $ 6,584,946                          
Approximate number of countries served
    160                          
Approximate number of global funds transfer agent locations
    100,000                          
 
Balance Sheet Data (at end of period)
                               
Total assets(1)
  $ 8,724,988                          
Total debt
    150,771                          
Stockholder’s equity(1)
    489,318                          


(1)  Management anticipates that Viad Corp will incur a one-time pre-tax loss on the retirement of debt and redemption of preferred stock, currently estimated to be $23.0 million, in connection with the spin-off. Further, management expects that one-time pre-tax expenses of approximately $18.0 million, primarily related to investment banking, legal and accounting fees, will be required to complete the spin-off. Of these expenses, $10.0 million represent fees payable by Viad Corp upon completion of the spin-off under existing agreements. The remaining $8.0 million represent other fees and expenses incurred jointly by MoneyGram International, Inc. and Viad Corp in connection with the spin-off, which fees and expenses MoneyGram International, Inc. and Viad Corp will share equally. As a result, approximately $4.0 million is expected to be incurred by MoneyGram International, Inc. and $14.0 million is expected to be incurred by New Viad. These nonrecurring items have not been reflected in the pro forma consolidated statements of income; however, the pro forma consolidated balance sheet has been adjusted to reflect these nonrecurring items.
 
(2)  For an explanation of the pro forma adjustments included in the above information, refer to the Unaudited Pro Forma Consolidated Statements of Income of MoneyGram International, Inc. (Accounting Successor to Viad Corp) included elsewhere in this information statement.
 
(3)  The computation of unaudited pro forma income from continuing operations per common share for the periods presented is based upon Viad Corp’s historical weighted average number of shares of common stock outstanding.
 
(4)  The diluted weighted average common shares is based on Viad Corp’s historical outstanding and potentially dilutive securities for purposes of computing unaudited pro forma diluted income from continuing operations per common share.

15


Table of Contents

Summary Historical Consolidated Financial and Other Data of

Viad Corp
(Accounting Predecessor to MoneyGram International, Inc.)

      The summary historical financial data of Viad Corp (accounting predecessor to MoneyGram International, Inc.) is derived from the audited and unaudited consolidated financial statements of Viad Corp. Notwithstanding the legal form of the spin-off, because of the relative significance of MoneyGram International, Inc. to Viad Corp, MoneyGram International, Inc. will be considered the divesting entity and treated as the “accounting successor” to Viad Corp for financial reporting purposes in accordance with EITF No. 02-11. As such, the information presented in the following summary for MoneyGram International, Inc. (accounting successor to Viad Corp) generally reflects financial and other information previously filed with the SEC by Viad Corp. If the spin-off were to occur, MoneyGram International, Inc. would report the historical results of operations (subject to certain adjustments) of New Viad as discontinued operations in accordance with the provisions of Statement of Financial Accounting Standards (SFAS) No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Pursuant to SFAS No. 144; however, this presentation is not permitted until the date of the spin-off.

      The statement of income data for the years ended December 31, 2003, 2002 and 2001 and the balance sheet data at December 31, 2003 and 2002 set forth below are derived from the audited consolidated financial statements of Viad Corp included elsewhere in this information statement. The balance sheet data at December 31, 2001 set forth below is derived from audited consolidated financial statements of Viad Corp not included in this information statement. The statement of income data for the three months ended March 31, 2004 and 2003 and the balance sheet data at March 31, 2004 are derived from the unaudited consolidated financial statements of Viad Corp included elsewhere in this information statement. The balance sheet data at March 31, 2003 is derived from unaudited consolidated financial statements of Viad Corp not included in this information statement.

      The summary historical consolidated financial data is not necessarily indicative of the results of operations or financial position that would have occurred if MoneyGram International, Inc. had been a separate, independent company during the periods presented, nor is it indicative of MoneyGram International, Inc.’s future performance. This historical data should be read together with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp (Accounting Predecessor to MoneyGram International, Inc.)” and Viad Corp’s consolidated financial statements and related notes included elsewhere in this information statement.

16


Table of Contents

                                         
Three months ended
March 31, Year ended December 31,


2004 2003 2003 2002 2001





(in thousands, except per share data)
Statement of Income Data
                                       
Revenues
  $ 398,877     $ 396,966     $ 1,507,692     $ 1,552,177     $ 1,581,057  
     
     
     
     
     
 
Income from continuing operations(1)(2)
  $ 29,061     $ 21,390     $ 110,528     $ 93,048     $ 42,382  
Income from discontinued operations(3)
    11,932       641       3,374       2,577       4,106  
Changes in accounting principles(4)
                      (37,739 )     (1,884 )
     
     
     
     
     
 
Net income
  $ 40,993     $ 22,031     $ 113,902     $ 57,886     $ 44,604  
     
     
     
     
     
 
Diluted income per common share
                                       
Continuing operations(1)(2)
  $ 0.33     $ 0.24     $ 1.27     $ 1.06     $ 0.48  
Discontinued operations(3)
    0.14       0.01       0.04       0.03       0.04  
Changes in accounting principles(4)
                      (0.44 )     (0.02 )
     
     
     
     
     
 
Diluted net income per common share
  $ 0.47     $ 0.25     $ 1.31     $ 0.65     $ 0.50  
     
     
     
     
     
 
Average outstanding and potentially dilutive common shares
    87,217       86,326       86,619       86,716       86,322  
     
     
     
     
     
 
Basic income per common share
                                       
Continuing operations(1)(2)
  $ 0.33     $ 0.24     $ 1.27     $ 1.07     $ 0.48  
Discontinued operations(3)
    0.14       0.01       0.04       0.03       0.05  
Changes in accounting principles(4)
                      (0.44 )     (0.02 )
     
     
     
     
     
 
Basic net income per common share
  $ 0.47     $ 0.25     $ 1.31     $ 0.66     $ 0.51  
     
     
     
     
     
 
Average outstanding common shares
    86,710       86,008       86,223       86,178       85,503  
     
     
     
     
     
 
Dividends declared per common share
  $ 0.09     $ 0.09     $ 0.36     $ 0.36     $ 0.36  
     
     
     
     
     
 
Balance Sheet Data (at end of period)
                                       
Total assets
  $ 9,566,076     $ 9,872,173     $ 9,222,155     $ 9,675,429     $ 8,375,299  
Total debt
    252,548       355,531       251,443       361,657       396,828  
$4.75 Redeemable preferred stock subject to mandatory redemption
    6,741       6,711       6,733       6,704       6,679  
Common stock and other equity
    915,369       733,093       849,837       677,894       714,481  


(1)  Includes investment impairment losses and interest income adjustments (after-tax) of $3.6 million, or $0.04 per diluted share, and $12.6 million, or $0.15 per diluted share for the three months ended March 31, 2004 and 2003, respectively, and $19.5 million, or $0.23 per diluted share, in 2003, $18.2 million, or $0.21 per diluted share, in 2002 and $4.6 million, or $0.06 per diluted share, in 2001. Also includes restructuring charges, recoveries and other items (after-tax) of $3.0 million income, or $0.03 per diluted share, in 2003, $12.3 million expense, or $0.14 per diluted share, in 2002 and $58.9 million expense, or $0.68 per diluted share, in 2001.
 
(2)  In January 2002, Viad Corp adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 specifies that goodwill and certain intangible assets with indefinite lives no longer be amortized but instead be subject to periodic impairment testing. Excluding the amortization of previously expensed goodwill and certain intangible assets, income from continuing operations and corresponding diluted income per share would have been $56.6 million ($0.64 diluted income per share) in 2001.
 
(3)  If the spin-off were to occur, MoneyGram International, Inc. (Accounting Successor to Viad Corp) would record the historical results of operations (subject to certain adjustments) of New Viad in discontinued

17


Table of Contents

operations upon the completion of the spin-off pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”
 
(4)  In accordance with the adoption of SFAS No. 142, Viad Corp completed the transitional impairment test for goodwill during 2002 and concluded that a transitional impairment loss of $40.0 million ($37.7 million after-tax) should be recognized related to goodwill at the Exhibitgroup reporting unit of the Convention and Event Services segment. Effective in the second quarter of 2001, Viad adopted the provisions of EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets” (EITF No. 99-20). Accordingly, Viad Corp recorded a cumulative effect of a change in accounting principle of $3.0 million ($1.9 million after-tax).

18


Table of Contents

Summary Unaudited Pro Forma Combined Financial and Other Data of New Viad

      The summary unaudited pro forma combined financial data for New Viad set forth below is derived from the unaudited pro forma combined financial information of New Viad included elsewhere in this information statement.

      The following summary unaudited pro forma combined financial data at and for the three months ended March 31, 2004 and for the year ended December 31, 2003 reflects the effects of the anticipated Viad preferred stock redemption, debt refinancing and spin-off. The pro forma data does not represent what New Viad’s financial position or results of operations would have been had New Viad operated as a separate, independent public company, nor does the pro forma data give effect to any events other than those discussed in the related notes. The pro forma data also does not project New Viad’s financial position or results of operations at any future date or for any future period.

                 
Three months
ended Year ended
March 31, December 31,
2004 2003


(in thousands, except
per share data)
Statement of Income Data
               
Revenues:
               
Convention show services
  $ 158,330     $ 521,433  
Exhibit design and construction
    45,286       195,832  
Travel and recreation services
    3,939       53,203  
     
     
 
Total revenues
  $ 207,555     $ 770,468  
     
     
 
Income from continuing operations(1)(2)
  $ 7,707     $ 21,624  
     
     
 
Unaudited pro forma diluted income from continuing operations per common share(3)
  $ 0.09     $ 0.25  
     
     
 
Average outstanding and potentially dilutive common shares(4)
    87,217       86,619  
     
     
 
Unaudited pro forma basic income from continuing operations per common share(3)
  $ 0.09     $ 0.25  
     
     
 
Average outstanding common shares
    86,710       86,223  
     
     
 
Balance Sheet Data (at end of period)
               
Total assets(1)
  $ 705,066          
Total debt
    19,274          
Stockholder’s equity(1)
    379,273          


(1)  Management expects that one-time pre-tax expenses of approximately $18.0 million, primarily related to investment banking, legal and accounting fees, will be required to complete the spin-off. Of these expenses, $10.0 million represent fees payable by Viad Corp upon completion of the spin-off under existing agreements. The remaining $8.0 million represent other fees and expenses incurred jointly by MoneyGram International, Inc. and Viad Corp in connection with the spin-off, which fees and expenses MoneyGram International, Inc. and Viad Corp will share equally. As a result, approximately $4.0 million is expected to be incurred by MoneyGram International, Inc. and $14.0 million is expected to be incurred by New Viad. These nonrecurring items have not been reflected in the pro forma combined statements of income; however, the pro forma combined balance sheet has been adjusted to reflect the incurrence of $14.0 million of these expenses.
 
(2)  For an explanation of the pro forma adjustments included in the above information, refer to the Unaudited Pro Forma Combined Statements of Income of New Viad included elsewhere in this information statement.
 
(3)  The computation of unaudited pro forma income (loss) per common share for the periods presented is based upon Viad’s historical weighted average number of shares of Viad common stock outstanding.
 
(4)  The diluted weighted average common shares is based on Viad Corp’s historical outstanding and potentially dilutive securities for purposes of computing unaudited pro forma diluted income (loss) per common share.

19


Table of Contents

Summary Historical Combined Financial and Other Data of New Viad

      The following table summarizes historical combined financial data for New Viad. The statement of income data for the years ended December 31, 2003, 2002 and 2001 and the balance sheet data at December 31, 2003 and 2002 set forth below are derived from the audited combined financial statements of New Viad included elsewhere in this information statement. The balance sheet data at December 31, 2001 set forth below is derived from the audited combined financial statements of New Viad not included in this information statement. The statement of income data for the three months ended March 31, 2004 and 2003 and the balance sheet data at March 31, 2004 are derived from the unaudited combined financial statements of New Viad included elsewhere in this information statement. The balance sheet data at March 31, 2003 is derived from the unaudited financial information of New Viad not included in this information statement.

      The summary historical combined financial data is not necessarily indicative of the results of operations or financial position that would have occurred if New Viad had been a separate, independent company during the periods presented, nor is it indicative of New Viad’s future performance. This historical data should be read together with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of New Viad” and New Viad’s combined financial statements and related notes included elsewhere in this information statement.

                                         
Three months ended
March 31, Year ended December 31,


2004 2003 2003 2002 2001





(in thousands, except per share data)
Statement of Income Data
                                       
Revenue
  $ 207,555     $ 225,338     $ 770,468     $ 844,486     $ 945,497  
     
     
     
     
     
 
Income (loss) from continuing operations
  $ 7,559     $ 4,711     $ 21,091     $ 8,395     $ (40,603 )
Change in accounting principle
                      (37,739 )      
     
     
     
     
     
 
Net income (loss)
  $ 7,559     $ 4,711     $ 21,091     $ (29,344 )   $ (40,603 )
     
     
     
     
     
 
Unaudited pro forma diluted income (loss) per common share(1)
                                       
Continuing operations
  $ 0.09     $ 0.05     $ 0.24     $ 0.10     $ (0.47 )
Change in accounting principle
                      (0.44 )      
     
     
     
     
     
 
Diluted net income (loss) per common share
  $ 0.09     $ 0.05     $ 0.24     $ (0.34 )   $ (0.47 )
     
     
     
     
     
 
Average outstanding and potentially dilutive common shares(2)
    87,217       86,326       86,619       86,716       86,322  
     
     
     
     
     
 
Unaudited pro forma basic income (loss) per common share(1)
                                       
Continuing operations
  $ 0.09     $ 0.05     $ 0.24     $ 0.10     $ (0.47 )
Change in accounting principle
                      (0.44 )      
     
     
     
     
     
 
Basic net income (loss) per common share
  $ 0.09     $ 0.05     $ 0.24     $ (0.34 )   $ (0.47 )
     
     
     
     
     
 
Average outstanding common shares
    86,710       86,008       86,223       86,178       85,503  
     
     
     
     
     
 
Balance Sheet Data (at end of period)
                                       
Total assets
  $ 719,066     $ 692,705     $ 681,882     $ 673,356     $ 732,848  
Total debt
    19,274       65,959       50,092       66,778       73,703  
Stockholder’s equity
    393,273       276,384       333,871       266,163       333,440  
 
Other Data
                                       
Adjusted EBITDA(3)
  $ 19,339     $ 17,574     $ 63,873     $ 47,083     $ (18,029 )


(1)  The computation of unaudited pro forma income (loss) per common share for the periods presented is based upon Viad Corp’s historical weighted average number of shares of common stock outstanding.

20


Table of Contents

(2)  The diluted weighted average common shares is based on Viad Corp’s historical outstanding and potentially dilutive securities for purposes of computing unaudited pro forma diluted income (loss) per common share.
 
(3)  Adjusted EBITDA is a measure of New Viad’s ability to service debt, fund capital expenditures and finance growth, and should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America (GAAP). This information is supplemental to results presented under GAAP and may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is defined by New Viad as income from continuing operations before interest expense, income taxes, depreciation and amortization, and changes in accounting principles.

21


Table of Contents

RISK FACTORS

           You should carefully consider the risks described below and all other information contained in this information statement. If any of the following risks, or other risks and uncertainties that we have not yet identified or that we currently consider to be immaterial, actually occur, the business, prospects, financial condition, results of operations and cash flow of MoneyGram or New Viad could be materially adversely affected. In that event, the market value of the MoneyGram and/or New Viad common stock could decline and you could lose all or part of your investment.

Risks Relating to MoneyGram

 
Our financial condition and results of operations could be adversely affected by fluctuations in interest rates.

           We derive a substantial portion of our revenue from the investment of funds we receive from the sale of payment instruments, such as official checks and money orders, until these instruments are settled. We generally invest these funds in long-term fixed-rate securities.

           We pay the financial institutions to whom we provide official check outsourcing services a commission based on the average balance of funds produced by their sale of official checks. This commission is generally calculated on the basis of a variable rate based on short-term financial indices, such as the federal funds rate. In addition, we have agreements to sell, on a periodic basis, undivided percentage interests in some of our receivables from agents at a price that is discounted based on short-term interest rates. To mitigate the effects of interest rate fluctuations on our commission expense and the net proceeds from our sales of agent receivables, we enter into variable-to-fixed rate swap agreements. These swap agreements require us to pay our counterparty a fixed interest rate on an agreed notional amount, while our counterparty pays us a variable interest rate on that same notional amount.

           Fluctuations in interest rates affect the value and amount of revenue produced by our investment portfolio, the amount of commissions that we pay, the net proceeds from our sale of receivables and the amount that we have to pay under our swap agreements. As a result, as more specifically described below, our “net float income,” which is the difference, or “spread,” between the amount we earn on our investment portfolio and the commissions we pay and the discount on the sale of receivables, net of the effect of the swap agreements, is subject to interest rate risk. Interest rate risk is the potential reduction of net float income as a result of fluctuations in interest rates. We are exposed to interest rate risk because the cash flows from our investment portfolio and our obligations to pay commissions to our financial institution customers, the net discount on our sale of receivables and the related swaps are not perfectly matched through time and across all possible interest rate scenarios.

           As interest rates decrease, borrowers are more likely to prepay fixed-rate debt, resulting in cash flows that are received earlier than expected. Replacing the higher-rate investments that prepay with lower-rate investments could reduce our net float income. Conversely, an increase in interest rates may result in slower than expected prepayments leading to cash flows that are received later than expected. In this case, we have risk that the cost of our commission payments may reprice faster than our investments and at a higher cost, which could also reduce our net float income. An additional component of interest rate risk is market risk that arises from fluctuations in interest rates that may result in changes in the values of investments and derivatives. Rate movements can affect the repricing of assets and liabilities differently, as well as their market value. Stockholders’ equity can be adversely affected by changing interest rates, as after-tax changes in the fair value of securities classified as available-for-sale and after-tax changes in the fair value of our swaps are reflected as increases and decreases to a component of stockholders’ equity. The fair value of our swaps generally increases when the market value of fixed rate, long-term debt investments decline and vice versa.

           The market values of securities we hold may decline due to a variety of factors, including decline in credit rating of the issuer or credit issues related to underlying collateral of the security, general market conditions and increases in interest rates for comparable obligations. If we determine that an unrealized loss on a security is “other-than-temporary,” the loss becomes a realized loss through an impairment charge in the income statement.

22


Table of Contents

           For a discussion of the effect of recent interest rate fluctuations on our net income and financial condition, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad.”

 
Our business may require cash in amounts greater than the amount of available credit facilities and liquid assets that we have on hand at a particular time, and if we were forced to ultimately liquidate assets or secure other financing as a result of unexpected liquidity needs, our earnings could be reduced.

           We are subject to risks relating to daily liquidity needs, as well as extraordinary events, such as the unexpected loss of a customer. On a daily basis, we receive remittances from our agents and financial institution customers and we must clear and pay the financial instruments that were previously sold and currently are presented for payment. We monitor and maintain a liquidity portfolio along with credit lines and repurchase agreements in order to cover payment service obligations as they are presented. If we were forced to liquidate portfolio assets or secure other financing as a result of unexpected liquidity needs, our earnings could be reduced. In addition, if we were to lose any of our largest or other significant customers, in addition to losing the related revenues, we may have to liquidate investments or seek to borrow for a period of time to fund our obligation to clear the outstanding instruments issued on behalf of that customer at the termination of its contract. We may not be able to plan effectively for every customer contract termination, which could result in sale of investments at a loss of or lower profits than we would otherwise realize due to prevailing market conditions.

           We sell a portion of our receivables, primarily from money order agents, at a discount to a purchasing bank on a daily basis to accelerate cash flow for investment in liquid assets or investments with an investment rating of A or higher. Approximately $394 million of receivables were sold during the first quarter of 2004. The agreement governing these receivables sales does not require the purchasing bank to buy all or a portion of these receivables. As a result, the purchasing bank may cease to purchase agent receivables under this program or the terms on which it purchases these receivables may become less favorable to us. If the purchasing bank were to decline to purchase receivables at the same level as in the past, the size of our investment portfolio would decrease and any incremental revenue that would have been generated by the investment of the proceeds of these receivables sales would decline. In this case, we may have to liquidate investments or borrow money for a period of time to meet related money order obligations.

 
We are subject to credit risk related to our investment portfolio and our use of derivatives.

           Approximately 93 percent of our investment portfolio consists of securities that are not issued or guaranteed by the U.S. government. If the issuer of any of these securities were to default in its payment obligations to us or to otherwise experience credit problems, the value of that security would decline, adversely affecting the value of our investment portfolio. At December 31, 2003, we were party to derivative instruments known as swaps having a notional amount of $3.1 billion. These swap agreements are contracts in which we and a counterparty agree to exchange periodic payments based on a fixed or variable rate of interest on a given notional amount, without the exchange of the underlying notional amounts. The notional amount of a swap agreement is used to measure amounts to be paid or received and does not represent the amount of exposure to credit loss. At any point in time, depending upon many factors including the interest rate environment and the fixed and variable rates of the swap agreements, we may owe our counterparty or our counterparty may owe us. If any of our counterparties to these swap agreements were to default in its payment obligation to us, we could be adversely affected.

 
  If we do not receive an investment grade credit rating or if our credit ratings were to be downgraded, or if the ratings agencies were to indicate that a lowering may occur, our business would be harmed.

           Our ability to maintain an investment grade long-term credit rating is important to our business. Viad’s long-term debt currently has an investment grade rating subject to negative implications as a result of the spin-off. We have received indications from major credit ratings agencies that immediately following the spin-off, MoneyGram’s long-term debt will have an investment grade rating, with a stable outlook. If our long-term debt did not receive this rating or if our rating were to be downgraded below investment grade, or if ratings agencies were to indicate that a lowering may occur, our business, results of operations and financial condition would be materially adversely affected. Any downgrade of our ratings, or an indication that a downgrade may occur, could

23


Table of Contents

damage our customers’ perception of our financial strength. This would adversely affect our relationships with existing and prospective official check customers and clearing banks. Also, a downgrade would increase our costs of borrowing money, adversely affecting our business and results of operations.
 
We face intense competition, and if we are unable to continue to compete effectively, our business, financial condition and results of operations would be adversely affected.

           The industries in which we compete are highly competitive. Our primary competition comes from First Data Corporation and its subsidiaries, including Western Union, which has substantially greater transaction volume than we do. First Data and its subsidiaries have a larger agent base, a more established brand name and substantially greater financial and marketing resources than we do.

           In our global funds transfer segment, we compete for agents to provide our products and services to consumers. We compete for agents on the basis of the commissions and other financial consideration, primarily up-front incentive payments, that we offer to them, the variety and branding of products and services that we offer, and the point-of-sale solutions and support that we provide. Because of its greater resources and higher transaction volume, First Data and its subsidiaries may be able to offer key agents, such as large retail chains, foreign postal agencies and financial institutions, higher commissions and other financial consideration than we can. Key agents may choose to align themselves with First Data as a result of greater consumer recognition of the Western Union brand name and larger network of agent locations. Consumers may choose to purchase products and services from agents that use the Western Union brand.

           We also face competition in the money transfer business from niche companies, which provide money transfer services in one or a small number of send and receive corridors. Other new competitors, such as banks, may continue to enter the money transfer business and may use their existing branch locations to deliver money transfer services. In addition, in the future, major retail chains and others, including some that currently serve as our agents, may determine to form their own money transfer or money order businesses and compete with us.

           Finally, the U.S. Postal Service, a competitor in our money order business, is not dependent on third-party agents to provide money order services. In addition, the different cost structure of the U.S. Postal Service may enable it to offer its products and services at lower prices.

           In our payment systems segment, we compete in selling our official check outsourcing services to financial institutions on the basis of price, features of the services offered and financial institutions’ perceptions concerning our financial strength. Our primary competition comes from First Data and its subsidiaries. First Data’s greater financial resources may permit it to provide financial institutions more attractive economic incentives, such as signing bonuses, than we may be able to provide. First Data’s higher credit ratings may also make it more attractive to financial institutions considering outsourcing their official check services, particularly large financial institutions. Due to these factors, large financial institutions may, as a condition to entering into a contract with us, demand that we maintain a certain credit rating or provide additional security for our performance or require that we segregate the portion of our portfolio attributable to their payment instruments.

           If we are unable to continue to compete effectively, our business, financial condition and results of operations would be adversely affected.

 
If we lost key retail agents in our global funds transfer segment, our business and results of operations could be adversely affected.

           We may not be able to retain all of our current retail agents. The competition for chain retail agents is intense, and larger agents are increasingly demanding financial concessions and more information technology customization. The development and equipment necessary to meet agent demands could require substantial capital expenditures. If we were unable to meet these demands, we could lose agents and our volume of money transfers would be substantially reduced and our revenues would decline.

           A substantial portion of our transaction volume is generated by a limited number of key agents. During 2003 and 2002, our ten largest agents accounted for 17 percent and 14 percent, respectively, of our total revenues, and 30 percent and 26 percent, respectively, of the revenues of our global funds transfer segment. One of these agents

24


Table of Contents

accounted for four percent and two percent of our total revenues, and eight percent and three percent, during 2003 and 2002, respectively of the revenues of our global funds transfer segment. If any of these key agents were not to renew their contracts with us, or if such agents were to reduce the number of their locations, or cease doing business, we might not be able to replace the volume of business conducted through these agents, and our business and results of operations would be adversely affected.

           In addition, many of our high volume agents are in the check cashing industry. There are risks associated with the check cashing industry that could cause this portion of our agent base to decline. Any regulatory action that adversely affects check cashers could also cause this portion of our agent base to decline.

 
If we lost large financial institution customers in our payment systems segment, our business and results of operation could be adversely affected.

           During 2003 and 2002, our ten largest financial institution customers accounted for 17 percent and 19 percent, respectively, of our total revenues and 40 percent and 40 percent, respectively, of the revenues in our payment systems segment. One of our financial institution clients generated approximately four percent and six percent of our total revenues and approximately 12 percent and 12 percent of the revenues in our payment systems segment during 2003 and 2002, respectively. The loss of any of our top financial institution customers could adversely affect our business and results of operations.

 
If we fail to develop and introduce new and enhanced products and services or if alternative payment mechanisms that we do not offer replace the use of money orders and money transfers, our business and prospects could be adversely affected.

           Our future growth will depend, in part, on our ability to continue to develop and successfully introduce new and enhanced methods of providing money transfer, money order, official check, bill payment, cash access and related services that keep pace with competitive introductions, technological changes and the demands and preferences of our agents, financial institution customers and consumers. Many of our competitors offer stored-value cards and other electronic payment mechanisms, including various internet-based payment services, that could be substituted for traditional forms of payment, such as the money orders, bill payment and money transfer services we offer. If these alternative payment mechanisms become widely substituted for our products and services, and we do not develop similar alternative payment mechanisms, our business and prospects could be adversely affected.

 
We face credit and fraud risks from our retail agents.

           The vast majority of our global funds transfer business is conducted through independent agents that provide our products and services to consumers at their business locations. These agents sell our products and services, collect the funds from consumers and are required to remit the proceeds from these transactions to us. As a result, we have credit exposure to our agents, which averages approximately $1.0 billion, representing a combination of money orders, money transfers and bill payment proceeds. This credit exposure is spread across more than 27,000 agents, of which 25 owe us in excess of $5 million each at any one time.

           We are not insured against credit losses, except in circumstances of agent theft or fraud. If an agent becomes insolvent, files for bankruptcy, commits fraud or otherwise fails to remit money order or money transfer proceeds to us, we must nonetheless pay the money order or complete the money transfer on behalf of the consumer. Moreover, we have made, and may in the future make, secured or unsecured loans to retail agents under limited circumstances or allow agents to retain our funds for a period of time before remitting them to us. The failure of agents owing us large amounts to remit funds to us or to repay such amounts could materially adversely affect our business, results of operations and our financial condition.

           In the past five years we have experienced two significant agent fraud incidents, one involving an agent in the Dominican Republic and the other an agent in Switzerland. Losses before insurance recoveries were $9.4 million in 2000, and $2.3 million in 1998, respectively, in these incidents. These fraud losses were covered by insurance, after we satisfied our co-insurance amount. However, claims filed in respect of these fraud incidents

25


Table of Contents

have caused our insurance premiums to increase. If we were to experience significant fraud incidents in the future, our results of operations could be adversely affected.
 
Our business is highly dependent on the efficient and uninterrupted operation of our computer network systems and data centers, and any disruption could harm our business.

           Our ability to provide reliable service largely depends on the efficient and uninterrupted operation of our computer network systems and data centers. Any significant interruptions could harm our business and reputation and result in a loss of customers. Our systems and operations could be exposed to damage or interruption from fire, natural disaster, power loss, telecommunications failure, unauthorized entry and computer viruses. Although we have taken steps to prevent a system failure, including the implementation of a disaster recovery plan and redundant computer systems, our measures may not be successful and we may experience problems other than system failures. We may also experience software defects, development delays and installation difficulties, which would harm our business and reputation and expose us to potential liability. Our data applications may not be sufficient to address technological advances, changing market conditions or other developments.

           If we face system interruptions and system failures due to defects in our software, development delays, installation difficulties or for any other reason, our business interruption insurance may not be adequate to compensate us for all losses or damages that we may incur.

 
Our business involves the movement of large sums of money, and, as a result, our business is particularly dependent on our ability to process and settle transactions accurately and efficiently.

           Our business involves the movement of large sums of money. In 2003, for example, we handled items with a face amount of over $400 billion. Our revenues consist primarily of transaction fees that we charge for the movement of this money and investment revenues. These transaction fees represent only a small fraction of the total amount of money that we move. Because we are responsible for large sums of money that are substantially greater than our revenues, the success of our business particularly depends upon our efficient and error-free handling of the money that is remitted to us and that is used to clear payment instruments or complete money transfers. If we were to make a major error in handling a particularly large transaction, or to make small errors in a large number of smaller transactions, and such errors could not be corrected, the amount of loss caused by such error could represent a substantial portion of our revenues, and materially adversely affect our business, results of operations and financial condition.

 
Our attempts to expand by means of acquisitions and strategic alliances may not be successful.

           We intend to expand our operations and market presence by entering into business combinations, joint ventures or other strategic alliances in the United States and internationally. However, we may not have sufficient cash or be able to access the capital markets to fund these acquisitions, and, as a result of restrictions contained in the Tax Sharing Agreement, we may not be able to issue shares to fund these acquisitions. See “Relationship between New Viad and MoneyGram — Tax Sharing Agreement.” We also may be unsuccessful in identifying and completing any of these combinations or alliances.

      Further, any acquisition that we do complete may subject us to a number of risks, including:

       •  difficulties associated with integrating the operations, technology and personnel of any acquired company or companies;
 
       •  disruptions in our business resulting from the allocation of resources to complete any acquisitions;
 
       •  failure of the acquired businesses to achieve anticipated revenues, earnings or cash flow;
 
       •  effects of our financing of the acquisition, such as the incurrence of indebtedness or the dilution of existing stockholders’ interests by issuing stock; and
 
       •  failure of strategic alliances to be successful or for us to realize anticipated benefits in a timely manner.

26


Table of Contents

 
If we are unable to protect our intellectual property rights, business, financial condition and results of operation could be adversely affected.

           We rely on a combination of patent, trademark and copyright laws, trade secret protection and confidentiality and license agreements to protect our intellectual property rights. See “Business of MoneyGram — Intellectual Property Rights.” We may be required to spend resources to protect and police these rights, and some rights may not be protected by intellectual property laws, particularly in foreign jurisdictions. Third parties may infringe or misappropriate our proprietary rights. The loss of intellectual property protection or the inability to secure or enforce intellectual property protection could harm our business and prospects.

 
We currently rely on third-party vendors in the conduct of our business, including clearing banks, and we could be adversely affected if we were to lose any material third-party vendor.

           We rely on third-party vendors to conduct our business, including clearing banks and other vendors. Because we are not a bank and therefore cannot be a member of the Federal Reserve Banking System, we must contract with banks for processing and clearing functions for our money orders and official checks. We currently rely on ten principal clearing banks, two of which clear our money orders and eight of which clear our official checks. If any of our clearing banks were to terminate or not renew its contract with us, we could incur costs and experience disruption to our business in replacing that clearing bank. We could also be required to pay any new clearing banks a higher per item fee than we currently do, thereby increasing our cost of doing business. In addition, our business is dependent upon a number of other key vendors, including the manufacturer of our money order dispensers and certain of our telecommunications providers. The loss of any of these key vendors could disrupt our business and we could incur costs in replacing that vendor.

 
Litigation may adversely affect our business, financial condition and results of operations.

           Our business has in the past been, and may in the future continue to be, the subject of class actions, regulatory actions or other litigation. For example, in the past, we settled a class action lawsuit that alleged that our disclosure surrounding currency exchange spreads was inadequate. The total amount paid out over a five year period related to this lawsuit was $8.6 million. The outcome of class action lawsuits and regulatory actions is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of lawsuits and actions may remain unknown for substantial periods of time. The cost to defend future lawsuits may be significant. There may also be adverse publicity associated with lawsuits that could decrease customer acceptance of our services. As a result, litigation may adversely affect our business, financial condition and results of operations.

Risks Relating to the Payment Services Industry

 
We are subject to a number of risks relating to U.S. federal and state regulation of our business.

           In the United States, the money transfer business is subject to a variety of state regulations. We are also subject to U.S. federal anti-money laundering laws, and the requirements of the Office of Foreign Assets Control, which prohibit us from transmitting money to specified countries or on behalf of prohibited individuals. The money transfer business has been subject to increased scrutiny following the events of September 11, 2001. The Patriot Act, enacted following those events, mandates several new anti-money laundering requirements. The federal government or the states may elect to impose additional anti-money laundering requirements. Changes in laws or regulations that impose additional regulatory requirements, including the Patriot Act, could increase our compliance and other costs of doing business, and therefore have an adverse effect on our results of operation. If onerous regulatory requirements were imposed on our agents, they could lead to a loss of agents, which, in turn, could lead to a loss of retail business.

           Failure to comply with the laws and regulatory requirements of federal and state regulatory authorities could result in, among other things, revocation of required licenses or registrations, loss of approved status, termination of contracts with banks or retail representatives, administrative enforcement actions and fines, class action lawsuits, cease and desist orders and civil and criminal liability. The occurrence of one or more of these events could materially adversely affect our business, financial condition and results of operations.

27


Table of Contents

           If we were to inadvertently transmit money on behalf of, or unknowingly conduct business with, a prohibited individual, we could be required to pay significant damages, including fines and penalties. Likewise, any intentional or negligent violation of anti-money laundering laws by our employees could lead to significant fines and/or penalties, and could limit our ability to conduct business in some jurisdictions.

           Legislation has been proposed in the U.S. Congress and in various states that would require additional disclosures to consumers regarding fees and foreign exchange “spreads” on international money transfers. If enacted, this would require costly upgrades to our computer and point-of-sale systems.

 
We are not registered under the Investment Company Act and if we were required to register, our business, prospects and results of operations would be materially adversely affected.

           The Investment Company Act of 1940 requires the registration of, and imposes restrictions on, certain companies that engage primarily in the business of investing, reinvesting or trading in securities. A company may be classified as an investment company if it owns certain types of securities having a value exceeding 40 percent of its assets and is not primarily engaged in businesses other than investing, reinvesting, owning, holding or trading in securities. We are, and we intend to remain, in the payment services businesses. Thus, we believe that we are primarily engaged in a business other than investing, reinvesting, owning, holding or trading securities. Although the Securities and Exchange Commission has recognized in some cases that companies with more than 40 percent of their assets in investment securities were nonetheless operating businesses and not investment companies, there is no controlling precedent as to the businesses in which we engage. While approximately 84 percent of our assets at December 31, 2003 are held in cash, cash equivalents and investments substantially restricted for payment services obligations and approximately 40 percent of our 2003 revenue was generated from these investments, these activities are undertaken only in connection with our payment services business. Accordingly, we believe that we are not an “investment company” for purposes of the Investment Company Act and are not required to register under that Act. If we were required to register as an investment company, we would become subject to substantial regulations with respect to our capital structure, management, operations and other matters, which would have a material adverse effect on our business, results of operations and prospects.

 
New check technology could cause our investment balances to decline.

           The recently-enacted Check 21 Act is designed to enhance check truncation by speeding up the time in which checks are presented for payment or returned through the banking system if warranted. The Check 21 Act, which becomes effective October 28, 2004, will enable banks to create a new negotiable instrument known as a substitute check that can be transmitted electronically from one bank to another and thereby eliminate the need to transfer the original check. While banks are not required to use substitute checks, it is anticipated that many will take advantage of this new technology in order to reduce their own costs of transporting checks and to eliminate some of the float in the check clearing process. If widely adopted, the new technology could cause the period of time between when a check is issued and the time when that check is presented for payment to decrease, which could adversely affect our business by causing a reduction in our investment balances and related investment revenues for both our official check processing business and our money order business. The staff of the Board of Governors of the Federal Reserve System is preparing implementation regulations for the Check 21 Act that will provide further guidance on how the new law may impact us.

 
Imposition of additional regulatory requirements in any of the foreign countries in which we operate could adversely affect our business.

           International regulation of the money transfer business varies from country to country. Although most countries, other than Germany and the United Kingdom, do not regulate this business to the same degree as the United States, this could change in the future. Various foreign governments could impose additional regulatory requirements on us or impose penalties or charges. Any of these requirements, including anti-money laundering requirements and related scrutiny, could make it more difficult to originate money transfers overseas, increase our costs or decrease our revenues. Any inadvertent violation of a law or regulation by us or one of our agents could subject us to damages, including fines or penalties.

28


Table of Contents

 
States may enact laws that negatively impact our business, such as laws that decrease unclaimed property abandonment periods.

           We earn revenue from our investment of the proceeds of money orders and other financial instruments pending presentment for payment by the consumer. We retain these proceeds until the item is paid or we remit the balance, net of our cumulative service charges, as unclaimed property to the state in which these instruments were issued, pursuant to applicable unclaimed property laws. State abandonment periods for money orders and money transfers range from three to seven years, while those for official checks are generally three to five years. We also derive revenues from a service charge that is assessed against our payment instruments that remain outstanding for long periods of time. States may adopt new legislation at any time that decreases the unclaimed property abandonment periods, or eliminates or reduces our ability to collect a service charge. Any such change in state law could adversely affect our results of operations.

 
There are a number of risks associated with our international sales and operations that could harm our business.

           We currently provide money transfer services between and among approximately 160 countries, and our strategy is to expand our international business. Our ability to grow in international markets and our future results could be harmed by a number of factors, including:

       •  failure to manage successfully our exposure to foreign currency exchange rates;
 
       •  changes in political and economic conditions and potential instability in certain regions;
 
       •  changes in regulatory requirements or in foreign policy and the adoption of foreign laws detrimental to our business;
 
       •  burdens of complying with a wide variety of laws and regulations;
 
       •  possible fraud or theft losses, and lack of compliance by international representatives in remote locations and foreign legal systems where collection and enforcement may be difficult or costly;
 
       •  reduced protection for our intellectual property rights;
 
       •  unfavorable tax rules or trade barriers; and
 
       •  inability to secure, train or monitor international agents.

Risks Relating to New Viad and the Industries in Which It Operates

 
Our businesses and operating results are adversely affected by deterioration in general economic conditions.

           Our businesses, which include convention and event services, exhibit design and construction services and travel and recreation services, are highly sensitive to fluctuations in general economic conditions. Operating results for GES and Exhibitgroup depend largely on the number of trade shows held and on the size of exhibitors’ marketing expenditures. These factors also depend on the strengths or weaknesses of particular industries in which exhibitors operate. The number and size of trade shows generally decrease during periods of adverse economic conditions and increase when general economic conditions are positive.

           Further, many exhibitors view a portion of their marketing budget as discretionary, and, as a result, marketing budgets are frequently among the first expenditures reduced by exhibitors when general economic conditions deteriorate, resulting in exhibitors reusing or refurbishing old exhibits rather than purchasing new exhibits. Marketing expenditures often are not increased, and new exhibits not purchased, until general economic conditions improve. As a result, during periods of adverse general economic conditions, the operating results of GES and Exhibitgroup are adversely affected. For example, revenues for these businesses declined an aggregate of approximately 11 percent from 2001 to 2002.

29


Table of Contents

           Similarly, revenues from our travel and recreation businesses depend largely on the amount of disposable income that consumers have available for travel. This amount decreases during periods of negative general economic conditions.

 
Our businesses are adversely affected by disruptions in the travel industry, particularly those adversely affecting the hotel and airline industries.

           The success of our businesses depends largely on the ability and willingness of people, whether exhibitors, trade show attendees or travelers, to travel, which is in turn dependent upon their ability to find transportation alternatives and accommodations. As a result, factors adversely affecting the travel industry as a whole, and particularly the airline and hotel industries, generally also adversely affect our business and results of operations. Factors that could adversely affect the travel industry as a whole include fuel prices, increased security requirements, weather conditions, airline accidents and international political instability and hostilities. For example, the September 11, 2001 terrorist attacks resulted in, among other things, a reluctance on the part of many people to travel and decreased availability of airline alternatives at affordable prices, significantly affecting the travel and recreation services business generally and resulting in the cancellation of many trade shows. More recently, attendance at trade shows and at some of our Canadian travel and recreation facilities was also negatively affected by fears stemming from the outbreak of severe acute respiratory syndrome, or “SARS.” Unexpected events of this nature in the future, or other events that may have an impact on the availability and pricing of air travel and accommodations, could materially adversely affect our business and results of operations.

 
Our businesses are seasonal, which causes our results of operations to fluctuate and makes our results of operations particularly sensitive to adverse events during peak periods.

           GES and Exhibitgroup both generally report higher revenues during the first and second quarters, and GES and Exhibitgroup report their lowest revenues in the fourth and third quarters, respectively. Our travel and recreation businesses are also seasonal, experiencing peak activity during May through September — these months account for approximately 80 percent of our travel and recreation revenues. Because of the seasonal nature of these businesses, adverse events or conditions occurring during peak periods could particularly affect the operating results of our businesses.

 
Trade show rotation may impact our overall profitability and makes comparisons between periods difficult.

           Convention and event services and exhibit design and construction activity are largely dependent upon the frequency, timing and location of conventions and trade shows. For example, some large trade shows are not held on a yearly basis (they may be held once every two or three years), and some large trade shows may be held at a different time of year than the times at which they have historically been held. In addition, the same trade show may be held in different locations in different years.

           Our results of operations fluctuate significantly as a result of this rotation, making it more difficult for us to make budget and planning decisions. The geographic rotation of trade shows requires us to maintain a high degree of flexibility of resources (including personnel and transportation) and may result in a business generating lower margins in a given period if trade shows shift to higher-cost cities. As a consequence of these factors, the operating results for our key businesses may fluctuate significantly from quarter to quarter or from year to year, making periodic comparisons difficult.

 
Transportation disruptions could adversely affect our business and operating results.

           GES and Exhibitgroup rely on independent transportation carriers to send materials and exhibits to and from trade shows, warehouse facilities and customer facilities. If we are unable to secure the services of these independent transportation carriers at favorable rates, it could have a material adverse effect on our business and results of operations. In addition, disruption of transportation services because of weather-related problems, strikes, lockouts or other events could adversely affect our ability to supply services to customers and could cause cancellation of trade shows, which may have a material adverse effect on our business and operating results.

30


Table of Contents

 
Union-represented labor creates an increased risk of work stoppages and higher labor costs.

           A majority of our employees are unionized, and we are party to over 100 collective-bargaining agreements, with approximately one-third requiring renegotiation each year. If labor negotiations force us to increase wages or benefits and thus increase total labor costs, we would either absorb the increased costs, adversely affecting our margins, or pass the costs to the customers, which may lead customers to turn away from us in response to higher prices. In either event, our business and results of operations could be adversely affected.

           Moreover, if we were unable to reach an agreement with a union during the collective bargaining process, the union may call for a strike or other work stoppage. If a strike were to occur, we might be unable to find substitute workers with the necessary skill sets to perform many of our services, and this could adversely affect our business and results of operations.

 
We compete in competitive industries, and increased competition could negatively impact our operating results.

           We compete in industries that are highly competitive. Competition in the convention and event services and exhibit design and construction services industries is on the basis of price and service level, among other things. To the extent competitors seek to gain or retain their market presence through aggressive underpricing strategies, we may be required to lower our prices and rates, thereby adversely affecting operating results. If we are unable to meet the challenges presented by the competitive environment, our results of operations and financial condition may be adversely affected.

 
The failure of a large customer to renew its services contract or the loss of business from convention facilities may adversely impact our revenues.

           Although no single customer accounts for more than nine percent of the revenue of any of our business segments, GES is dependent upon a relatively small number of large trade show customers and Exhibitgroup has a number of large customer accounts. The loss of any of these large customers may adversely affect our results of operations.

           In addition, GES’s revenues may be significantly impacted if certain convention facilities choose to in-source electrical, plumbing and other services that have represented revenue-generating opportunities for GES. When GES is hired as the general services contractor for a trade show, the trade show organizer contractually grants GES an exclusive right to perform these electrical and plumbing services, subject in each case to the convention facility’s option to in-source the services (either by performing the services themselves or by hiring a separate service provider). The operators of many convention facilities are currently under financial pressure as a result of conditions generally affecting their industry, including decreased usage and revenues. As a result, some of these convention facilities may seek to in-source all or a large portion of these services. If a large number of facilities with which we have these relationships seek to move these facilities services in-house, our revenues and operating results would be affected.

 
Our key businesses are relationship driven.

           The convention and event services and exhibit design and construction businesses heavily focus on client relationships, and, specifically, on very close collaboration and interaction between teams from the client and GES or Exhibitgroup, as the case may be. This close relationship requires the account team to become attuned to the client’s desires and expectations in order to provide top-quality service. We have in the past lost, and may in the future lose, important customers if a key member of the account team were to cease employment with us and take that customer that he or she services to a competitor.

 
Liabilities relating to prior and discontinued operations may adversely affect our results of operations.

           Viad and its predecessors have a corporate history spanning over seven decades and involving approximately 2,400 previous subsidiaries in diverse businesses, such as the manufacturing of locomotives, buses, industrial chemicals, fertilizers, pharmaceuticals, leather, textiles, food and fresh meats. Some of these businesses used raw

31


Table of Contents

materials that have been, and may continue to be, the subject of litigation. Moreover, some of the raw materials used, and the waste produced, by these businesses have been and are the subject of U.S. federal and state environmental regulations, including laws enacted under the Comprehensive Environmental Response, Compensation and Liability Act, or and its state law counterparts. In addition, we may incur other liabilities, resulting from indemnification or warranty claims involving sold subsidiaries as well as from our past operations of those of our predecessors or our or their subsidiaries. Although we believe we have adequate reserves and sufficient insurance coverage to cover these future liabilities, our results of operations could be materially affected if future events or proceedings contradict our current assumptions, and our reserves or insurance become inadequate.
 
We expect that we will no longer have an investment grade credit rating after the spin-off, which may result in increased costs.

           We believe that, following the completion of the spin-off, our debt will not have an investment grade rating. As a result, there is a high probability that our credit-related costs will increase after the spin-off, and this may adversely affect our operating results. In addition, we may experience an increase in certain insurance-related costs, which may also adversely affect our results of operations.

 
Glacier Park’s concession agreement for its operations inside Glacier National Park expires in December 2005, and, if Glacier Park is unsuccessful in renewing this contract, this failure would adversely affect our results of operations.

           Glacier Park operates four lodges, three motor inns and one stand-alone camp store inside Glacier National Park. Two of the lodges, the three motor inns and the camp store are operated through a concession agreement with the U.S. National Park Service. The lodges at Waterton Lakes, Canada, and at East Glacier are not subject to the concession agreement. When this agreement expires in December 2005, Glacier Park will be obligated, if it wants to continue operations, to rebid for the right to retain these concession services. If Glacier Park does not retain these contractual rights, it will receive an amount from the U.S. National Park Service equal to its “possessory interest,” which generally means the value of the structures acquired or constructed, fixtures installed or improvements made to Glacier National Park during the term of this Agreement, based on the reconstruction cost of a new unit of like kind, less depreciation, but not to exceed fair market value. Although we believe that Glacier Park has a preferential right of renewal under applicable federal law (which would allow Glacier Park to retain the business by matching the highest bid offered by any third party), the U.S. National Park Service has taken a contrary position. We expect that the U.S. National Park Service will not recognize Glacier Park’s preferential right of renewal, which may make the concessionaire bidding process more difficult for Glacier Park. If Glacier Park were to lose the concessionaire portion of its business to another bidder, Glacier Park’s results of operations may be adversely affected to the extent of the value of this business over the value of the possessory interest.

Risks Relating to the Separation of MoneyGram from Viad and the Distribution

 
The historical financial information of MoneyGram and New Viad may not be representative of their results as separate, independent companies.

           Historically, the businesses that comprise each of MoneyGram and New Viad have been able to rely, to some degree, on the earnings, assets and cash flow of each other for capital and cash flow requirements. Accordingly, the historical financial information for MoneyGram and New Viad that we have included in this information statement may not reflect what the results of operations, financial condition and cash flows of MoneyGram and New Viad would have been had each been a separate, independent company during the periods presented. This financial information also may not be indicative of what the results of operations, financial condition and cash flows of MoneyGram or New Viad will be in the future.

           For additional information about the past financial performance and the basis of presentation of the historical financial statements, see “Selected Historical Consolidated Financial and Other Data of Viad Corp (Accounting Predecessor to MoneyGram International, Inc.),” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp (Accounting Predecessor to MoneyGram International, Inc.),”

32


Table of Contents

“Selected Historical Combined Financial and Other Data of New Viad,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of New Viad” and the financial statements and related notes of Viad Corp and New Viad included elsewhere in this information statement.
 
If the spin-off is determined to be a taxable transaction, New Viad could be subject to material amounts of taxes and you could be subject to tax on the value of the MoneyGram common stock you receive in the distribution.

           Viad has received a favorable private letter ruling from the Internal Revenue Service to the effect that the distribution will be tax-free to Viad and its stockholders for U.S. federal income tax purposes. Although generally binding on the Internal Revenue Service, this letter ruling is subject to certain factual representations and assumptions. If these factual representations and assumptions were incorrect in any material respect, this letter ruling could be retroactively revoked or modified by the Internal Revenue Service. If, notwithstanding the Internal Revenue Service ruling, the spin-off is determined to be a taxable transaction, Viad could be subject to material amounts of taxes and you could be subject to tax on the value of the MoneyGram common stock you receive in the distribution. See “The Spin-Off — Material U.S. Federal Income Tax Consequences of the Spin-Off.”

 
If either Viad or MoneyGram takes actions that cause the distribution to fail to qualify as a tax-free transaction, the party that causes the distribution to be taxable will be required to indemnify the other for any resulting taxes and related losses.

           Viad has received a favorable private letter ruling from the Internal Revenue Service to the effect that the distribution will be tax-free to Viad and its stockholders for U.S. federal income tax purposes. Under the tax sharing agreement between MoneyGram and New Viad, if either New Viad or MoneyGram takes or fails to take any action (or permits any of their respective affiliates to take or fail to take any action) that causes the distribution to be taxable, or if there is an acquisition of the equity securities or assets of either party (or equity securities or assets of any member of that party’s group) that causes the distribution to be taxable, that party will be required to indemnify the other party for any resulting taxes and related losses.

           In the event that the distribution were taxable to New Viad, New Viad would recognize gain equal to the excess, if any, of the fair market value of MoneyGram common stock distributed on the distribution date over Viad’s tax basis in that MoneyGram common stock, and New Viad would have to pay tax on that gain. The amount of tax would be substantial, and the party causing the distribution to be taxable likely would not have sufficient financial resources to operate its business after paying any resulting taxes and related losses.

 
The ability of MoneyGram and New Viad to engage in financings and acquisitions and other strategic transactions using equity securities is subject to limitations because of the U.S. federal income tax requirements for a tax-free distribution.

           Current tax law generally creates a presumption that the spin-off would be taxable to New Viad (but not to its stockholders) if either MoneyGram or New Viad engages in, or enters into an agreement to engage in, a transaction that would result in a 50 percent or greater change (by vote or by value) in stock ownership during the four-year period beginning on the date that begins two years before the distribution date, unless it is established that the transaction is not pursuant to a plan or series of transactions related to the spin-off. Temporary Treasury regulations currently in effect generally provide that whether an acquisition transaction and a distribution are part of a plan is determined based on all of the facts and circumstances, including, but not limited to, those specific factors listed in the Treasury regulations. In addition, the regulations provide several “safe harbors” for acquisition transactions that are not considered to be part of a plan.

           Each of MoneyGram and New Viad will be subject to restrictions (including restrictions on share issuances, business combinations, sales of assets and similar transactions) that are designed to preserve the tax-free status of the spin-off. These restrictions may prevent MoneyGram and New Viad from entering into transactions that might be advantageous to them, such as issuing equity securities to satisfy financing needs or acquiring businesses or assets by issuing equity securities. Many of MoneyGram’s and New Viad’s competitors are not subject to similar restrictions, and therefore, may have a competitive advantage over MoneyGram and New Viad.

33


Table of Contents

 
MoneyGram and New Viad could incur significant tax liability if the other party fails to pay the tax liabilities attributable to it under the tax sharing agreement.

           Under U.S. federal income tax laws, New Viad and MoneyGram are severally liable for New Viad’s federal income taxes attributable to the periods prior to or including the taxable year of Viad during which the spin-off occurs. This means that if either New Viad or MoneyGram fails to pay the taxes for which it is responsible under the tax sharing agreement for those periods, the other party may be liable for any part of, including the whole amount of, these liabilities. Although New Viad and MoneyGram have entered into the Tax Sharing Agreement that allocates responsibility for tax liabilities between New Viad and MoneyGram, MoneyGram remains liable if New Viad does not or is unable to pay its taxes. Certain other jurisdictions may have similar rules. For a discussion of the Tax Sharing Agreement, please see “Relationship between New Viad and MoneyGram — Agreements between Viad and MoneyGram — Tax Sharing Agreement.”

 
The spin-off may be challenged by creditors as a fraudulent transfer or conveyance.

           If a court in a suit by an unpaid creditor or representative of creditors of New Viad, such as a trustee in bankruptcy, or New Viad, as debtor-in-possession, in a reorganization case under Title 11 of the U.S. Bankruptcy Code, were to find that:

       •  the spin-off and the related transactions were undertaken for the purpose of hindering, delaying or defrauding creditors; or
 
       •  New Viad received less than reasonably equivalent value or fair consideration in connection with the spin-off and the transactions related thereto and (1) Viad was insolvent immediately prior to or was rendered insolvent by the spin-off, (2) Viad immediately prior to or as of the effective time of the completion of the spin-off and after giving effect thereto intended or believed that it would be unable to pay its debts as they became due or (3) the capital of Viad immediately prior to or at the effective time of the completion of the spin-off and after giving effect thereto was inadequate to conduct its business;

then that court could determine that the spin-off or the related transactions violated applicable provisions of the U.S. Bankruptcy Code or applicable state fraudulent transfer or conveyance laws. This determination would permit the bankruptcy trustee or debtor-in-possession or unpaid creditors to rescind the spin-off or to require MoneyGram or New Viad, as the case may be, to fund liabilities of the other for the benefit of creditors.

           The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied. Generally, however, an entity would be considered insolvent if:

       •  the sum of its liabilities, including contingent liabilities, is greater than its assets, at a fair valuation;
 
       •  the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities, including contingent liabilities, as they become absolute and matured; or
 
       •  it is generally not paying its debts as they become due.
 
If the distribution made to effect the spin-off is not a legal dividend, it could be held invalid by a court and harm the financial condition and results of operations of MoneyGram and New Viad.

           The declaration of the distribution of shares of MoneyGram common stock made to effect the spin-off is governed by the Delaware General Corporation Law. Under the Delaware General Corporation Law, there are certain restrictions on when a corporation may distribute its property, including the shares of the common stock of a subsidiary, as a dividend. If the distribution and related transactions, including the merger, are found invalid under Delaware law, a court could seek to have the transactions rescinded. The resulting complications, costs and expenses could harm the financial condition of MoneyGram and New Viad.

34


Table of Contents

 
After the spin-off, most of the management and directors of MoneyGram and New Viad may have conflicts of interest because of their ownership of both MoneyGram and New Viad common stock.

           After the spin-off, most of the management and directors of MoneyGram and New Viad will own shares of both MoneyGram common stock and New Viad common stock because of their prior relationship with Viad. This ownership could create, or appear to create, potential conflicts of interest when MoneyGram’s and New Viad’s directors and executive officers are faced with decisions that could have different implications for MoneyGram and New Viad. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between New Viad and MoneyGram regarding terms of the agreements governing the spin-off and the relationship between Viad and MoneyGram thereafter, including the separation and distribution agreement, the employee benefits agreement, the tax sharing agreement or the interim services agreement. Potential conflicts of interest could also arise if MoneyGram and New Viad entered into any commercial dealings in the future.

      In addition, Robert H. Bohannon will serve as Chairman of the Board of Directors of both New Viad and MoneyGram and will continue to be President and Chief Executive Officer of New Viad. The fact that Mr. Bohannon holds positions with both MoneyGram and New Viad could create, or appear to create, potential conflicts of interest for Mr. Bohannon when faced with decisions such as those described above. Mr. Bohannon may also face conflicts with regard to the allocation of his time between MoneyGram and New Viad.

Risks Relating to the Securities Markets and Ownership of MoneyGram or New Viad Common Stock

 
Provisions of the charter documents of MoneyGram and New Viad and Delaware law may delay or prevent a change in control that you may favor.

           Provisions of the certificate of incorporation and by-laws of each of MoneyGram and New Viad and Delaware law may delay or prevent a change of control of MoneyGram or New Viad that you may consider favorable. These provisions include the following:

       •  no cumulative voting by stockholders for directors;
 
       •  a classified board of directors with three-year staggered terms;
 
       •  the ability of the board of directors to set the size of the board of directors, to create new directorships and to fill vacancies;
 
       •  the ability of the board of directors, without stockholder approval, to issue preferred stock, which may have rights and preferences that are superior to common stock;
 
       •  the ability of the board of directors to amend the by-laws;
 
       •  the prohibition of stockholder action by written consent;
 
       •  the inability of stockholders to call a special meeting;
 
       •  advance notice requirements for stockholder proposals and for nominating candidates to the board of directors, which generally require that stockholder proposals and nominations be provided to us between 90 and 120 days before the anniversary of our last annual meeting in order to be properly brought before a stockholder meeting;
 
       •  a stockholder rights plan, which discourages the unauthorized acquisition of 20 percent or more of the outstanding common stock or an unauthorized exchange or tender offer; and
 
       •  the requirement that certain business combinations with an “interested stockholder” (defined as a holder of ten percent or more of the outstanding voting stock) must be approved by holders of 66 2/3 percent of the voting power of shares not owned by the interested stockholder, unless the business combination is approved by certain “continuing directors” (as defined in our certificate of incorporation) or meets certain requirements regarding price and procedure.

In addition, Section 203 of the Delaware General Corporation Law could have the anti-takeover effects described under “Description of Capital Stock of MoneyGram — Section 203 of the Delaware General Corporation Law”

35


Table of Contents

and “Description of Capital Stock of New Viad — Section 203 of the Delaware General Corporation Law.” Please see “Description of Capital Stock of MoneyGram” and “Description of Capital Stock of New Viad” for a more detailed description of these agreements and provisions.
 
The combined value of MoneyGram common stock and New Viad common stock after the spin-off may not equal or exceed the pre-spin-off value of Viad common stock.

           We cannot determine the trading value of MoneyGram common stock or New Viad common stock after the spin-off. The combined trading value of MoneyGram and New Viad common stock after the spin-off may not be equal to or exceed the pre-spin-off value of Viad common stock, taking into account the proposed reverse stock split of New Viad common stock that, if approved by Viad stockholders and effected by New Viad, would be effective following the spin-off.

 
The securities of MoneyGram and New Viad, as separate companies, have no prior market. This may result in fluctuations in stock prices, which may harm each company’s ability to raise capital.

           The common stock of MoneyGram and New Viad, as separate companies, has not been publicly traded, and an active trading market may not develop or be sustained after the completion of the spin-off. Until the market has fully evaluated the businesses of MoneyGram and New Viad, the trading prices of MoneyGram and New Viad common stock may fluctuate significantly. The market price of MoneyGram and New Viad common stock could be subject to significant fluctuations after the spin-off due to factors such as:

       •  actual or anticipated fluctuations in results of operations;
 
       •  failure to be covered by securities analysts, or failure to meet securities analysts’ expectations;
 
       •  success of operating strategies;
 
       •  realization of any of the risks described in this section;
 
       •  in the case of MoneyGram, decline in the stock prices of peer companies; and
 
       •  in the case of New Viad, the absence of comparable public companies in the markets of New Viad’s primary businesses.

           Substantially all of the shares of MoneyGram common stock that will be issued in the distribution will be eligible for immediate resale in the public market, except for shares of MoneyGram common stock held by affiliates of MoneyGram under the rules of the Securities Act of 1933, as amended. We believe that approximately            shares of MoneyGram common stock will be held by affiliates. The shares held by affiliates may only be sold pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, such as the exemptions provided by Sections 4(1) or 4(2) of the Securities Act or Rule 144 thereunder. Rule 144, as currently in effect, generally provides that an affiliate who has held shares of MoneyGram common stock (or the shares of Viad common stock that such shares were issued in respect of) for one year or has held the shares of Viad, may sell such shares in broker’s transactions, subject to quarterly volume limitations. A significant redistribution of MoneyGram common stock could occur in the public markets during the first weeks or months that MoneyGram common stock is traded because of the differing objectives and strategies of investors that acquire these shares in the distribution.

           In addition, following the spin-off, New Viad is likely to be removed from the S&P Mid-Cap 400 index and will have a substantially smaller market capitalization. Because of these facts, there is likely to be a substantial shift in the makeup of New Viad’s stockholder base. As this shift occurs, there are likely to be significant fluctuations in the prices at which Viad common stock trades.

36


Table of Contents

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

      Some of the statements made by MoneyGram and New Viad in this information statement under “Summary,” “Risk Factors,” “The Spin-Off,” “Management’s Discussion and Analysis of Financial Condition and Results of Operation of Viad Corp,” “Business of MoneyGram,” “Management’s Discussion and Analysis of Financial Condition and Results of Operation of New Viad,” “Business of New Viad” and elsewhere in this information statement are not statements of historical fact and constitute forward-looking statements. These forward-looking statements are based on management’s current estimates, projections, views and assumptions regarding future events, future business conditions and the outlook for MoneyGram and New Viad based on currently available information.

      Forward-looking statements include statements concerning or based on:

  •  MoneyGram’s and New Viad’s possible or assumed future results of operations and operating cash flows;
 
  •  MoneyGram’s and New Viad’s business strategies and investment policies;
 
  •  MoneyGram’s and New Viad’s financing plans and the availability of short-term borrowing;
 
  •  MoneyGram’s and New Viad’s competitive position;
 
  •  potential growth opportunities available to MoneyGram and New Viad;
 
  •  MoneyGram’s and New Viad’s potential operating performance, achievements, productivity improvements, efficiency and cost reduction efforts;
 
  •  changes in interest and tax rates;
 
  •  benefits to MoneyGram and New Viad resulting from the effects of the spin-off or reverse stock split;
 
  •  effects of competition on MoneyGram and New Viad; and
 
  •  effects of future legislation and regulation on MoneyGram and New Viad.

Forward-looking statements can be identified by forward-looking terminology such as “believe,” “plan,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “predict,” “potential,” “is confident that,” “will likely result,” “continue,” “may,” “will,” “should” or similar expressions or the negative of these terms or similar expressions.

      Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in or implied by forward-looking statements. For example, any of the risks discussed under “Risk Factors” could cause the results of MoneyGram or New Viad to be materially different from those expressed in forward-looking statements. There may also be other risks that we are unable to predict at this time. Both MoneyGram and New Viad wish to caution readers not to rely on any of these forward-looking statements, which speak only as of the date of this information statement. Neither MoneyGram nor New Viad has any intention or obligation to update forward-looking statements after the date of this information statement, whether as a result of new information, future developments or otherwise.

37


Table of Contents

THE SPIN-OFF

Background of the Spin-Off

      On July 24, 2003, Viad announced a plan to separate its global payment services business from its other businesses by means of a tax-free spin-off transaction. To effect the separation, Travelers Express Company, Inc., which currently conducts the global payment services business, will become a subsidiary of Viad’s newly formed, wholly-owned subsidiary, MoneyGram, and Viad’s board of directors will declare a dividend on Viad common stock consisting of the                      shares of MoneyGram common stock that Viad will own on the distribution date. These shares of MoneyGram common stock will represent all of the outstanding MoneyGram common stock on that date. The dividend will be paid at 11:59 p.m., New York City time, on                     , 2004, in the amount of one share of MoneyGram common stock for each outstanding share of Viad common stock as described below.

      Please note that you will not be required to pay any cash or other consideration for the shares of MoneyGram common stock distributed to you or to surrender or exchange your shares of Viad common stock to receive the dividend of MoneyGram common stock. You will continue to own your shares of Viad common stock, and, if you were a Viad stockholder on the record date for the distribution, you will also receive shares of MoneyGram common stock. The distribution will not otherwise change the number of, or the preferred share purchase rights associated with, outstanding shares of Viad common stock.

Reasons for the Spin-Off

      Viad and MoneyGram believe that the key benefits of the spin-off include:

  •  Direct access to capital markets. As an independent public company, MoneyGram will be able to directly access the capital markets, and issue equity and debt more easily and on more favorable terms in order to finance expansion, growth opportunities and debt repayment.
 
  •  Greater strategic focus. MoneyGram and New Viad each expects to have a sharper focus on its businesses and growth opportunities as a result of their respective boards of directors and management teams concentrating only on their core businesses. MoneyGram and New Viad believe that each will be able to make decisions more quickly, deploy resources more rapidly and efficiently, and operate with more agility than when all of their businesses were part of a larger organization. Further, the separation of MoneyGram from Viad will eliminate any competition for capital among Viad’s various businesses, which MoneyGram and New Viad believe will enhance the businesses’ opportunities for growth.
 
  •  Increased ability to attract, retain and motivate employees. MoneyGram and New Viad believe that incentive compensation arrangements for key employees, directly related to the market performance of their respective common stock, will provide enhanced incentives for performance. The separation will enable each of MoneyGram and New Viad to offer its key employees compensation directly linked to the performance of its business, which they expect to enhance their ability to attract, retain and motivate qualified personnel.
 
  •  Improved ability to undertake acquisitions. After the completion of the spin-off, MoneyGram will be a “pure-play” payment services company. MoneyGram expects that having a more focused equity currency will improve its ability to pursue strategic initiatives, including acquisitions, joint ventures and investments.
 
  •  Better understanding of businesses. The businesses of each of MoneyGram and New Viad will be more easily understood by investors, rating agencies, clearing banks and others after the completion of the spin-off.

Conditions to the Spin-Off

      Viad may decide not to complete the distribution if, at any time prior to the distribution, Viad’s board of directors determines, in its sole discretion, that the distribution is not in the best interests of Viad or its

38


Table of Contents

stockholders. In addition, Viad’s intention to complete the distribution is contingent on the satisfaction of the conditions described below, any of which (other than those set forth in the first, second, sixth and seventh bullet points below) may be waived by Viad:

  •  the MoneyGram common stock to be distributed in the distribution must be approved for listing on the New York Stock Exchange;
 
  •  the registration statement filed in respect of the MoneyGram common stock to be distributed in the distribution must be effective;
 
  •  any material governmental consents and authorizations necessary for the distribution must have been obtained, without any conditions that would have a material adverse effect on MoneyGram or Viad;
 
  •  all statutory requirements for the consummation of the distribution must have been satisfied;
 
  •  the consummation of the distribution must not conflict with or require any consent under any material contract of Viad or MoneyGram and no legal constraint prevents the consummation of the distribution;
 
  •  the distribution must be payable in accordance with applicable law;
 
  •  no injunction or court order and no law or regulation shall be in effect preventing the completion of the distribution;
 
  •  Viad and MoneyGram must have in place new credit agreements that are acceptable to their respective boards of directors, and the employee benefits agreements, the interim services agreements and the tax sharing agreement must be in effect;
 
  •  there shall not have occurred any material adverse effect on the business, assets, liabilities, financial condition, results of operations or prospects of MoneyGram or New Viad, including among other things, any such effect resulting from or arising in connection with any terrorist attacks or the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war or the occurrence of any similar calamity or crises, or any event or circumstances that could reasonably be expected to have an adverse effect on the ruling that Viad received from the Internal Revenue Service that the distribution will qualify as a tax-free distribution for federal income tax purposes; and
 
  •  indications received from the relevant ratings agencies with respect to the expected investment grade long-term credit rating for MoneyGram must not have been revoked or adversely revised.

The Number of MoneyGram Shares You Will Receive

      For each share of Viad common stock that you owned at 5:00 p.m., New York City time, on                     , 2004, the record date, you will receive one share of MoneyGram common stock, together with the attached preferred share purchase right. Because you will receive one share of MoneyGram common stock for each share of Viad common stock that you hold, Viad will not need to issue or pay cash in lieu of any fractional shares of MoneyGram common stock. It is important to note that if you sell your shares of Viad common stock between the record date and the distribution date in the “regular way” market, you will be selling your right to receive the share dividend in the distribution. See “— Trading between the Record Date and Distribution Date.”

Results of the Spin-Off

      After the completion of the spin-off, MoneyGram and New Viad will be separate, independent, public companies. Immediately following the completion of the spin-off, there will be approximately                      beneficial holders of shares of MoneyGram common stock, based on the number of beneficial holders of Viad common stock on                     , 2004, and approximately                    shares of MoneyGram common stock outstanding. There will also be options outstanding to purchase MoneyGram common stock as described in “— Treatment of Employee Stock Options.”

39


Table of Contents

      MoneyGram and Viad will be parties to a number of agreements that govern MoneyGram’s separation from Viad and their future relationship. Under these agreements, among other things:

  •  assets, personnel and liabilities currently associated with Viad’s global funds transfer and payment systems business and other specified assets and liabilities will be allocated to MoneyGram, while all other assets, personnel and liabilities will be allocated to New Viad;
 
  •  MoneyGram will indemnify New Viad against liabilities related to MoneyGram’s business and other specified liabilities and New Viad will indemnify MoneyGram against liabilities related to New Viad’s business;
 
  •  employees, employee benefit plans and associated liabilities and related assets will be allocated between MoneyGram and Viad, with Viad generally remaining responsible for compensation and benefit liabilities for employees and former employees assigned to it, and MoneyGram being responsible for compensation and benefit liabilities for employees and former employees assigned to it and specified liabilities relating to Viad employees and former employees (except that MoneyGram will assume specified liabilities relating to employees and former employees of Viad under its primary defined benefit pension plan, supplemental executive retirement plans, deferred compensation plans and specified executive medical benefits);
 
  •  federal, state, local and foreign tax liabilities for all periods through the spin-off will be allocated between Viad and MoneyGram, with MoneyGram being liable for all federal, state, local and foreign tax liabilities, including any such liabilities resulting from the audit of or other adjustment to previously filed tax returns, that are attributable to the business of MoneyGram for all periods through the spin-off, and Viad being responsible for all other of these taxes through the spin-off.

      For further information on the effects of the spin-off on MoneyGram and New Viad, see “Relationship between New Viad and MoneyGram.”

      In connection with the spin-off, Viad will repay all or a portion of its outstanding commercial paper (or similar indebtedness), of which it currently has approximately $170 million outstanding, with amounts received from MoneyGram or Travelers Express Company, Inc. prior to the spin-off. Viad is also making offers to repurchase all of its outstanding subordinated debt and medium-term notes, for an aggregate amount of approximately $59.5 million (which includes an estimated tender premium), and has paid $9.0 million to retire industrial revenue bonds for which it is responsible. In addition, Viad intends to redeem its outstanding preferred stock at an aggregate redemption price of $23.7 million. Viad will fund the preferred stock redemption, repurchase of public indebtedness and repayment of industrial revenue bonds, as well as the repayment of any commercial paper not funded with amounts received from MoneyGram, with cash on hand. See “Relationship between New Viad and MoneyGram — The Separation.”

      The spin-off will not affect the number of outstanding shares of Viad common stock or any rights of Viad stockholders; however, the number of outstanding shares of Viad common stock will change if the reverse stock split is completed. See “— Reverse Stock Split.”

Material U.S. Federal Income Tax Consequences of the Spin-Off

      The following discussion summarizes the material U.S. federal income tax consequences of the spin-off. This discussion is based on the Code, the Treasury regulations promulgated thereunder, judicial opinions, published positions of the Internal Revenue Service, and all other applicable authorities as of the date of this information statement, all of which are subject to change (possibly with retroactive effect).

      The following discussion is limited to holders of Viad common stock that are U.S. persons for federal income tax purposes and may not describe all of the tax consequences that may be relevant to a holder in light of his or her particular circumstances or to holders subject to special rules. In addition, this summary is limited to holders that hold their Viad common stock as a capital asset. This summary may not be applicable to stockholders that received their Viad common stock pursuant to the exercise of employee stock options, or otherwise as compensation. Accordingly, each stockholder should consult his or her tax advisor as to the particular

40


Table of Contents

consequences of the spin-off of MoneyGram common stock to that stockholder, including the application of U.S. state, local and foreign tax laws, and as to possible changes in tax laws that may affect the tax consequences described in this information statement.

      Viad has received a favorable private letter ruling from the Internal Revenue Service confirming, among other things, that the spin-off will qualify as tax-free to Viad and its stockholders under Section 355 of the Code and related provisions. Although the rulings relating to the qualification of the spin-off as a tax-free transaction are generally binding on the Internal Revenue Service, the continuing validity of the rulings is subject to factual representations and assumptions. Neither Viad nor MoneyGram is aware of any facts or circumstances that would cause these representations and assumptions to be untrue in any material respect. If the Internal Revenue Service subsequently held the spin-off to be taxable, the consequences described below would not apply and both Viad and holders of Viad common stock that received shares of MoneyGram common stock in the spin-off could be subject to tax. In this case, MoneyGram may have to indemnify New Viad, and New Viad may have to indemnify MoneyGram, for some or all of the resulting taxes and related losses.

      For U.S. federal income tax purposes the principal U.S. federal income tax consequences of the spin-off will be as follows:

  •  no gain or loss will be recognized by, and no amount will be included in the income of, Viad upon the spin-off other than with respect to any “excess loss account” or “intercompany transaction” required to be taken into account under Treasury regulations relating to consolidated returns;
 
  •  no gain or loss will be recognized by, and no amount will be included in the income of, a holder of Viad common stock as a result of the receipt of shares of MoneyGram common stock in the spin-off;
 
  •  a holder of Viad common stock will apportion the tax basis for that holder’s Viad common stock on which MoneyGram stock is distributed between Viad common stock and MoneyGram common stock received in the spin- off in proportion to the relative fair market values of Viad common stock and MoneyGram common stock on the date of the spin-off; and
 
  •  the holding period of the shares of MoneyGram common stock received by a holder of Viad common stock in the spin-off will include the period during which such holder held the Viad common stock on which MoneyGram common stock is distributed.

      Current Treasury regulations require each Viad stockholder that receives MoneyGram common stock pursuant to the spin-off to attach to his or her U.S. federal income tax return, for the year in which the spin-off occurs, a detailed statement setting forth data as may be appropriate in order to show the applicability to the spin-off of Section 355 of the Code. Viad will provide appropriate information to each holder of record of Viad common stock as of the record date.

Listing and Trading of MoneyGram and Viad Common Stock

      Viad presently owns all of the outstanding shares of MoneyGram common stock. No trading prices are available with respect to these shares. Neither MoneyGram nor Viad can assure you as to the trading price of MoneyGram or New Viad common stock after the spin-off or as to whether their initial combined price will be higher or lower than the price of Viad common stock prior to the spin-off. See “Risk Factors — Risks Relating to the Securities Markets and Ownership of MoneyGram or New Viad Common Stock.”

      MoneyGram has applied to list MoneyGram common stock on the New York Stock Exchange, Inc. under the symbol “MGI.”

      The shares of MoneyGram common stock distributed to Viad stockholders will be freely transferable, except for shares received by persons that may have a special relationship or affiliation with MoneyGram. Persons that may be considered our affiliates after the spin-off generally include individuals or entities that control, are controlled by or are under common control with MoneyGram. This may include some or all of the officers and directors of MoneyGram. Affiliates of MoneyGram will be permitted to sell their shares of MoneyGram common stock only pursuant to an effective registration statement under the Securities Act or an exemption from the

41


Table of Contents

registration requirements of the Securities Act, such as the exemptions afforded by Sections 4(1) or 4(2) of the Securities Act or Rule 144 thereunder.

      New Viad common stock will continue to trade on the New York Stock Exchange, Inc. under the symbol “VVI.”

Trading between the Record Date and Distribution Date

      Between the record date and the distribution date, Viad expects that there will be two markets in Viad common stock: a regular way market and an ex-dividend market. Shares of Viad common stock that trade on the regular way market will trade with an entitlement to shares of MoneyGram common stock distributed in the distribution. Shares that trade on the ex-dividend market will trade without an entitlement to shares of MoneyGram common stock distributed in the distribution. Therefore, if you owned shares of Viad common stock at 5:00 p.m., New York City time, on the record date and sell those shares on the regular way market prior to the distribution date, you will also be trading the shares of MoneyGram common stock that would have been distributed to you in the distribution. If you sell those shares of Viad common stock on the ex-dividend market prior to the distribution date, you will still receive the shares of MoneyGram common stock that were to be distributed to you pursuant to your ownership of the shares of Viad common stock. If the spin-off does not occur, all ex-dividend trading will be null and void. If ex-dividend trading occurs, the listing of Viad common stock will be under the symbol “VVI” accompanied by the letters “wi.”

      Between the record date and the distribution date, a when-issued trading market in MoneyGram common stock may develop. The when-issued trading market will be a market for shares of MoneyGram common stock that will be distributed to Viad stockholders on the distribution date. If you owned shares of Viad common stock at 5:00 p.m., New York City time, on the record date, then you are entitled to shares of MoneyGram common stock distributed pursuant to the distribution. You may trade this entitlement to shares of MoneyGram common stock, without the shares of Viad common stock you own, on the when-issued trading market. On the first trading day following the distribution date, when issued trading with respect to MoneyGram common stock will end and regular way trading will begin. If when-issued trading occurs, the listing for MoneyGram common stock will be under the trading symbol “MGI” accompanied by the letters “wi.” If the spin-off does not occur, all when-issued trading will be null and void.

When and How You Will Receive the Dividend

      Viad will pay the dividend on                     , 2004, by releasing its shares of MoneyGram common stock, together with the attached preferred share purchase rights, to be distributed in the distribution to Wells Fargo Shareowner Services, our transfer agent. As part of the distribution, MoneyGram will be adopting a book-entry share transfer and registration system for MoneyGram common stock. Instead of receiving physical share certificates, registered holders of Viad common stock entitled to the distribution will have their shares of MoneyGram common stock distributed on the distribution date credited to book-entry accounts established for them by the transfer agent. The transfer agent will mail an account statement to each registered holder stating the number of shares of MoneyGram common stock credited to the holder’s account. After the distribution, you may request:

  •  a transfer of all or a portion of your shares of MoneyGram common stock to a brokerage or other account; and
 
  •  receipt of one or more physical share certificates representing your shares of MoneyGram common stock.

      For those holders of Viad common stock that hold their shares through a broker, bank or other nominee, the transfer agent will credit the shares of MoneyGram common stock to the accounts of those nominees that are registered holders, that, in turn, will credit their customers’ accounts with MoneyGram common stock. MoneyGram and Viad anticipate that brokers, banks and other nominees will generally credit their customers’ accounts with MoneyGram common stock within three to eight days of the distribution date.

42


Table of Contents

Treatment of Employee Stock Options

      In order to ensure that the rights of holders of Viad options are neither enlarged nor diluted as a result of the distribution, Viad and MoneyGram have agreed that all outstanding options will be subject to an anti-dilution adjustment, in accordance with the shareholder-approved Viad plans under which they were granted. The adjustment, which is described in more detail in the next paragraph, calls for each holder of a Viad option to receive a MoneyGram option, while retaining an adjusted Viad option. The number of shares covered by, and the exercise price of, the MoneyGram option and the adjusted Viad option will be determined so as to ensure that the combined intrinsic economic value of the two options immediately after the distribution will be equal to the combined intrinsic economic value of the Viad option immediately before the distribution. This anti-dilution adjustment is designed so as not to be treated as a “new grant” or “repricing” of options under generally accepted accounting principles and the New York Stock Exchange’s listing standards and is not subject to any stockholder approval.

      As of the distribution date, each Viad option that immediately prior to the distribution date is outstanding and not exercised will be adjusted to consist of two options: (1) an option to purchase shares of Viad common stock and (2) an option to purchase shares of MoneyGram common stock. The exercise price of the Viad stock option will be adjusted by multiplying the exercise price of the old stock option by a fraction, the numerator of which is the closing price of a share of Viad common stock on the first trading day after the distribution date (without the right to receive the distribution, and divided by four if the reverse stock split occurs prior to the close of business on that trading day) and the denominator of which is that price plus the closing price of a share of MoneyGram common stock on the first trading day after the distribution date. The exercise price of the MoneyGram stock option will equal the exercise price of the old stock option times a fraction, the numerator of which is the closing price of a share of MoneyGram common stock on the first trading day after the distribution date and the denominator of which is that price plus the closing price of a share of Viad common stock on the first trading day after the distribution date.

      See “Relationship between New Viad and MoneyGram — Agreements between Viad and MoneyGram — Employee Benefits Agreement.”

Reverse Stock Split

      Viad received approval of its stockholders at its 2004 annual meeting of stockholders for a one-for-four reverse stock split of Viad common stock. The reverse stock split will be effective immediately following the spin-off. In the reverse stock split, you will receive one share of Viad common stock for each four shares of Viad common stock that you held at the record date. Information concerning the reverse stock split is contained in the proxy statement provided to you in connection with Viad’s 2004 annual meeting. You do not need to take any action at this time in connection with the reverse stock split.

      In connection with the reverse stock split, Viad will send you a letter of transmittal after the reverse stock split becomes effective instructing you to mail your certificates representing shares of New Viad common stock to New Viad’s transfer agent. You should send these stock certificates only after you have received that letter of transmittal.

      Employee stock options to acquire Viad stock will be subject to an anti-dilution adjustment to reflect the reverse stock split, in accordance with the shareholder-approved Viad plans under which they were granted. This adjustment will be made after completing the adjustment described above under “Treatment of Employee Stock Options.” The number of shares subject to each Viad stock option will be multiplied by four, and the per-share exercise price subject to each Viad stock option will be divided by four. As a result, the intrinsic economic value of the Viad stock option will remain the same immediately after the reverse stock split as it was immediately before the reverse stock split.

43


Table of Contents

DIVIDEND POLICY OF MONEYGRAM

      In 2003, Viad paid a quarterly dividend of $0.09 per share of Viad common stock. MoneyGram has not yet determined whether it will pay dividends on MoneyGram common stock following the spin-off (and if so, the amount thereof), and MoneyGram may determine not to pay any dividends on MoneyGram common stock following the spin-off. Any future determination to pay dividends on MoneyGram common stock will be at the discretion of MoneyGram’s board of directors and will depend on MoneyGram’s financial condition, results of operations, cash requirements, prospects and such other factors as MoneyGram’s board of directors may deem relevant.

44


Table of Contents

CAPITALIZATION OF VIAD CORP

(Accounting Predecessor to MoneyGram International, Inc.)

      The following table sets forth the unaudited historical capitalization of Viad Corp (accounting predecessor to MoneyGram International, Inc.) at March 31, 2004, and unaudited pro forma capitalization of MoneyGram International, Inc. (accounting successor to Viad Corp) at March 31, 2004, after giving effect to the anticipated preferred stock redemption, the debt refinancing and the spin-off and related transactions, each as if they occurred on that date. For an explanation of the spin-off and related transactions between MoneyGram and Viad, see “Unaudited Pro Forma Consolidated Financial Information of MoneyGram International, Inc. (Accounting Successor to Viad Corp).”

      This table should be read in conjunction with Viad Corp’s consolidated financial statements and related notes, the “Unaudited Pro Forma Consolidated Financial Information of MoneyGram International, Inc. (Accounting Successor to Viad)” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp (Accounting Predecessor to MoneyGram International, Inc.)”

                     
March 31, 2004

Historical Pro Forma


(in thousands, except share data)
Current portion of long-term debt
  $ 40,595     $ 266  
     
     
 
Long-term debt:
               
 
Long-term debt, less current portion
  $ 211,953     $ 150,505  (1)
     
     
 
$4.75 Preferred stock subject to mandatory redemption, call price of $101, 234,983 shares outstanding historical and none pro forma
    6,741        (1)
     
     
 
Stockholders’ equity:
               
 
Common stock, $1.50 par value, 200,000,000 shares authorized, 99,739,925 issued historical and $0.01 par value, 250,000,000 shares authorized, 88,569,892 issued and outstanding pro forma
    149,610       886  (2)
 
Additional capital
    214,148       53,970  (2)
 
Retained income
    897,178       475,114  (1)(2)
 
Unearned employee benefits and other
    (54,099 )     (32,627 )(2)
 
Accumulated other comprehensive income (loss):
               
   
Unrealized gain on available-for-sale securities
    136,298       135,847  (2)
   
Unrealized loss on derivative financial instruments
    (109,464 )     (109,464 )(2)
   
Cumulative foreign currency translation adjustments
    11,877       4,128  (2)
   
Minimum pension liability adjustment
    (42,749 )     (38,536 )(2)
 
Common stock in treasury, at cost, 11,170,033 shares historical and none pro forma
    (287,430 )      (3)
     
     
 
 
Total Stockholders’ equity
    915,369       489,318  
     
     
 
Total Capitalization
  $ 1,134,063     $ 639,823  
     
     
 


(1)  The pro forma capitalization of MoneyGram International, Inc. assumes that at March 31, 2004:

  •  MoneyGram International, Inc. obtained bank credit facilities of $350.0 million, drew $150.0 million on these facilities and paid that amount to Viad Corp, and Viad Corp used such $150 million to repay all or a portion of its commercial paper as described below.
 
  •  Viad Corp repaid its commercial paper of $170.0 million, repurchased its senior notes and subordinated debt in a total amount of $53.5 million, retired industrial revenue bonds of $9.0 million and redeemed its outstanding preferred stock at an aggregate call price of $23.7 million. The total cash used related to the debt repayment and preferred stock redemption is assumed to be $262.2 million, of which $150.0 million is assumed to be provided by MoneyGram’s borrowings under its new bank facilities described above and

45


Table of Contents

  $112.2 million is assumed to come from cash on hand (including funds received by Viad from Travelers Express Company, Inc.).
 
  •  An aggregate loss of $23.0 million was recorded in connection with the early retirement of debt and the redemption of preferred stock.

(2)  The pro forma capitalization at March 31, 2004 also reflects the following:

  •  The net assets of New Viad are assumed to be distributed as a dividend at historical cost.
 
  •  An aggregate loss of $23.0 million is assumed to be recorded in connection with the early retirement of debt and the redemption of preferred stock.
 
  •  The elimination of treasury stock described in note (3) below.
 
  •  One-time pre-tax expenses of $4.0 million were incurred in order to complete the spin-off.
 
  •  The allocation of the employee equity trust between MoneyGram International, Inc. and Viad Corp as contemplated by the Employee Benefits Agreement.
 
  •  The change in the par value of MoneyGram common stock from $1.50 per share to $0.01 per share.

(3)  The pro forma capitalization at March 31, 2004 reflects the elimination of Viad treasury stock, which shares will be treasury shares of New Viad.

46


Table of Contents

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION OF

MONEYGRAM INTERNATIONAL, INC.
(Accounting Successor to Viad Corp)

      On July 24, 2003, Viad Corp announced a plan to separate its global payment services business from its other businesses by means of a tax-free spin-off transaction. To effect the separation, Travelers Express Company, Inc., which currently conducts Viad Corp’s global payment services business, will become a subsidiary of MoneyGram International, Inc., a newly formed, wholly-owned subsidiary of Viad Corp, and Viad will distribute all of the shares of MoneyGram common stock as a dividend on Viad common stock.

      In connection with the spin-off, Viad Corp, MoneyGram International, Inc. and Travelers Express Company, Inc. will engage in the following transactions:

  •  A newly formed, wholly-owned subsidiary of MoneyGram will be merged with and into Travelers Express Company, Inc., which currently conducts Viad Corp’s global payment services business and is a wholly-owned subsidiary of Viad Corp. As a result of the merger, Travelers Express Company, Inc. will become a wholly-owned subsidiary of MoneyGram International, Inc.
 
  •  Prior to the merger, each of Viad Corp and MoneyGram International, Inc. expect to enter into new credit agreements, as described under “Financing Arrangements of MoneyGram” and “Financing Arrangements of New Viad.” Following the spin-off, MoneyGram International, Inc. expects to borrow $150 million under its new credit agreement.
 
  •  In connection with the merger, MoneyGram International, Inc. will pay $150 million to Viad Corp. MoneyGram International, Inc. will fund this payment with the borrowing under its new credit agreement. Viad Corp will use all of the proceeds of this cash payment to repay all or a portion of its outstanding commercial paper (or other similar indebtedness). Viad Corp currently has approximately $170 million of commercial paper outstanding.
 
  •  Prior to the merger, Viad Corp intends to seek to repurchase all of its outstanding subordinated debt and medium-term notes, for an aggregate amount of approximately $59.5 million (which includes an estimated tender premium). In May 2004, Viad Corp commenced tender offers to repurchase this public indebtedness. In April 2004, Viad Corp paid $9.0 million to retire certain industrial revenue bonds for which it was responsible. In addition, prior to the merger, Viad Corp expects to redeem its outstanding preferred stock (carrying value of $6.7 million) at an aggregate redemption price of $23.7 million. Viad Corp will fund the preferred stock redemption, repurchase of public indebtedness and repayment of the industrial revenue bonds, as well as the repayment of any commercial paper in excess of the $150 million described above, with cash on hand (including funds received from Travelers Express Company, Inc. prior to the merger). The total amount of cash required to fund the repayment of commercial paper, preferred stock redemptions and debt retirement described above is expected to be $262.2 million. Viad Corp expects to record an aggregate pre-tax loss on the debt retirement and preferred stock redemption of $23.0 million at the time that such transactions occur. Following the spin-off, this loss would be reflected on the financial statements of MoneyGram, as the accounting successor to Viad Corp.
 
  •  Pursuant to the employee benefits agreement, MoneyGram International, Inc. and Travelers Express Company, Inc. will assume certain employee benefits liabilities of Viad Corp, and in connection with the assumption of certain liabilities, Viad Corp will transfer certain related assets to Travelers Express Company, Inc. In connection with the distribution, Viad Corp will pay out deferred compensation to its current and former corporate employees and current and former employees of its former subsidiaries in the aggregate amount of approximately $7.2 million. In connection with the transactions contemplated by the Employee Benefits Agreement, the unaudited pro forma consolidated balance sheet of MoneyGram International, Inc. (accounting successor to Viad Corp) reflects the transfer to a trust established by MoneyGram International, Inc. of shares of MoneyGram common stock that will be distributed in the spin-off with respect to the shares of Viad common stock held in the Viad Employee Equity Trust, which will be used to provide employee benefits to employees of MoneyGram International, Inc.

47


Table of Contents

  •  Pursuant to the tax sharing agreement, a tax sharing payment of approximately $35.5 million was made on April 1, 2004 by Travelers Express Company, Inc. to Viad Corp in respect of alternative minimum tax credits and general business tax credits.
 
  •  We expect that Viad Corp will incur pre-tax expenses of up to approximately $18 million, primarily related to investment banking, legal and accounting fees, in order to complete the spin-off and related transactions. Of these expenses, $10.0 million represent fees payable by Viad Corp upon completion of the spin-off under existing agreements. The remaining $8.0 million represent other fees and expenses incurred jointly by MoneyGram International, Inc. and Viad Corp in connection with the spin-off, which fees and expenses MoneyGram International, Inc. and Viad Corp will share equally. As a result, approximately $4.0 million is expected to be incurred by MoneyGram International, Inc. and $14.0 million is expected to be incurred by New Viad.
 
  •  We expect that prior to the merger, Travelers Express Company, Inc., will pay a cash dividend to Viad Corp in the amount of the net income of Travelers Express Company, Inc. in 2004 to the date of the spin-off, less the amount of dividends already paid in respect of such net income (other than the $7.25 million dividend described below). For the quarter ended March 31, 2004, Travelers Express Company, Inc. paid Viad Corp a dividend in respect of net income for that quarter of approximately $34 million, of which $11 million related to a gain from the sale of a subsidiary and approximately $23 million related to net income exclusive of such gain. Assuming the spin-off is completed on June 30, 2004, Travelers Express Company, Inc. expects to pay a similar amount (approximately $23 million) based on its net income for the quarter ending on that date. However, we do not currently know when the distribution will occur or how Travelers Express Company, Inc.’s business will perform during that time. This dividend is in addition to a $7.25 million dividend Travelers Express Company, Inc. will pay to Viad Corp prior to the spin-off in connection with Viad’s payment of certain deferred compensation liabilities, which amount Viad will use to pay its creditors.

      The transactions described above related to the transfer of employee benefit plan liabilities and related assets and the tax sharing payment are included in New Viad’s historical combined financial statements because these items will be allocated as described pursuant to the employee benefits agreement and the tax sharing agreement. As such, no further pro forma adjustments (except as noted) were made to the unaudited consolidated financial information of MoneyGram International, Inc. (accounting successor to Viad Corp) or the unaudited combined financial information of New Viad related to these items. All other items are reflected in the “pro forma adjustments — other” column in the pro forma unaudited consolidated (combined) financial information, as applicable.

      At the time of the spin-off, the business of MoneyGram International, Inc. will consist solely of the business of Viad Corp’s current Payment Services operations. The continuing business of Viad Corp will consist solely of the businesses of the convention and event services, exhibit design and construction, and travel and recreation services operations including Viad Corp’s centralized corporate functions. The allocation of historical assets, liabilities, revenues and expenses between MoneyGram International, Inc. and New Viad is based on the legal ownership of such items as stipulated in the separation and distribution agreement. In general, the net assets of MoneyGram International, Inc. reflect those net assets historically reported by Viad in the “Payment Services segment,” adjusted for the effects of the tax sharing and employee benefit transfer transactions described above. Similarly, the revenues and expenses of MoneyGram International, Inc. reflect those specific to the payment services operations, also adjusted for the effects of the above transactions. The expenses of MoneyGram International, Inc. include allocated corporate overhead expenses which are directly attributable to and incurred on behalf of the Payment Services business. In addition, for historical financial reporting purposes, the revenues and expenses of MoneyGram International, Inc. also include interest income, interest expense and the indirect corporate overhead expenses of Viad Corp, in accordance with the “reverse spin-off” accounting treatment described below. Following the spin-off, New Viad, as opposed to MoneyGram International, Inc., will be responsible for the indirect corporate overhead expenses currently incurred by Viad Corp and included in the historical financial statements of MoneyGram International, Inc. The allocation of income tax expense between

48


Table of Contents

MoneyGram International, Inc. and New Viad is based on the actual historical tax expense of each stand-alone entity (MoneyGram International, Inc. has historically had a significantly lower effective tax rate as compared to New Viad due to tax-exempt investment income generated by MoneyGram’s operations). All other assets, liabilities, revenues and expenses are allocated to the businesses comprising New Viad.

      Notwithstanding the legal form of the spin-off, due to the relative significance of MoneyGram International, Inc. to Viad Corp, MoneyGram International, Inc. will be considered the divesting entity and treated as the accounting successor to Viad Corp for financial reporting purposes in accordance with the EITF No. 02-11. The spin-off of New Viad will be accounted for pursuant to Accounting Principles Board (APB) Opinion No. 29, “Accounting for Non-Monetary Transactions (APB No. 29).” Accordingly, the spin-off will be accounted for based upon the recorded amounts of the New Viad assets to be divested. MoneyGram International, Inc. will charge directly to equity as a dividend the historical cost carrying amount of the net assets of New Viad after reduction, if appropriate, for any indicated impairment of value. Management currently believes there is no indicated impairment of value of the net assets of New Viad. Furthermore, if the spin-off transaction were to occur, MoneyGram International, Inc. would report the historical results of operations (subject to adjustments related to the indirect overhead expenses of Viad Corp) of New Viad in discontinued operations in accordance with the provisions of SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”

      The following unaudited pro forma consolidated statements of income for the three months ended March 31, 2004 and for the year ended December 31, 2003 and the unaudited pro forma consolidated balance sheet at March 31, 2004 present the consolidated results of operations and financial position of MoneyGram International, Inc. (accounting successor to Viad Corp) assuming that the preferred stock redemption, debt refinancing and the transactions contemplated in connection with the spin-off had been completed as of the beginning of 2004 with respect to the unaudited pro forma consolidated statement of income for the three months ended March 31, 2004, at the beginning of 2003 with respect to the unaudited pro forma consolidated statement of income for the year ended December 31, 2003, and at March 31, 2004 with respect to the unaudited pro forma consolidated balance sheet at March 31, 2004. The unaudited pro forma statements of income for the years ended December 31, 2002 and 2001 reflect the financial statements of MoneyGram International, Inc. giving effect to the recording of the spin-off transaction only as of the beginning of 2002 and 2001, respectively, and represent the historical results of operations to be reported by MoneyGram International Inc. subsequent to the spin-off. In the opinion of management, except as described above and below, the following unaudited pro forma financial statements include all material adjustments necessary to reflect, on a pro forma basis, the impact of transactions contemplated by the spin-off on the historical financial information of MoneyGram International, Inc. The adjustments are described in the notes to the pro forma consolidated financial information.

      The unaudited pro forma consolidated statements of income only disclose income from continuing operations and related per share data, and do not include the effects of discontinued operations and changes in accounting principles if historically reported by Viad Corp in a particular period. Net income and related per share data is presented for periods in which discontinued operations or changes in accounting principles were not previously reported. Furthermore, the unaudited pro forma consolidated statements of income include only those adjustments directly attributable to the preferred stock redemption, debt refinancing, and transactions that are expected to have a continuing impact on MoneyGram International, Inc. and do not include material nonrecurring charges directly attributable to the spin-off and related transactions. These nonrecurring charges include the currently estimated one-time loss on the retirement of Viad’s debt and redemption of preferred stock of approximately $23.0 million, and the expected one-time expenses of approximately $18.0 million (of which $4.0 million is expected to be incurred by MoneyGram International, Inc. and $14.0 million is expected to be incurred by New Viad), primarily related to investment banking, legal and accounting fees that will be required to complete the spin-off. The unaudited pro forma consolidated balance sheet at March 31, 2004, includes adjustments directly attributable to the spin-off and related transactions regardless of whether they have a continuing impact or are nonrecurring.

      The unaudited pro forma consolidated financial information of MoneyGram International, Inc. (accounting successor to Viad Corp) should be read together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Viad Corp (Accounting Predecessor to MoneyGram International, Inc.)”

49


Table of Contents

and the historical consolidated financial statements of Viad Corp and the related notes. The pro forma consolidated financial information has been prepared for informational purposes only and does not reflect the results of operations or financial position of MoneyGram International, Inc. that would have occurred had MoneyGram International, Inc. operated as a separate, independent company for the periods presented. Actual results might have differed from pro forma results if MoneyGram International, Inc. had operated independently. The pro forma consolidated financial information should not be relied upon as being indicative of MoneyGram International, Inc.’s results of operations or financial condition had the debt refinancing and transactions contemplated in connection with the spin-off been completed on the date assumed. The pro forma consolidated financial information also does not project the results of operations or financial position for any future period or date.

50


Table of Contents

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

                                             
Year ended December 31, 2003

Historical Historical Pro Forma Pro Forma
Viad Corp New Viad(3) Subtotal(4) Adjustments MoneyGram(5)





(in thousands, except per share data)
Revenues:
                                       
 
Convention show services
  $ 521,433     $ (521,433 )   $     $     $  
 
Payment services transaction fees
    419,003             419,003             419,003  
 
Payment services investment income
    323,098             323,098             323,098  
 
Payment services investment gains (losses)
    (4,877 )           (4,877 )           (4,877 )
 
Exhibit design and construction
    195,832       (195,832 )                  
 
Travel and recreation services
    53,203       (53,203 )                  
     
     
     
     
     
 
   
Total revenues
    1,507,692       (770,468 )     737,224             737,224  
     
     
     
     
     
 
Costs and expenses:
                                       
 
Costs of services
    1,146,417       (514,254 )     632,163       (6,886 )(6)     625,277  
 
Costs of products sold
    193,986       (193,986 )                  
 
Corporate activities
    12,571       (3,058 )     9,513       (8,192 )(6)     1,321  
 
Other investment income
    (2,922 )     441       (2,481 )     1,459 (7)     (1,022 )
 
Interest expense
    8,777       1,080       9,857       (3,570 )(8)     6,287  
 
Restructuring recoveries
    (5,015 )     5,015                    
 
Minority interests
    110       (110 )                  
     
     
     
     
     
 
   
Total costs and expenses
    1,353,924       (704,872 )     649,052       (17,189 )     631,863  
     
     
     
     
     
 
Income from continuing operations before income taxes
    153,768       (65,596 )     88,172       17,189       105,361  
Income tax expense (benefit)
    43,240       (32,995 )     10,245       6,704 (9)     16,949  
     
     
     
     
     
 
Income from continuing operations(1),(2)
  $ 110,528     $ (32,601 )   $ 77,927     $ 10,485     $ 88,412  
     
     
     
     
     
 
Diluted income per common share
                                       
Income per share from continuing operations
  $ 1.27                             $ 1.02  
     
                             
 
Average outstanding and potentially dilutive common shares
    86,619                               86,619  
     
                             
 
Basic income per common share
                                       
Income per share from continuing operations
  $ 1.27                             $ 1.03  
     
                             
 
Average outstanding common shares
    86,223                               86,223  
     
                             
 


(1)  Viad Corp’s historical results of operations included income from discontinued operations of $3.4 million (after-tax).
 
(2)  Management anticipates that Viad Corp will incur a pre-tax loss on the retirement of debt and redemption of preferred stock, currently estimated to be $23.0 million, in connection with the spin-off. Furthermore, management expects that pre-tax expenses of approximately $18.0 million, primarily related to investment banking, legal and accounting fees, will be required to complete the spin-off. Of these expenses, $10.0 million represent fees payable by Viad Corp upon completion of the spin-off under existing agreements. The remaining $8.0 million represent other fees and expenses incurred jointly by MoneyGram

51


Table of Contents

International, Inc. and Viad Corp in connection with the spin-off, which fees and expenses MoneyGram International, Inc. and Viad Corp will share equally. As a result, approximately $4.0 million is expected to be incurred by MoneyGram International, Inc. and $14.0 million is expected to be incurred by New Viad. These nonrecurring items have not been reflected in the pro forma consolidated statements of income.

(3)  Amounts represent the historical revenues and expenses of New Viad to be reported as discontinued operations upon completion of the spin-off pursuant to SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Pursuant to EITF Issue No. 87-24, “Allocation of Interest to Discontinued Operations,” indirect corporate overhead expenses attributable to New Viad of $6.9 million and $9.5 million included in Viad Corp’s historical results of operations under the captions “costs of services” and “corporate activities,” respectively, will not be presented as discontinued operations in the historical financial statements of MoneyGram International, Inc. Accordingly, such expenses will be reported in continuing operations. See note (6).
 
(4)  Amounts represent the historical results of operations to be reported by MoneyGram International, Inc. subsequent to the spin-off.
 
(5)  Amounts represent the results of operations of MoneyGram International, Inc. after giving effect to the anticipated preferred stock redemption, debt refinancing and spin-off transactions.
 
(6)  Adjustment assumes a reduction of indirect corporate overhead expenses attributable to the operations of New Viad which will not be included in the ongoing operations of MoneyGram International, Inc. pursuant to the separation and distribution agreement. Corporate activities expense for MoneyGram International, Inc. consists of the net expense associated with the assumed specified liabilities relating to employees and former employees of Viad Corp under its primary defined benefit pension plan, supplemental executive retirement plans and specified executive medical benefits in accordance with the employee benefits agreement.
 
(7)  Adjustment assumes net decreased interest income on net cash and investments used in connection with the early retirement of Viad Corp’s debt and redemption of preferred stock. The net cash used for the debt retirement and preferred stock redemption is assumed to be $112.2 million, representing the total cash required to fund the above transactions of $262.2 million, less cash proceeds of $150.0 million resulting from MoneyGram’s credit facility borrowing. The interest income adjustment represents a reduction in the historical interest income recorded by Viad, and assumes Viad’s historical investment yield of 1.3% related to these funds is applied to the net cash and investments used of $112.2 million.
 
(8)  Adjustment assumes net decreased interest expense of $3.5 million due to Viad’s debt retirement and preferred stock redemption transactions resulting in a gross reduction of interest expense of $6.7 million, less estimated interest expense incurred of $3.2 million under MoneyGram’s new credit facility borrowing. The assumed gross reduction of interest expense of $6.7 million represents the historical interest expense of Viad consisting of:

  $1.9 million related to the commercial paper retirement of $170.0 million (average interest rate of 1.1%),
 
  $2.2 million related to the senior debt retirement of $35.0 million (average interest rate of 6.3%),
 
  $1.9 million related to the subordinated debt retirement of $18.5 million (average interest rate of 10.5%), and
 
  $702,000 related to the retirement and redemption of the industrial revenue bonds and preferred stock.

The estimated interest expense incurred of $3.2 million related to MoneyGram’s new credit facility assumes a borrowing of $150.0 million at a LIBOR-indexed interest rate of 2.1%, which is based on the average LIBOR rate for the period and the applicable interest rate spreads pursuant to the expected terms of MoneyGram’s new credit facility. A 0.125% change in the interest rate on $150.0 million results in a change of interest expense of $187,500 and a change to income from continuing operations of $114,375 (after-tax).

(9)  Adjustment assumes an effective income tax rate of 39 percent.

52


Table of Contents

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME

<
                             
Year ended December 31, 2002

Historical Historical Pro Forma
Viad Corp New Viad(3) MoneyGram(4)



(in thousands, except per share data)
Revenues:
                       
 
Convention show services
  $ 568,301     $ (568,301 )   $  
 
Payment services transaction fees
    365,636             365,636  
 
Payment services investment income
    351,331             351,331  
 
Payment services investment gains (losses)
    (9,276 )           (9,276 )
 
Exhibit design and construction
    217,932