EXHIBIT 10.18

 

EMPLOYMENT AGREEMENT

 

--------------------------------------------------------------------------------

 

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of this 27th
day of October, 2008, by and between MetaBank, 121 E. 5th Street, Storm Lake,
Iowa 50588 (hereinafter referred to as the “Bank” whether in mutual or stock
form) and David W. Leedom (the “Employee”), who resides at 305 Spyglass Drive,
Sioux Falls, South Dakota 57105.

 

WHEREAS, the Employee is currently serving as Senior Vice President and Chief
Financial Officer; and

 

WHEREAS, the Bank is a publically held corporation as the subsidiary of Meta
Financial Group, Inc. (the “Holding Company”) and

 

WHEREAS, the Board of Directors of the Bank recognizes that, as is the case with
publicly held corporations generally, the possibility of a change in control of
the Holding Company and/or the Bank may exist and that such possibility, and the
uncertainty and questions which it may raise among management, may result in the
departure or distraction of key management personnel to the detriment of the
Bank, the Holding Company and its stockholders; and

 

WHEREAS, the Board of Directors of the Bank believes it is in the best interests
of the Bank to enter into this Agreement with the Employee in order to assure
continuity of management of the Bank and to reinforce and encourage the
continued attention and dedication of the Employee to his assigned duties
without distraction in the face of potentially disruptive circumstances arising
from the possibility of a change in control of the Holding Company, although no
such change is now contemplated; and

 

WHEREAS, the Board of Directors of the Bank has approved and authorized the
execution of this Agreement with the Employee to take effect as stated in
Section 4 hereof;

 

NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements of the parties herein contained, it is AGREED as
follows:

 

1.  Employment. The Employee will be employed as Senior Vice President and Chief
Financial Officer of the Bank. As Senior Vice President and Chief Financial
Officer, Employee shall render administrative and management services as are
customarily performed by persons situated in similar executive capacities, and
shall have other powers and duties as may from time to time be prescribed by the
Board, provided that such duties are consistent with the Employee’s position as
Senior Vice President and Chief Financial Officer. The Employee shall continue
to devote his best efforts and substantially all his business time and attention
to the business and affairs of the Bank and its subsidiaries and affiliated
companies.

 

2.  Compensation.

 

     (a)      Salary. The Bank agrees to pay the Employee during the term of
this Agreement a salary established by the Board of Directors. The salary
hereunder as of the Commencement Date (as defined in Section 4 hereof) shall be
at least equal to the Employee’s salary in effect immediately prior to the
Commencement Date. The salary provided for herein shall be payable not less
frequently than biweekly in accordance with the practices of the Bank, provided,
however, that no such salary is required to be paid by the terms of this
Agreement in respect of any month or portion thereof subsequent to the
termination of this Agreement and provided further, that the amount of such
salary shall be reviewed by the Board of Directors not less often than annually
and may be increased (but not decreased) from time to time in such amounts as
the Board of Directors in its discretion may decide, subject to the customary
withholding tax and other employee taxes as required with respect to
compensation paid by a corporation to an employee.

 

1

--------------------------------------------------------------------------------

 

     (b) Discretionary Bonuses. The Employee shall be entitled to participate in
an equitable manner with all other executive officers of the Bank in
discretionary bonuses as authorized and declared by the Board of Directors of
the Bank to its executive employees. Any such discretionary bonus shall be
payable to the Employee at the time bonuses are paid to executive officers in
accordance with the Bank’s policies and practices; provided, however, that any
such bonus shall be paid no later than March 15 of the year following the year
in which the bonus is earned and vested.  No other compensation provided for in
this Agreement shall be deemed a substitute for the Employee’s right to
participate in such bonuses when and as declared by the Board of Directors.

 

     (c) Expenses. During the term of his employment hereunder, the Employee
shall be entitled to receive prompt reimbursement for all reasonable expenses he
incurs (in accordance with policies and procedures at least as favorable to the
Employee as those presently applicable to the senior executive officers of the
Bank) in performing services hereunder, provided that the Employee properly
accounts for such expenses in accordance with Bank policy.  Such expense
reimbursements shall be paid no later than the end of the Employee’s taxable
year following the taxable year in which the Employee incurs the expenses.  The
amount of expenses eligible for reimbursement during a taxable year may not
affect the expenses eligible for reimbursement in any other taxable year, and
the Employee’s right to an expense reimbursement may not be liquidated or
exchanged for another benefit.

 

3.  Benefits.

 

     (a) Participation in Retirement and Employee Benefit Plans. The Employee
shall be entitled while employed hereunder to participate in, and receive
benefits under, all plans relating to stock options, stock purchases, pension,
thrift, profit-sharing, group life insurance, medical coverage, education, cash
or stock bonuses, and other retirement or employee benefits or combinations
thereof, that are now or hereafter maintained for the benefit of the Bank’s
executive employees or for its employees generally.

 

     (b) Fringe Benefits. The Employee shall be eligible while employed
hereunder to participate in, and receive benefits under, any other fringe
benefits which are or may become applicable to the Bank’s executive employees or
to its employees generally.

 

4. Term.  The term of employment under this Agreement shall be a period of three
(3) years commencing on the date of effective date of this document (the
“Commencement Date”) subject to earlier termination as provided herein.
Beginning on the first anniversary of the Commencement Date, and on each
anniversary thereafter, the term of employment under this Agreement shall be
extended for a period of one year unless either the Bank or the Employee gives
contrary written notice to the other not less than 90 days in advance of the
date on which the term of employment under this Agreement would otherwise be
extended, provided that such term will not be automatically extended unless,
prior thereto, such extension is approved by the Board of Directors following
the Board’s review of a formal performance evaluation of the Employee performed
by the disinterested members of the Board of Directors of the Bank and reflected
in the minutes of the Board of Directors. Reference herein to the term of
employment under this Agreement shall refer to both such initial term and such
extended terms.

 

5.  Vacations. The Employee shall be entitled, without loss of pay, to absent
himself voluntarily from the performance of his employment under this Agreement,
all such voluntary absences to count as vacation time, provided that:

 

     (a) the Employee shall be entitled to an annual vacation of not less than
five (5) weeks per year;

 

     (b) the timing of vacations shall be scheduled in a reasonable manner by
the Employee; and

 

2

--------------------------------------------------------------------------------

 

     (c) solely at the Employee’s request, the Board of Directors shall be
entitled to grant to the Employee a leave or leaves of absence with or without
pay at such time or times and upon such terms and conditions as the Board, in
its discretion, may determine.

 

6.  Termination of Employment; Death.

 

(a)   The Board of Directors may terminate the Employee’s employment at any
time, but any termination by the Bank’s Board of Directors, other than
termination for cause, shall not prejudice the Employee’s right to compensation
or other benefits under the Agreement.  If the employment of the Employee is
involuntarily terminated, other than for “cause” as provided in this
Section 6(a) or pursuant to any of Sections 6(d) through 6(g), or by reason of
death or disability as provided in Sections 6(c) or 7, the Employee shall be
entitled to receive:

 

(i) his then-applicable salary for the then-remaining term of the Agreement as
calculated in accordance with Section 4 hereof, payable in installments not less
frequently than biweekly, in accordance with the Bank’s regular payroll
practices and procedures, subject to the customary withholding tax and other
employee taxes as required with respect to compensation paid by a corporation to
an employee, provided that if the Employee is a “specified employee” (as such
term is defined in Code Section 409A and the regulations or other guidance in
effect thereunder) at the time of his employment termination and his employment
terminates under circumstances that require a distribution delay under Code
Section 409A, the commencement of biweekly installments of the Employee’s
continued salary payments shall be delayed for six months and the installments
that otherwise would have been paid during that six-month period shall be paid
in a lump sum on the six-month anniversary of the Employee’s employment
termination date (or, if earlier, as soon as administratively feasible after his
death); and

 

(ii) health insurance benefits as maintained by the Bank for the benefit of its
senior executive employees or its employees generally over the then-remaining
term of the Agreement as calculated in accordance with Section 4 hereof,
provided that if the duration of such health insurance benefits extends beyond
the end of the applicable continuation coverage period under the Consolidated
Omnibus Budget Reconciliation Act (COBRA), (A) the amount of benefits provided
during one calendar year shall not affect the amount of benefits provided during
a subsequent calendar year (except with respect to health plan maximums),
(B) the benefits may not be exchanged or substituted for other forms of
compensation to the Employee, and (C) any reimbursement or payment under the
benefit arrangement will be paid in accordance with applicable plan terms and no
later than the last day of the Employee’s taxable year following the taxable
year in which he incurred the expense giving rise to such reimbursement or
payment.

 

     (b) The Employee’s employment may be voluntarily terminated by the Employee
at any time upon 90 days written notice to the Bank or upon such shorter period
as may be agreed upon between the Employee and the Board of Directors of the
Bank. In the event of such voluntary termination, the Bank shall be obligated to
continue to pay the Employee his salary only through the date of termination, at
the time such payments are due, and the Bank shall have no further obligation to
the Employee under this Agreement.

 

     (c) In the event of the death of the Employee during the term of employment
under this agreement and prior to any termination hereunder, the Employee’s
estate, or such person as the Employee may have previously designated in
writing, shall be entitled to receive from the Bank the salary of the Employee
through the last day of the calendar month in which his death shall have
occurred, and the term of employment under this Agreement shall end on such last
day of the month.

 

3

--------------------------------------------------------------------------------

 

     (d) If the Employee is suspended from office and/or temporarily prohibited
from participating in the conduct of the Bank’s affairs by a notice served under
Section 8(e) (3) or (g) (1) of the Federal Deposit Insurance Act (“FDIA”), 12
U.S.C. § 1818 (e) (3); (g) (1), the Bank’s obligations under this Agreement
shall be suspended as of the date of service, unless stayed by appropriate
proceedings. If the charges in the notice are dismissed, the Bank may in its
discretion (i) pay the Employee all or part of the compensation withheld while
its obligations under this Agreement were suspended and (ii) reinstate in whole
or in part any of the obligations which were suspended.

 

     (e) If the Employee is removed from office and/or permanently prohibited
from participating in the conduct of the Bank’s affairs by an order issued under
Section (8) (e) (4) or (g) (1) of the FDIA, 12 U.S.C. § 1818 (e) (4); (g) (1),
all obligations of the Bank under this Agreement shall terminate, as of the
effective date of the order, but vested rights of the parties shall not be
affected.

 

     (f) If the Bank becomes in default (as defined in Section 3 (x) (1) of the
FDIA, 12 U.S.C. § 1813 (x) (1)), all obligations under this Agreement shall
terminate as of the date of default, but this provision shall not affect any
vested rights of the parties.

 

     (g) All obligations under this Agreement shall be terminated, except to the
extent determined that continuation of this Agreement is necessary for the
continued operation of the Bank: (i) by the Director of the Office of Thrift
Supervision (“OTS”) or his or her designee at the time the Federal Deposit
Insurance Corporation or the Resolution Trust Corporation enters into an
agreement to provide assistance to or on behalf of the Bank under the authority
contained in Section 13 (c) of the FDIA, 12 U.S.C. § 1823 (c); or (ii) by the
Director of the OTS or his or her designee at the time the Director of the OTS
or his or her designee approves a supervisory merger to resolve problems related
to operation of the Bank or when the Bank is determined by the Director of the
OTS to be in unsafe or unsound condition.  Any rights of the parties that have
already vested, however, shall not be affected by any such action.

 

     (h)      In the event the Bank purports to terminate the Employee for
cause, but it is determined by a court of competent jurisdiction or by an
arbitrator pursuant to Section 17 that cause did not exist for such termination,
or if in any event it is determined by any such court or arbitrator that the
Bank has failed to make timely payment of any amounts owed to the Employee under
this Agreement, the Employee shall be entitled to reimbursement for all
reasonable costs, including attorneys’ fees, incurred in challenging such
termination or collecting such amounts; provided, however, that (i) the Employee
shall have no right to cost reimbursements until the court or arbitrator enters
a final and binding opinion that cause did not exist for the Employee’s
termination or that the Bank has failed to pay amounts due to the Employee under
this Agreement, and (ii) cost reimbursements will be paid no later than March 15
of the year following the year in which the court or arbitrator enters its final
and binding opinion.  Such reimbursement shall be in addition to all rights to
which the Employee is otherwise entitled under this Agreement.

 

7.  Disability. If during the term of employment hereunder the Employee shall
become disabled or incapacitated to the extent that he is unable to perform the
duties of the Senior Vice President and Chief Financial Officer, he shall be
entitled to receive disability benefits of the type provided for other executive
employees of the Bank.

 

8.  Change in Control.

 

     (a) Involuntary Termination. If the Employee’s employment is involuntarily
terminated (other than for cause or pursuant to any of Sections 6 (c) through 6
(g) or Section 7 of this Agreement) in connection with or within 12 months after
a change in control which occurs at any time during the term of employment under
this Agreement, in addition to any payments under Section 6 (a) of the
Agreement, the

 

4

--------------------------------------------------------------------------------

 

Bank shall pay to the Employee in a lump sum in cash within 25 business days
after the Date of Termination (as hereinafter defined) of employment an amount
equal to 299% of the Employee’s “base amount” of compensation as defined in
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”).

 

     (b) Definitions. For purposes of Section 8, 9 and 11 of this Agreement,
“Date of Termination” means the earlier of (i) the date upon which the Bank
gives notice to the Employee of the termination of his employment with the Bank,
or (ii) the date upon which the Employee ceases to serve as an Employee of the
Bank; and “change in control” is defined solely as any acquisition of control
(other than pursuant to the Conversion or by a trustee or other fiduciary
holding securities under an employee benefit plan of the Holding Company or a
subsidiary of the Holding Company), as defined in 12 C.F.R. § 574.4, or any
successor regulation, of the Bank or Holding Company which would require the
filing of an application for acquisition of control or notice of change in
control in a manner as set forth in 12 C.F.R. § 574.3, or any successor
regulation.

 

9.  Certain Reduction of Payments by the Bank.

 

     (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Bank to or
for the benefit of the Employee (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise) (a
“Payment”) would be nondeductible (in whole or part) by the Bank for Federal
income tax purposes because of Section 280G of the Code, then the aggregate
present value of amounts payable or distributable to or for the benefit of the
Employee pursuant to this Agreement (such amounts payable or distributable
pursuant to this Agreement are hereinafter referred to as “Agreement Payments”)
shall be reduced to the Reduced Amount. The “Reduced Amount” shall be an amount,
not less than zero, expressed in present value which maximizes the aggregate
present value of Agreement Payments without causing any Payment to be
nondeductible by the Bank because of Section 280G of the Code. For purposes of
this Section 9, present value shall be determined in accordance with
Section 280G (d) (4) of the Code.

 

(b) All determinations required to be made under this Section 9 shall be made by
the Bank’s independent auditors, or at the election of such auditors by such
other firm or individuals of recognized expertise as such auditors may select
(such auditors or, if applicable, such other firm or individual, are hereinafter
referred to as the “Advisory Firm”). The Advisory Firm shall within ten business
days of the Date of Termination, or at such earlier time as is requested by the
Bank, provide to both the Bank and the Employee an opinion (and detailed
supporting calculations) that the Bank has substantial authority to deduct for
federal income tax purposes the full amount of the Agreement Payments and that
the Employee has substantial authority not to report on his federal income tax
return any excise tax imposed by Section 4999 of the Code with respect to the
Agreement Payments. Any such determination and opinion by the Advisory Firm
shall be binding upon the Bank and the Employee. The Employee shall determine
which and how much, if any, of the Agreement Payments shall be eliminated or
reduced consistent with the requirements of this Section 9, provided that, if
the Employee does not make such determination within ten business days of the
receipt of the calculations made by the Advisory Firm, the Bank shall elect
which and how much, if any, of the Agreement Payments shall be eliminated or
reduced consistent with the requirements of this Section 9 and shall notify the
Employee promptly of such election. Within five business days of the earlier of
(i) the Bank’s receipt of the Employee’s determination pursuant to the
immediately preceding sentence of this Agreement or (ii) the Bank’s election in
lieu of such determination, the Bank shall pay to or distribute to or for the
benefit of the Employee such amounts as are then due the Employee under this
Agreement. The Bank and the Employee shall cooperate fully with the Advisory
Firm, including without limitation providing to the Advisory Firm all
information and

 

5

--------------------------------------------------------------------------------

 

materials reasonably requested by it, in connection with the making of the
determinations required under this Section 9.

 

(c) As a result of uncertainty in application of Section 280G of the Code at the
time of the initial determination by the Advisory Firm hereunder, it is possible
that Agreement Payments will have been made by the Bank which should not have
been made (“Overpayment”) or that additional Agreement Payments will not have
been made by the Bank which should have been made (“Underpayment”), in each
case, consistent with the calculations required to be made hereunder. In the
event that the Advisory Firm, based on controlling precedent or other
substantial authority, determines that an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Bank to or for the benefit of the
Employee together with interest at the applicable federal rate provided for in
Section 7872(f)(2) of the Code, provided that such Underpayment and interest
shall be paid no later than two and a half months after the date on which the
Advisory Firm informs the Bank of its determination that an Underpayment has
occurred

 

(d) The total of payments to the Employee in the event of involuntary
termination of employment under Section 6(a) and Section 8(a) shall not exceed
three times his average annual compensation from the Bank over the five most
recent taxable years (or, if employed by the Bank for a shorter period, over the
period of his employment by the Bank).

 

(e) Any payments made to the Employee pursuant to this Agreement, or otherwise,
are subject to and conditioned upon their compliance with 12 U.S.C. 1828(k) and
any regulations promulgated thereunder.

 

10.  Non-competition

 

(a) Upon the expiration of the term of the Employee’s employment hereunder or in
the event the Employee’s employment hereunder terminates prior thereto for any
reason whatsoever, the Employee shall not, for a period of one (1) year after
the occurrence of such event, for himself, or as the agent of, on behalf of, or
in conjunction with, any person or entity, solicit or attempt to solicit,
whether directly or indirectly: (i) any employee of the Bank to terminate such
employee’s employment relationship with the Bank; or (ii) any savings and loan,
banking or similar business from any person or entity that is or was a client,
employee, or customer of the Bank and had dealt with the Employee or any other
employee of the Bank under the supervision of the Employee.

 

(b) In the event Employee voluntarily resigns pursuant to section 6 (b) of this
Agreement, or in the event the Employee’s employment hereunder is terminated for
cause, the Employee shall not, for a period of one (1) year from the date of
termination, directly or indirectly, own, manage, operate or control, or
participate in the ownership, management, operation or control of, or be
employed by or connected in any manner with; (i) any financial institution
having an office located within fifty (50) miles of any office of the Bank as of
the date of termination; or by (ii) any person or entity engaged in any business
or activity in the prepaid debit card, payments or similar industry, or which
relates in any way to the prepaid debit card products, payment services and
other related services of Bank, anywhere within the United States.

 

(c) The provisions of subsections (a) and (b) hereof shall not prevent the
Employee from purchasing, solely for investment, not more than five percent (5%)
of any financial institution’s stock or other securities which are traded on any
national or regional securities exchange or are actively traded in the
over-the-counter market and registered under Section 12 (g) of the Securities
Exchange Act of 1934.

 

6

--------------------------------------------------------------------------------

 

(d) The provisions of this Section shall survive the termination of the
Employee’s employment hereunder whether by expiration of the term thereof or
otherwise.

 

11.  No Assignments.

 

(a) This Agreement is personal to each of the parties hereto, and neither party
may assign or delegate any of its rights or obligations hereunder without first
obtaining the written consent of the other party; provided, however, that the
Bank will require any successor or assign (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Bank, by an assumption agreement in form and
substance satisfactory to the Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Bank would be
required to perform it if no such succession or assignment had taken place.
Failure of the Bank to obtain such an assumption agreement prior to the
effectiveness of any such succession or assignment shall be a breach of this
Agreement and shall entitle the Employee to compensation from the Bank in the
same amount and on the same terms as the compensation pursuant to Section 8
(a) hereof. For purposes of implementing the provisions of this Section 11 (a),
the date on which any such succession becomes effective shall be deemed the Date
of Termination.

 

(b) This Agreement and all rights of the Employee hereunder shall inure to the
benefit of and be enforceable by the Employee’s personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Employee should die while any amounts would still
be payable to the Employee hereunder if the Employee had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the- Employee’s devisee, legatee or other
designee or if there is no such designee, to the Employee’s estate.

 

12.  Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when personally delivered or sent by certified
mail, return receipt requested, postage prepaid, addressed to the respective
addresses set forth on the first page of this Agreement (provided that all
notices to the Bank shall be directed to the attention of the Board of Directors
of the Bank with a copy to the Secretary of the Bank), or to such other address
as either party may have furnished to the other in writing in accordance
herewith.

 

                13.  Amendments. No amendments or additions to this Agreement
shall be binding unless in writing and signed by both parties, except as herein
otherwise provided.

 

14.  Paragraph Headings. The paragraph headings used in this Agreement are
included solely for convenience and shall not affect, or be used in connection
with, the interpretation of this Agreement.

 

15.  Severability. The provisions of this Agreement shall be deemed severable
and the invalidity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.

 

16.  Governing Law. This Agreement shall be governed by the laws of the United
States to the extent applicable and otherwise by the laws of the State of Iowa.

 

17.  Arbitration. Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrator’s award in any court having jurisdiction.

 

7

--------------------------------------------------------------------------------

 

18. Code Section 409A.  It is intended that any income or payments to the
Employee provided under this Agreement will not be subject to the additional tax
and interest under Code Section 409A (the “Section 409A Tax”).  The provisions
of the Agreement will be construed in favor of complying with any applicable
requirements of Code Section 409A as necessary to prevent the imposition of a
Section 409A Tax.  The Bank and the Employee agree to amend the Agreement
(retroactively, if necessary) to comply with Code Section 409A, including
amendment to enable the Employee to prevent the imposition of, or to reduce the
amount of, any Section 409A Tax.  The Bank and the Employee shall reasonably
cooperate to give full effect to this provision and the consent to any amendment
described in the preceding sentence shall not be unreasonably withheld by either
party.  The parties agree that neither party has (a) an obligation to bring any
potential Section 409A Tax to the attention of the other party or (b) any
liability for any Section 409A Tax or any other reporting or withholding
obligation to the other party.

 

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

 

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE ENFORCED BY
THE PARTIES.

 

 

 

METABANK

 

 

 

/s/ E. Wayne Cooley

 

E. Wayne Cooley

 

Chairman, Compensation Committee

 

 

 

EMPLOYEE

 

 

 

/s/ David W Leedom

 

David W. Leedom

 

Senior Vice President and Chief Financial Officer

 

8

--------------------------------------------------------------------------------