Exhibit 10.3

 

MANAGEMENT EMPLOYMENT AGREEMENT

 

THIS MANAGEMENT EMPLOYMENT AGREEMENT (this “Employment Agreement”) is dated as
of June 20, 2011 (the “Effective Date”) by and between NETSPEND CORPORATION, a
Delaware corporation (the “Company”) and Steve Coleman, an individual residing
at the address set forth on the signature page hereto (the “Executive”). 
Certain terms used herein are defined in Section 8(k) hereof.

 

WITNESSETH:

 

WHEREAS, the Company wishes to secure the services of the Executive as Executive
General Counsel of the Company upon the terms and conditions hereinafter set
forth, and the Executive wishes to render such services to the Company upon the
terms and conditions hereinafter set forth; and

 

WHEREAS, in consideration of the employment to be provided hereby and the
amounts to be paid as provided herein, the Executive desires to be employed by
the Company and to agree with the Company as further provided herein.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:

 

1.                                       Employment by the Company.

 

(a)                                  The Company agrees to employ the Executive
in the position of Executive Vice President, General Counsel and Secretary, and
the Executive accepts such employment and agrees to perform such duties as the
Company’s Chief Executive Officer or his or her designee may assign from time to
time. During the Term (as hereinafter defined), the Executive shall report to
the Company’s Chief Executive Officer.

 

(b)                                 The Executive agrees to devote his business
time and energies to the business of the Company and to perform his duties
hereunder faithfully, diligently and to the best of his ability.  The Executive,
if so requested by the Company, also shall serve, without additional
compensation, as an officer, director or manager of NetSpend Holdings, Inc.
(“Holdings”) and/or any Affiliate thereof.  During the Term, the Executive shall
not engage in any business activity which, in the reasonable judgment of the
Board of Directors of Holdings (the “Board”), conflicts with the duties of the
Executive hereunder, whether or not such activity is pursued for gain, profit or
other pecuniary advantage.

 

2.                                       Term of Employment.  Unless otherwise
mutually agreed upon by the parties hereto, the term of the Executive’s
employment pursuant to this Employment Agreement (the “Term”) shall be for the
period commencing on the Effective Date and ending on the first (1st)
anniversary of the Effective Date (the “Initial Term”).  This Employment
Agreement shall automatically renew for additional one (1) year terms beginning
on the expiration of the Initial Term and on each subsequent anniversary thereof
(each, an “Expiration Date”) unless (i) the Executive notifies the Company in
writing of his intention to terminate his employment pursuant to this Employment
Agreement at least thirty (30) calendar days prior to the applicable

 

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Expiration Date or (ii) the Company notifies the Executive in writing of its
intention to terminate his employment pursuant to this Employment Agreement at
least thirty (30) calendar days prior to the applicable Expiration Date. 
Notwithstanding the foregoing, the Executive’s employment may be earlier
terminated as provided in Section 4 hereof.

 

3.                                       Compensation, Benefits and Expenses. 
As full compensation for all services to be rendered by the Executive to the
Company and its Affiliates in all capacities, the Executive shall receive the
following compensation, benefits, and reimbursement of expenses during the Term:

 

(a)                                  Salary.  During the Term, the Executive
shall be entitled to receive an annual salary of $300,000.00 (the “Base
Salary”), payable not less frequently than semimonthly in accordance with the
then-customary payroll practices of the Company.  Executive’s Base Salary shall
be reviewed for adjustment by the Compensation Committee of the Board (the
“Compensation Committee”) at least once annually during the Term, and the
determination of whether to increase the Base Salary shall be in the sole
discretion of the Company.  For the avoidance of doubt, the Company shall not be
obligated to increase the Base Salary during the Term.

 

(b)                                 Bonus.  The Executive shall be eligible to
participate in the bonus program of the Company now or hereafter maintained by
the Company (the “Bonus Program”), subject to the terms and conditions of the
Bonus Program.  The Executive shall be eligible to earn a bonus under the Bonus
Program of up to 50% of the Base Salary if the Company achieves 100% of the
target thereunder (the “Executive Target Bonus Percentage”), with a maximum
bonus of 75% of the Base Salary.  With respect to the calendar year ending on
December 31, 2011, the Executive’s bonus shall be pro-rated based on the number
of full calendar months of such year elapsed in such year during which the
Executive was employed; provided, however, that such bonus shall not be less
than $75,000.   For purposes of clarification, the Board may elect to eliminate
or modify the Bonus Program at any time during the Term.

 

(c)                                  Participation in Executive Benefit Plans. 
The Executive additionally shall be permitted during the Term, if and to the
extent eligible, to participate in employee benefit plans now or hereafter
maintained by the Company and/or Holdings and generally provided to the
Company’s executives, subject to the terms and conditions of such plans. 
Nothing in this Employment Agreement shall preclude the Company from terminating
or amending any such plans or coverage so as to eliminate, reduce or otherwise
change any benefit payable thereunder.

 

(d)                                 Expenses.  Subject to the limitations set
forth in Section 9(b), the Company shall pay or reimburse the Executive for all
reasonable and necessary expenses actually incurred or paid by the Executive
during the Term in the performance of the Executive’s duties under this
Employment Agreement, upon submission and approval of expense statements,
vouchers or other supporting information in accordance with the then-customary
practices of the Company.

 

(e)                                  Vacation.  The Executive shall be entitled
to up to four (4) weeks of personal time off (“PTO”), which shall include,
without limitation, vacation and sick leave.

 

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(f)                                    Relocation. The Executive will reside
primarily in Austin, Texas.  Subject to the limitations set forth in
Section 5(b), the Company shall pay or reimburse the Executive for all
reasonable and necessary expenses actually incurred or paid by the Executive in
connection with the relocation of his principal residence to Austin, Texas
(including, without limitation, temporary housing costs for the twelve-month
period after the Effective Date) up to an aggregate cap of $60,000, as well as
provide tax assistance on the payment of these expenses to the extent eligible
under the Company’s relocation policy.  The Company shall additionally reimburse
the Executive for his travel costs in connection up to four (4) trips to and
from Minneapolis, Minnesota and Austin, Texas during the twelve (12) month
period after the Effective Date.

 

(g)                                 Option Grant. As soon as practicable
following the Effective Date, subject to the approval of the Board, the
Executive shall be awarded an option (the “Option”) pursuant to the Second
Amended and Restated NetSpend Holdings, Inc. 2004 Equity Incentive Plan to
acquire 200,000 shares of Common Stock, par value $0.001 per share (“Common
Stock”), of Holdings pursuant to an option agreement substantially in the form
attached hereto as Exhibit B.

 

(h)                                 Withholding of Taxes.  The Company may
withhold from any compensation or benefits payable under this Employment
Agreement or otherwise all federal, state, city and other taxes as shall be
required pursuant to any law or governmental regulation or ruling and, where
applicable, in accordance with any lawful election made by the Executive.

 

4.                                       Termination.

 

(a)                                  Termination upon Death.  If the Executive
dies during the Term, the Term shall terminate as of the date of his death.

 

(b)                                 Termination upon Disability.  If during the
Term the Executive becomes physically or mentally disabled, whether totally or
partially, so that the Executive is unable to perform his essential job
functions hereunder, with or without reasonable accommodation in accordance with
the Americans With Disabilities Act, as determined by the Board in its good
faith judgment, for: (i) a period of one hundred twenty (120) consecutive days;
or (ii) for shorter periods aggregating one hundred fifty (150) days during any
twelve-month period (a “Disability”), the Company, by written notice to the
Executive, may terminate the Executive’s employment, in which event the Term
shall terminate ten (10) calendar days after the date upon which the Company
shall have given notice to the Executive of its intention to terminate the
Executive’s employment because of the Disability.  Nothing in this
Section 4(b) shall be deemed to extend the Term.

 

(c)                                  Termination by Company for Cause.  If
(i) the Executive commits any felony or other offense involving moral turpitude
or any crime relating to his employment, (ii) the Executive violates this
Employment Agreement or any other written agreement with the Company or any
Affiliate thereof, in any material respect, and fails to cure such violation
within fourteen (14) calendar days after notice of such conduct, (iii) the
Executive commits any act of fraud, theft or personal dishonesty with respect to
the Company or any Affiliate thereof or otherwise detrimental to the Company or
any Affiliate thereof, (iv) the Executive, in the good faith opinion of the
Board, fails to perform his duties hereunder or performs such duties in a
grossly negligent manner or with willful malfeasance, (v) the Executive fails to
observe material

 

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Company policies applicable to executives of the Company, or (vi) the Executive
violates any state or federal law relating to sexual harassment or age, sex or
other prohibited discrimination, (the foregoing clauses (i) through (vi) being
referred to herein collectively as “Cause”), then the Company, at any time by
written notice to the Executive, may terminate the employment of the Executive
for Cause, which notice shall set forth the reasons for the Company’s
terminating the Executive’s employment for Cause, and terminate the Term and
Executive’s employment pursuant to this Employment Agreement effective as of the
date of such notice and, except as provided in Section 5(b) hereof, the
Executive shall have no right to receive any compensation or benefit hereunder
on and after the date of such notice.

 

(d)                                 Termination by Company Without Cause.  The
Company may terminate the Term at any time, without Cause, upon thirty (30)
calendar days’ written notice by the Company to the Executive and, except as
provided in Section 5(a) hereof, the Executive shall have no right to receive
any compensation or benefit hereunder after such termination.  The Executive’s
termination of employment on any Expiration Date following notice by the Company
to the Executive of the Company’s intention to terminate this Employment
Agreement on such Expiration Date, as provided in Section 2 hereof, shall
constitute a termination without Cause hereunder.

 

(e)                                  Termination by Executive for Good Reason. 
The Executive may terminate the Term at any time with Good Reason (as
hereinafter defined), upon thirty (30) calendar days’ written notice by the
Executive to the Company (which notice shall be received by the Company no later
than thirty (30) calendar days following the Executive’s knowledge of the
occurrence of any of the events set forth in clauses (i) or (ii) below) and,
except as provided in Section 5(a) hereof, the Executive shall have no right to
receive any compensation or benefit hereunder after such termination.  For
purposes of this Employment Agreement, “Good Reason” shall mean, without the
Executive’s written consent: (i) the Company violates this Employment Agreement
in any material respect, including, without limitation, the failure of the
Company to pay the Executive the Base Salary or any reduction to the Executive
Target Bonus Percentage (it being understood by the Executive that the Board may
elect not to maintain the Bonus Program at any time during the Term and that,
except for the calendar year ending December 31, 2011, the Company is not
obligated to pay the Executive any bonus hereunder); (ii) the Company makes a
material reduction in the Executive’s duties as General Counsel as provided in
Section 1(a) hereof, other than by reason of the expiration of the Term or a
termination of the Term pursuant to Sections 4(a), 4(b), 4(c) or 4(d) hereof;
(iii) the Company requires the Executive to permanently relocate to a location
outside of the Austin, Texas metropolitan area without the Executive’s consent;
or (iv) the sale or other transfer of all or substantially all of the assets of
the Company to a corporation or other entity in a transaction in which such
corporation or other entity does not assume all of the obligations of the
Company hereunder.  Notwithstanding anything to the contrary contained herein,
Good Reason shall not be deemed to exist unless the Company fails to cure the
event giving rise to Good Reason within thirty (30) calendar days after receipt
of written notice thereof given by the Executive to the Company, which notice
shall specifically set forth the nature of such event and the corrective action
reasonably sought by the Executive.

 

(f)                                    Termination by Executive Without Good
Reason.  The Executive may terminate the Term at any time, without Good Reason,
upon thirty (30) calendar days’ written

 

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notice by the Executive to the Company and, except as provided in
Section 5(b) hereof, the Executive shall have no right to receive any
compensation or benefit after such termination.

 

5.                                       Severance Payments.

 

(a)                                  Severance Payments for Termination by the
Company Without Cause or Termination by Executive With Good Reason.  If during
the Term the Company terminates the Term pursuant to Section 4(d) hereof or the
Executive terminates the Term pursuant to Section 4(e) hereof, all compensation
payable to the Executive under Section 3 hereof shall cease as of the date of
termination of the Term specified in the Company’s or Executive’s notice, as the
case may be (the “Termination Date”), and:

 

(i)                                     the Company shall pay to the Executive
the following sums:  (A): all accrued and unpaid Base Salary through the
Termination Date, (B) any unpaid or unreimbursed expenses incurred by the
Executive through the Termination Date in accordance with Section 3(d) hereof,
and (C) to the extent permitted under the applicable plans, programs or
policies, if any, all previously earned, accrued, and unpaid benefits from the
Company, Holdings and their respective employee benefit plans, including any
such benefits which have become vested prior to the Termination Date under the
retirement plans, and any other such benefits under disability, and life
insurance plans, policies, and programs applicable to the Company which
benefits, if any, shall be payable as provided therein (collectively, the
“Accrued Obligations”); and

 

(ii)                                  the Company shall pay to the Executive the
following sums, subject to the final sentence of this Section 5(a)(ii) and
Sections 5(c), 6 and 9 hereof, (A) an amount equal to the Base Salary, as in
effect on the Termination Date, payable over the twelve (12) month period
following the Termination Date (the “Severance Period”), (B) the pro rata
portion of any bonus at target that would have been received by the Executive
for the then-current fiscal year (based upon the number of full calendar months
elapsed in such fiscal year prior to the Termination Date during which the
Executive was employed, but additionally including the month of termination),
payable when bonuses generally are paid to executives of the Company pursuant to
the terms of the Bonus Program, (C) any accrued but unpaid bonus in respect of
any fiscal year ending prior to the fiscal year in which the Termination Date
falls (which shall be paid notwithstanding any requirement that the Executive
otherwise be employed by the Company on the date of the payment of such bonus),
payable when bonuses generally are paid to executives of the Company pursuant to
the terms of the Bonus Program, and (D) if the Executive elects to continue his
participation and/or that of his eligible dependents in the Company’s group
health and/or dental plans for a period of time under the Consolidated Omnibus
Reconciliation Act of 1985 “COBRA”) then, through the earliest of (1) the
expiration of the Severance Period, (2) the period during which the Executive is
entitled to continuation coverage under COBRA and (3) the date the Executive
becomes eligible to receive comparable medical coverage under a group health
plan (within the meaning of Section 5001(b)(1) of the Internal Revenue Code of
1986, as amended (the “Code”) under new employment (the earliest of such
periods, the “COBRA Continuation Period”), the Company will contribute to the
premium cost of the Executive’s coverage and that of his eligible dependents
under those plans at the rate it contributed to the Executive’s premium cost of
coverage on the Termination Date.  To be eligible for these Company premium
contributions, however, the Executive must pay the same

 

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portion of the premium cost during the COBRA Continuation Period as is paid by
the Company’s active employees.  The Executive is required to notify the Company
immediately if he begins new employment during the COBRA Continuation Period and
to repay promptly the cost of any benefit contributions made by the Company for
coverage after Executive becomes eligible to participate in the group policy of
such new employer.  After the Company’s contributions end, the Executive may
continue benefits coverage for the remainder of the COBRA period, if any, by
paying the full premium cost of such benefits.  If, prior to the end of the
Severance Period, the Executive violates Section 6 hereof, then the Company
shall have no obligation to make any of the payments that remain payable by the
Company under this Section 5(a)(ii) on or after the date of such violation.

 

(b)                                 Payments upon Termination by Company for
Cause, Termination by Executive Without Good Reason, Death or Disability;
Repayment of Relocation Reimbursement Amount.  If the Term is terminated by the
Company pursuant to Sections 4(a), 4(b) or 4(c) hereof or if the Executive
terminates the Term pursuant to Section 4(f) hereof, the Executive shall receive
only the Accrued Obligations.  If the Term is terminated by the Company prior to
the expiration of the Initial Term pursuant to Sections 4(a), 4(b) or
4(c) hereof or if the Executive terminates the Term prior to the expiration of
the Initial Term pursuant to Section 4(f) hereof, the Executive shall promptly
return to the Company a pro-rated portion of the Executive’s expenses that were
reimbursed under Section 3(f) (including the amount of any tax assistance
provided by the Company in connection therewith) (collectively, the “Relocation
Reimbursement Amount”) equal to the product of (i) the Relocation Reimbursement
Amount and (ii) a fraction, the numerator of which shall be the number of
partial or full months remaining in the Initial Term as of the effective date of
such termination and the denominator of which shall be twelve (12) (the
“Relocation Repayment Amount”).  The Company shall be entitled to offset the
Relocation Repayment Amount, as well as any and all costs and expenses incurred
by the Company in connection with the enforcement of this
Section 5(b) (including attorneys’ fees and court costs), against any amounts
owed to the Executive hereunder.

 

(b)                                 Eligibility.  For the Executive (or his
estate) to be eligible to receive the severance payments and benefits provided
for in Section 5(a)(ii) and, if applicable, (iii), the Executive (or his estate
or, in the event of the Executive’s legal incapacity, his legal representative)
will be obligated to execute and deliver to the Company (and not revoke) a
release (to be provided by the Company) substantially in the form attached
hereto as Exhibit A (the “Form of Release”); provided, however, that the Company
shall have the right to modify the form of Release as necessary to comply with
applicable law and/or the particular circumstances of termination.  The Company
shall deliver the Release to the Executive within five (5) Business Days
following the Termination Date.

 

(c)                                  No Mitigation.  The Executive shall not be
required to mitigate the amount of any severance payments or benefits provided
for in Section 5(a)(ii) and (iii) by seeking other employment or otherwise and
the amount of any such severance payments and benefits shall not be reduced by
any compensation earned as a result of the Executive’s other employment or
otherwise.

 

6.                                       Certain Covenants of the Executive.  To
induce the Company to enter into this Employment Agreement, the Executive
covenants and agrees that:

 

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(a)                                  Confidential Information.  During the
Restricted Period (as hereinafter defined) and thereafter, the Executive shall
not, directly or indirectly, disclose to any Person who is not authorized by the
Company to receive such information, or use or appropriate for his own benefit
or for the benefit of any Person other than the Company, (i) any documents or
other papers relating to the Company, including, without limitation, any such
information, documents or papers relating to the Company’s Current Lines of
Business (as hereinafter defined) or the customers, distributors, reload agents,
marketers, vendors, suppliers or issuing banks of the Company (whether such
customers, distributors, reload agents, marketers, vendors or issuing banks were
customers, distributors, reload agents, marketers, vendors, suppliers or issuing
banks of the Company prior to or after the date hereof) including, without
limitation, files, business relationships and accounts, royalty relationships,
licensing relationships, pricing policies, customer lists, distributor lists,
computer software and hardware or (ii) any other materials relating to the
Company or any trade secrets or confidential information, including, without
limitation, any business or operational methods, know-how, marketing plans or
strategies, product development techniques or plans, product concepts and
designs, business acquisition plans, financial or other performance data,
personnel and other policies of the Company, whether generated by the Executive
or by any other Person and/or whether developed prior to the date hereof
(collectively, “Confidential Information”); provided, however, that Confidential
Information shall not include any information readily ascertainable from public
or published information, or trade sources (other than as a direct or indirect
result of unauthorized disclosure by the Executive).

 

(b)                                 Receipt of Confidential Information.  The
Executive acknowledges that: (i) the Company is presently engaged in the
marketing, processing and distributing of prepaid debit cards, stored value
cards and other similar products from which the Company derives substantial
revenues (collectively, the “Company’s Current Lines of Business”);
(ii) contemporaneously with the Executive’s execution of this Employment
Agreement, the Company is providing the Executive with Confidential Information,
including, without limitation, information relating to the Company’s information
technology systems, and related technologies, and information previously or
hereafter provided relating to the Company’s legal affairs and business
relationships, and the Company will continue to provide the Executive with
Confidential Information in the future while the Executive is employed with the
Company; (iii) the Executive has received the Confidential Information; (iv) in
the Executive’s position as General Counsel, the Executive will need the
Confidential Information to properly carry out the Executive’s duties hereunder;
(v) the Company’s provision of Confidential Information to the Executive, in
exchange for the Executive’s agreement and covenant to maintain the
confidentiality of the Confidential Information, as set forth in
Section 6(a) hereof gives rise to the Company’s interest in restraining the
Executive from competing against the Company as set forth in Sections 6(c),
6(e), 6(f) and 6(g) hereof; (vi) the Executive’s agreement and covenant not to
compete with the Company as set forth in Sections 6(c), 6(e), 6(f), and
6(g) hereof is designed to enforce the Executive’s agreement and covenant to
maintain the confidentiality of the Confidential Information as set forth in
Section 6(a) hereof; (vii) the agreements and covenants contained in Sections
6(a) through 6(g) hereof (the “Restrictive Covenants”) are essential to protect
the goodwill and profitability of the Company’s Current Lines of Business; and
(viii) the agreements and covenants contained in Sections 6(a) through
6(g) hereof will not involve a substantial hardship upon the Executive’s future
livelihood.  Accordingly, the Executive

 

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covenants and agrees for the benefit of the Company, with respect to himself, to
comply with the Restrictive Covenants.

 

(c)                                  Non-Compete.  At all times during the Term
and for a period of one (1) year thereafter (the entirety of such period being
the “Restricted Period”), the Executive shall not, in the United States of
America or any other country in which the Company then engages in business,
directly or indirectly, accept employment with, provide services to or have any
interest (as an owner, sole proprietor, shareholder, partner, director, officer,
employee, consultant, agent or otherwise) in any financial institution, program
manager, third party processor, prepaid card provider, member service provider,
card association or independent sales organization or other similar business
that directly competes with the Company’s Current Lines of Business; provided,
however, that the Executive may hold, directly or indirectly, solely as an
investment, not more than one percent (1%) of the outstanding securities of any
Person which is listed on any national securities exchange or regularly traded
in the over-the-counter market.

 

(d)                                 Property of the Company.  At no time shall
the Executive remove or cause to be removed from the premises of the Company any
memorandum, note, list, record, file, document or other paper, equipment or any
like item relating to the Company, or its customers, distributors, reload
agents, marketers, vendors, suppliers or issuing banks (including copies,
extracts and summaries thereof) except as specifically permitted hereunder or in
furtherance of the performance of his duties on behalf of the Company.  Upon
termination of employment the Executive must return Confidential Information to
the Company in accordance with the provisions of Section 8(b) hereof.  All
memoranda, notes, lists, records, files, documents and other papers and other
like items (and all copies, extracts and summaries thereof) made or compiled by
the Executive or made available to the Executive concerning the Company (whether
or not prior to the date hereof), are and shall be the property of the Company
(or its customers, distribution partners, or issuing banks) and shall be
delivered by the Executive to the Company, and all electronic copies thereof
shall be deleted by the Executive from any personal computer or other similar
device belonging to the Executive promptly upon the termination of the
Executive’s employment with the Company.

 

(e)                                  Employees of the Company.  During the
Restricted Period, the Executive shall not hire or, directly or indirectly,
initiate communications with, solicit, persuade, entice, induce or encourage any
individual who is then or who has been within the preceding 12-month period, an
employee or consultant of the Company to terminate employment with the Company
or to become employed by, or enter into a contract or any other arrangement
with, any other Person, and the Executive shall not approach any such employee
or provider for any such purpose or authorize or knowingly approve the taking of
any such actions by any other Person.

 

(f)                                    Solicitation of Customers and/or
Suppliers.  During the Restricted Period, the Executive shall not, directly or
indirectly, initiate communications with, solicit, persuade, entice, induce, or
encourage (or assist any other Person to do any of the foregoing), for the
Executive’s benefit or for the benefit of any Person other than the Company, any
Person who is then or has been within the preceding 12-month period a customer,
distributor, reload agent marketer, vendor, supplier, issuing bank or account of
the Company, or any potential customer, distributor, reload agent, marketer,
vendor, supplier, issuing bank or account whose identity the

 

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Executive learned during the course of his relationship with the Company
(whether or not prior to the date hereof), to terminate its contractual or other
relationship with the Company.

 

(g)                                 Servicing of Customers.  During the
Restricted Period, the Executive shall not furnish any services similar to those
furnished while he was employed by the Company (whether prior to or after the
date hereof) to any customer, distributor, reload agent, marketer, vendor,
supplier, issuing bank or account of the Company.

 

(h)                                 Future Employer.  The Executive shall inform
any future employer of the Restrictive Covenants and provide such employer with
a copy thereof, prior to the commencement of that employment.

 

(i)                                     Corporate Opportunities.  During the
Term, the Executive promptly shall disclose to the Company any business idea or
opportunity which falls within the scope of the Company’s Current Lines of
Business, which business idea or opportunity shall become the sole property of
the Company if the Company elects to pursue such idea or opportunity as part of
the Company’s Current Lines of Business or as a business project. All programs,
product concepts, materials, results or ideas (“Inventions”) conceived, made,
developed, reduced to practice, or worked on, in whole or in part, solely by the
Executive or jointly with others prior to the date of this Employment Agreement,
during the Term, relating to the business of the Company are and shall be deemed
to be “work for hire” and, at the election of the Company, shall be the sole
property of the Company, without any further consideration paid to the
Executive.  The Executive shall disclose promptly in writing to any duly
appointed officer of the Company, any Invention, whether or not patentable or
copyrightable or entitled to legal protection as a trade secret or otherwise. 
Upon the request of the Company, the Executive agrees to disclaim promptly in
writing all such rights and give all reasonable assistance and execute such
documents to enable the Company to prepare and prosecute any application for
patent or copyright registration.  The Company shall have the sole right as it
may deem appropriate to determine the treatment of information related to any
Inventions, including but not limited to the right to keep the same as a trade
secret, to use, disclose, and publish same without prior patent application or
copyright registration and to file the same in its own name or to follow any
other procedure which the Company may deem appropriate.

 

(j)                                     The Executive agrees that during and
after the Term he will not, either directly or indirectly through any agent or
surrogate, and whether orally or in writing, Disparage (as defined herein) the
Company or its Affiliates, or the members, directors, managers, officers, or
employees of the Company or its Affiliates.  For purposes of this Agreement, to
“Disparage” includes, but is not limited to, impugning the character, honesty,
integrity, morality, business acumen, abilities, qualities, or reliability of
any person or entity.

 

(k)                                  Rights and Remedies Upon Breach.  If the
Executive breaches, or threatens to commit a breach of, any of the Restrictive
Covenants, the Company shall have the following rights and remedies, each of
which rights and remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Company under law
or in equity:

 

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(i)                                     Specific Performance.  The right and
remedy to seek from any court of competent jurisdiction in Travis County, Texas
specific performance of the Restrictive Covenants or injunctive relief against
any act which would violate any of the Restrictive Covenants, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and its Affiliates and that money damages will
not provide an adequate remedy.  Any action or proceeding arising out of this
Employment Agreement shall be maintained in Travis County, Texas.  In the event
an action is filed for specific performance or injunctive relief under this
Section 6(i)(i), the parties further agree to submit to jurisdiction and venue
in Travis County, Texas.

 

(ii)                                  Accounting.  The right and remedy to
require the Executive to account for and pay over to the Company and its
Affiliates all compensation, profits, monies, accruals, increments or other
benefits derived or received by the Executive as the result of any transactions
constituting a breach of any of the Restrictive Covenants.

 

(l)                                     Severability of Covenants.  If any of
the Restrictive Covenants, or any part thereof, is held by a court of competent
jurisdiction or any Governmental Authority to be invalid, void, unenforceable or
against public policy for any reason, the remainder of the Restrictive Covenants
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and such court, government, agency or authority shall be
empowered to substitute, to the extent enforceable, provisions similar to the
provisions governing the term, breadth or geographic scope of the Restrictive
Covenants so as to provide to the Company and Affiliates thereof, to the fullest
extent permitted by applicable law, the benefits intended by such provisions.

 

(m)                               Enforceability in Jurisdictions.  The Company
and the Executive intend to and hereby confer jurisdiction to enforce the
Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. If the courts of any one or
more of such jurisdictions hold the Restrictive Covenants wholly invalid or
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the Company and the Executive that such determination not bar or in
any way affect the right of the Company, or any of their Affiliates, to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.

 

(n)                                 Reasonableness of Restrictions.  The
Executive has carefully read and considered the provisions of this Section 6,
and having done so, agrees that the restrictions set forth herein, including,
but not limited to, the time period of restriction, the geographic areas of
restriction, and the scope of the restriction are fair and reasonable, are
supported by sufficient and valid consideration, and these restrictions do not
impose any greater restraint than is necessary to protect the goodwill and other
legitimate business interests of the Company and its Affiliates, officers,
directors, stockholders and other employees.

 

7.                                       Arbitration.  Any and all claims or
controversies between the Company and the Executive relating to the Executive’s
employment with the Company, or the termination thereof, including claims for
breach of contract, personal injury, tort, employment discrimination

 

10

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(including unlawful harassment), and any violation of any state or federal ,law
shall be resolved by final binding arbitration in accordance with the rules of
the American Arbitration Association.  Judgment upon the award rendered by the
arbitrator or arbitrators may be entered in any court having jurisdiction
thereof.  The Executive understands that this agreement to arbitrate covers any
and all claims that the Executive might bring under Title VII, the Americans
With Disabilities Act or the Age Discrimination in Employment Act.  The
arbitrators shall be selected from a panel provided by the American Arbitration
Association. Any such arbitration shall be conducted in Austin, Texas or such
other place as may be mutually agreed upon by the parties.  Each party shall
select one (1) individual to act as arbitrator, and the two (2) arbitrators so
selected shall select a third arbitrator.  Each party shall bear its own costs,
expenses and attorneys’ fees.  The Executive shall pay a portion of the
arbitrators’ expenses and administrative fees of arbitration equal to the
standard filing fee in the U.S. Federal District Court, Western District in
Austin, Texas.  The Company shall pay the remainder of the arbitrators’ expenses
and administrative fees of arbitration. If any party prevails on a statutory
claim that affords the prevailing party attorneys’ fees, then the arbitrator may
award reasonable attorneys’ fees and costs to the prevailing party.
Notwithstanding anything to the contrary contained in this Section 7, if the
Executive breaches, or threatens to commit a breach of, any of the Restrictive
Covenants, the Company shall have the right and remedy to seek from any court of
competent jurisdiction specific performance of the Restrictive Covenants or
injunctive relief against any act which would violate any of the Restrictive
Covenants, it being acknowledged and agreed that any such breach or threatened
breach will cause irreparable injury to the Company and its Affiliates.

 

8.                                       Other Provisions.

 

(a)                                  Notices.  Except as may be otherwise
provided herein, all notices, requests, waivers and other communications under
this Employment Agreement shall be in writing and shall be conclusively deemed
delivered and effective (i) when hand delivered to the other party, (ii) five
(5) Business Days after being sent by registered or certified mail, return
receipt requested, postage prepaid, (iii) one (1) Business Day after being sent
via a reputable nationwide overnight courier service guaranteeing next Business
Day delivery, or (iv) in the case of a facsimile transmission, upon transmission
thereof by the sender and the issuance by the transmitting machine of a
confirmation slip confirming that the number of pages constituting the notice
have been transmitted without error; provided, however, that the sender shall
contemporaneously mail a copy of the notice to the addressee by the method
provided for in (i) or (ii) above, but such mailing shall in no way alter the
time at which the notice sent by facsimile transmission is deemed received, in
each case to the intended recipient as set forth below:

 

11

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(i)                                     if to the Company, to:

 

NetSpend Corporation

Austin Centre

701 Brazos Street, 12th Floor

Austin, TX 78701

Telephone:

(512) 532-8308

Fax:

(512) 532-8235

Attn: Chief Executive Officer

 

and

 

(ii)                                  if to the Executive, to him at the address
set forth on the signature page hereto.

 

Any party may change the address to which notices, requests, consents or other
communications hereunder are to be delivered by giving the other parties notice
in the manner set forth in this Section 8.

 

(b)                                 Return of Confidential Information and the
Company’s Property. The Executive agrees that all documents, records, electronic
data, and tangible items and materials containing or embodying any Confidential
Information (whether prepared by the Executive or by others), including all
copies thereof, that are in the Executive’s possession, custody, or control are
the property of the Company and shall as soon as is practicable be returned to
the Company and that any electronic copies thereof shall be deleted by the
Executive from any personal computer or other similar device belonging to the
Executive upon termination of the Executive’s employment with the Company,
whether voluntary or otherwise, or at any time upon the Company’s request.  In
addition, upon termination of employment for any reason, the Executive shall
return all property of the Company for which the Executive is responsible
including but not limited to pagers, security access keys, and laptop computers,
or that is in the Executive’s possession, custody, or control.

 

(c)                                  Entire Agreement.  This Employment
Agreement contains the entire agreement between the parties with respect to the
subject matter hereof and supersedes all prior contracts and other agreements,
written or oral, with respect thereto, including, without limitation, the letter
from Paige Ellis to the Executive dated May 13, 2011 setting forth a summary of
a proposed offer.  Neither the termination of the Executive’s employment
hereunder nor the expiration or termination of the Term or of this Employment
Agreement shall affect the enforceability of Section 6 hereof.

 

(d)                                 Waivers and Amendments.  This Employment
Agreement may be amended, modified, superseded, canceled, renewed or extended,
and the terms and conditions hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance.  No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any waiver on
the part of any party of any right, power or privilege hereunder, nor any single
or partial exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege hereunder.

 

12

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(e)                                  Governing Law.  This Employment Agreement
shall be governed by, and construed in accordance with and subject to, the laws
of the State of Texas applicable to agreements made and to be performed entirely
within such State.  Venue for enforcement of this Employment Agreement shall be
in Travis County, Texas.

 

(f)                                    Payment of Severance.  In addition to the
provisions of Section 6(c) hereof, and not in any way in limitation thereof, or
in limitation of any right or remedy otherwise available to the Company, if the
Executive violates any provision of Section 6 hereof, any severance payments
and/or benefit then or thereafter due from the Company to the Executive shall be
terminated forthwith and the Company’s obligation to pay and the Executive’s
right to receive such severance payments and/or benefit shall terminate and be
of no further force or effect, in each case without limiting or affecting the
Executive’s obligations under Section 6 hereof or the Company’s other rights and
remedies available at law or equity.

 

(g)                                 Binding Effect; Benefit.  This Employment
Agreement shall inure to the benefit of and be binding upon the parties hereto
and any successors and assigns. Nothing in this Employment Agreement, expressed
or implied, is intended to confer on any person other than the parties hereto or
such successors and assigns, any rights, remedies, obligations or liabilities
under or by reason of this Employment Agreement other than the right to the
Executive’s estate under Section 5(c) hereof.

 

(h)                                 Assignment.  This Employment Agreement, and
the Executive’s rights and obligations hereunder, may not be assigned by the
Executive; provided, however, that it shall be enforceable by the Executive’s
legal representatives and other successors in interest. The Company may assign
this Employment Agreement and its rights, together with its obligations,
hereunder in connection with any sale, transfer or other disposition of all or
substantially all of its assets or business, whether by merger, consolidation or
otherwise.

 

(i)                                     Counterparts.  This Employment Agreement
may be executed in two or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.

 

(j)                                     Construction.  The headings in this
Employment Agreement are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Employment Agreement.  Whenever
required by the context any gender shall include any other gender, the singular
shall include the plural, and the plural shall include the singular.

 

(k)                                  Certain Definitions.

 

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly Controls, is Controlled by, or is under common Control with such
Person.

 

“Business Day” means a day other than Saturday, Sunday or a day on which banks
in Austin, Texas are not required to be open or are authorized to remain closed.

 

“Control” means the possession, direct or indirect, of the power to vote fifty
percent (50%) or more of the securities that have ordinary voting power for the
election of

 

13

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directors of any Person, or to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting securities or
by contract or otherwise.

 

“Governmental Authority” means any United States federal, state or local or
foreign government or governmental, regulatory or administrative authority,
department, agency, commission, entity or other political subdivision thereof or
any court, tribunal, or judicial or arbitral body.

 

“Person” means any natural person, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization or Governmental Authority.

 

9.                                       Compliance With Code Section 409A. 
Notwithstanding anything herein to the contrary, this Employment Agreement is
intended to be interpreted and operated so that the payments and benefits set
forth herein either shall either be exempt from the requirements of Code
Section 409A or shall comply with the requirements of such provision; provided,
however, that in no event shall the Company be liable to the Executive for or
with respect to any taxes, penalties or interest which may be imposed upon the
Executive pursuant to Section 409A.  The Executive hereby acknowledges and
agrees that no representations have been made to the Executive relating to the
tax treatment of any payment pursuant to this Agreement under Code Section 409A
and the corresponding provisions of any applicable state income tax laws. 
Specifically, the parties agree as follows:

 

(a)                                  Each severance payment shall be treated as
a right to a series of separate payments as set forth in Treasury Regulation
1.409A-2(b)(2)(iii) and no severance payment shall be paid later than the last
day of the second taxable year of the Executive following the taxable year of
the Executive’s “separation from service” as defined in Treasury Regulation
1.409A-1(h) (“Separation From Service”).  To the extent that any severance
payment constitutes a “deferral of compensation” subject to Code Section 409A (a
“409A Payment”), then, (A) in the event that a termination of Executive’s
employment does not constitute a Separation From Service, such 409A Payment
shall begin at such time as the Executive has otherwise experienced such a
Separation from Service, and the date of such Separation from Service shall be
deemed to be his Termination Date for purposes of Section 5 hereof, and (B) if
on the date of the Executive’s Separation from Service, the Executive is a
“specified employee,” as such term is defined in Treas. Reg.
Section 1.409A-1(i), as determined from time to time by the Company, then such
409A Payment shall not be made to the Executive earlier than the earlier of
(i) six (6) months after the Executive’s Separation from Service; or (ii) the
date of his death.  The 409A Payments under this Agreement that would otherwise
be made during such period shall be aggregated and paid in one lump sum, without
interest, on the first Business Day following the end of the six (6) month
period or following the date of the Executive’s death, whichever is earlier, and
the balance of the 409A Payments, if any, shall be paid in accordance with the
applicable payment schedule provided in Section 5.

 

(b)                                 With respect to reimbursements (whether such
reimbursements are for business expenses or, to the extent permitted under the
Company’s policies, other expenses) and/or in-kind benefits, in each case, that
constitute deferred compensation subject to Code Section 409A (as determined by
the Company in its sole discretion), each of the following shall

 

14

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

 

apply: (1) no reimbursement of expenses incurred by Executive during any taxable
year shall be made after the last day of the following taxable year of
Executive, (2) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during a taxable year of Executive shall not affect the
expenses eligible for reimbursement, or in-kind benefits to be provided, to
Executive in any other taxable year, and (3) the right to reimbursement of such
expenses or in-kind benefits shall not be subject to liquidation or exchange for
another benefit.

 

10.                                 WAIVER OF JURY TRIAL.  NO PARTY TO THIS
EMPLOYMENT AGREEMENT OR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE
OF A PARTY SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR
ANY OTHER LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS EMPLOYMENT
AGREEMENT OR ANY OF THE OTHER AGREEMENTS OR THE DEALINGS OR THE RELATIONSHIP
BETWEEN THE PARTIES. NO PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH
A JURY TRIAL HAS BEEN WAIVED, WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT
OR HAS NOT BEEN WAIVED.  THE PROVISIONS OF THIS SECTION HAVE BEEN FULLY
DISCUSSED BY THE PARTIES HERETO, AND THESE PROVISIONS SHALL BE SUBJECT TO NO
EXCEPTIONS. NEITHER PARTY HAS IN ANY WAY AGREED WITH OR REPRESENTED TO THE OTHER
PARTY THAT THE PROVISIONS OF THIS SECTION WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.

 

IN WITNESS WHEREOF, the parties have executed this Employment Agreement as of
the date first above written.

 

 

 

NETSPEND CORPORATION

 

 

 

 

 

By:

/s/ Paige Ellis

 

 

 

 

 

/s/ Steve Coleman

 

Steve Coleman

 

 

 

Address:

 

 

 

15

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Exhibit A

 

Form of Release

 

This Release Agreement is by and between NetSpend Corporation, a Delaware
corporation (the “Company”), and Steve Coleman (“Coleman”).

 

1.                                       The parties hereby acknowledge and
agree to the severance terms set forth in Section 5(a)(ii) and, if applicable,
(iii) of the Employment Agreement, dated as of June 20, 2011  (the “Employment
Agreement”), between the Company and Coleman.  Coleman further acknowledges and
agrees that he is not entitled to any severance payment or benefits, pursuant to
the Employment Agreement or otherwise, unless he signs this Release and returns
it to the Company, as required by Section 5(c) of the Employment Agreement.

 

2.                                       For and in consideration of the
severance payments and benefits the Company will pay to Coleman pursuant to
clauses (ii) and, if applicable, (iii) of Section 5(a) of the Employment
Agreement, Coleman, on his own behalf and on behalf of his successors and
assigns (collectively referred to as “Releasor”), hereby releases and forever
discharges the Company and NetSpend Holdings, Inc., and their respective
predecessors, successors, corporate affiliates, stockholders, officers,
directors, agents, representatives, employees, consultants and advisors
(collectively referred to as “Releasee”), from any and all claims,
counterclaims, demands, debts, actions, causes of action, suits, expenses,
costs, attorneys’ fees, damages, indemnities, obligations and/or liabilities of
any nature whatsoever, whether known or unknown, which Releasor ever had, now
has or hereafter can, shall or may have against Releasee, for, upon or by reason
of any matter, cause or thing whatsoever from the beginning of the world to the
day of the date of this Release, including, but not limited to, the following:
(i) all such claims and demands directly or indirectly arising out of or in any
way connected with Coleman’s employment with the Company or the termination of
that employment; (ii) all such claims and demands related to salary, bonuses,
commissions, stock, stock options, or any other ownership interests in the
Company, vacation pay, fringe benefits, expense reimbursements, severance pay
and/or any other form of compensation; (iii) any claims arising under any
federal, state or local law, statute or ordinance, including, without
limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination in
Employment Act, the Older Workers Benefit Protection Act, the Americans With
Disabilities Act, the Civil Rights Act of 1991, the Fair Labor Standards Act,
the Equal Pay Act, the Employee Retirement Income Security Act of 1974, the
Family and Medical Leave Act of 1993, the Consolidated Omnibus Budget
Reconciliation Act of 1985, the Texas Commission on Human Rights Act and section
8307c of the Texas Workers Compensation Act; and (iv) any claims for breach of
contract, express or implied, including any claim for breach of any implied
covenant of good faith and fair dealing, wrongful discharge, discrimination,
harassment, fraud, defamation, intentional tort, emotional distress and
negligence.

 

3.                                       Notwithstanding anything to the
contrary contained in this Release, Releasor does not release Releasee from any
(i) claims against Releasee that may arise after this Release has become
effective; (ii) rights to indemnification conferred upon Releasor as an officer,
director or employee of the Company or any Affiliates pursuant to the
certificate or articles of incorporation or bylaws of such entity, in accordance
with applicable law; (iii) rights under [list stock option agreements], or
(iv) rights of Releasor under Section 5(a) of the Employment Agreement.

 

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

 

4.                                       Coleman acknowledges that he has been
advised to consult independent legal counsel before signing this Release, and
hereby represents that he has executed this Release after having the opportunity
to consult independent counsel and after considering the terms of this Release
for at least twenty one (21) days (although Coleman may choose to voluntarily
execute this Release earlier). Coleman further represents and warrants that he
has read this Release carefully, that he has discussed it or has had reasonable
opportunity to discuss it with his counsel, that he fully understands its terms,
and that he is signing it voluntarily and of his own free will.

 

5.                                       Coleman acknowledges that the
consideration for this Release is consideration to which he would not otherwise
be entitled and is in lieu of any rights or claims that he may have with respect
to any severance benefits or other remuneration from the Company.

 

6.                                       This Release shall not become effective
until the eighth day following the date on which Coleman has executed it,
provided that he has not revoked it.  At any time prior to that effective date,
Coleman may revoke this Release by providing notice of revocation to the Board
of Directors of the Company.  If Coleman exercises his right to revoke this
Release, any obligation of the Company to pay him severance under the Employment
Agreement shall terminate.

 

7.                                       This Release may not be amended or
modified except by a writing signed by the Company and Coleman. This Release
shall be governed by and construed in accordance with the laws of the State of
Texas without regard to principles of conflicts of laws thereunder.

 

[Signature Page Follows]

 

2

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Steve Coleman

 

Dated:                                                             This
               day of                                                   , 200  .

 

WITNESSES:

 

 

 

 

 

 

 

Name

 

 

 

 

 

 

 

 

Name

 

ACKNOWLEDGEMENT

 

STATE OF

)

 

 

)

SS:

COUNTY OF

)

 

 

On this               day of                                   , 200  , before
me, the undersigned officer, personally appeared Steve Coleman, known to me (or
satisfactorily proven) to be the person whose name is subscribed to the within
instrument and acknowledged that he has executed the same for the purposes
therein contained and acknowledged the same to be his free act and deed.

 

In witness whereof, I have hereunto set my hand.

 

 

 

 

 

 

Notary Public

 

 

 

 

 

 

 

My Commission Expires:

 

3

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Exhibit B

 

Form of Option Agreement

 

[ATTACHED]

 

4

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[Double Trigger — Executive Form]

 

Amended and Restated NetSpend Holdings, Inc. 2004 Equity Incentive Plan
Notice of Grant

 

Name:

Address:

 

You have been granted an option to purchase Common Stock of the Company, subject
to the terms and conditions of the Stock Option Agreement attached hereto (the
“Stock Option Agreement”) and the Amended and Restated NetSpend Holdings, Inc.
2004 Equity Incentive Plan (the “Plan”), as follows:

 

Date of Grant:

 

 

 

 

 

Vesting Measurement Date:

 

 

 

 

 

Option Price per Share:

 

$

 

 

 

Total Number of Shares Granted:

 

 

 

 

 

Total Option Price:

 

$

 

 

 

Type of Option:

 

o Incentive Stock Option* o Nonqualified Stock Option

 

 

 

Expiration Date:

 

 

 

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

*Subject to Section 3(b) of the Stock Option Agreement

 

Capitalized terms not defined herein shall have the meanings ascribed to such
terms in the Plan or the Stock Option Agreement.

 

Vesting Schedule:

 

This Option shall become vested and may be exercised, in whole or in part, in
four equal annual installments on each of the first four anniversaries of the
Vesting Measurement Date, subject to (1) your continued employment with the
Company or an Affiliate through the applicable vesting date and
(2) Section 10(b) of the Plan.  Section 10(b) of the Plan generally provides
that in the event of a Change in Control twenty-five percent (25%) of the Option
will immediately vest, subject to your continued employment with the Company or
an Affiliate through the date of the Change in Control.  Notwithstanding the
foregoing or any provision of the Plan or the Stock Option Agreement to the
contrary, in the event of a Change in Control, if in connection therewith any
unvested portion of the Option is not being assumed by, or substituted for new
options (“New Options”) covering the stock of, the surviving, successor or
purchasing corporation, or a parent or subsidiary thereof, 100% of such unvested
portion of the Option shall be vested upon the consummation of such Change in
Control.  Further, in the event that (a) a Change in Control occurs and
(b) during the twelve-month period following such Change in Control, your
employment is terminated by the Company or an Affiliate for any reason other
than for (i) Cause or (ii) Disability, or you terminate your employment during
this twelve-month period for Good Reason (as defined in the employment agreement
between you and the Company or an Affiliate thereof), then 100% of the Option or
New Options, as applicable, shall be vested immediately.  For purposes of
clarification, in the event of a termination of your employment by the

 

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Company or an Affiliate for Cause or Disability, by you for any reason other
than Good Reason, or in the event of your death, the Option or New Options, as
applicable, shall not be vested pursuant to the preceding sentence.

 

Termination Period:

 

This Option (to the extent vested) may be exercised for the period set forth in
Section 4 of the Stock Option Agreement which generally provides the following: 
(1)  the Option may be exercised for 90 days after any termination of
employment, or for such longer period as may be applicable upon death or
Disability, but in no event later than the Expiration Date (as provided above)
and (2) the Option may not be exercised (A) after the termination of your
employment by the Company or an Affiliate for Cause (as defined in the Plan),
(B) after a breach by you of any confidentiality, non-solicitation or
non-competition agreement between you and the Company or any of its Affiliates,
or (C) after you engage in any Detrimental Activity.

 

2

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Amended and Restated

NetSpend Holdings, Inc.

2004 Equity Incentive Plan

 

Stock Option Agreement — Employees

 

This Stock Option Agreement (this “Agreement”) is made as of the      day of
                          , 20    , between NetSpend Holdings, Inc., a Delaware
corporation (the “Company”), and
                                                             (the “Participant”,
which term as used herein shall be deemed to include any successor to the
Participant by will or by the laws of descent and distribution, unless the
context shall otherwise require).

 

Pursuant to the Company’s Amended and Restated 2004 Equity Incentive Plan (the
“Plan”), the Company, acting through the Committee, approved the issuance to the
Participant, effective as of the date set forth above, of a stock option to
purchase the number of shares (the “Shares”) of Common Stock, $0.001 par value
per share, of the Company (the “Option Stock”), at the price (the “Option
Price”), each as set forth in the Notice of Grant attached hereto (the “Notice
of Grant”), upon the terms and conditions hereinafter set forth.  Capitalized
terms not defined herein shall have the meanings ascribed to such terms in the
Plan or in the Notice of Grant.

 

NOW, THEREFORE, in consideration of the mutual premises and undertakings
hereinafter set forth, the parties hereto agree as follows:

 

1.                                      Option; Option Price.

 

On behalf of the Company, the Committee hereby grants to the Participant an
option (the “Option”) to purchase the number of shares of Option Stock of the
Company set forth in the Notice of Grant, at an exercise price per share equal
to the Option Price set forth in the Notice of Grant, subject to the terms and
conditions of this Agreement and the Plan (which is incorporated by reference
herein and which in all cases shall control in the event of any conflict with
the terms, definitions and provisions of this Agreement).  If designated in the
Notice of Grant as an “incentive stock option”, the Option is intended to
qualify for Federal income tax purposes as an “incentive stock option” within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”), subject to the limitations set forth in Section 3(b) below.  A copy of
the Plan as in effect on the date hereof has been supplied to the Participant,
and the Participant hereby acknowledges receipt thereof.

 

2.                                      Term.

 

The term (the “Option Term”) of the Option shall commence on the Date of Grant
and shall expire on the Expiration Date set forth in the Notice of Grant, unless
such Option shall theretofore have been terminated in accordance with the terms
hereof or of the Plan.

 

3.                                      Time of Exercise.

 

(a)                                  The Option shall be vested and exercisable
as set forth in the Notice of Grant.

 

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(b)                                 Anything contained in this Agreement to the
contrary notwithstanding, to the extent that this Option is intended to be an
“incentive stock option”, as set forth in the Notice of Grant, the Option shall
not be exercisable as an incentive stock option, and shall be treated as a
non-qualified stock option, to the extent that the aggregate Fair Market Value
(as determined in accordance with Section 2(t) of the Plan) on the date hereof
of all stock with respect to which incentive stock options are exercisable for
the first time by the Participant during any calendar year (under the Plan and
all other plans of the Company and its Subsidiaries, if any) exceeds $100,000.

 

4.                                       Termination of Option.

 

(a)                                  The unexercised portion of the Option shall
automatically terminate and shall become null and void and be of no further
force or effect upon the first to occur of the following:

 

(i)                                     the expiration of the Option Term;

 

(ii)                                  the expiration of ninety (90) days from
the date of the Participant’s Termination of Service (other than as a result of
death, Disability or a Termination of Service by the Company or an Affiliate for
Cause); provided, however, that if the Participant shall die during such
ninety-day period, the time of termination of the unexercised portion of the
Option shall be one year from the date of the Participant’s death;

 

(iii)                               the expiration of one year from the date of
the Participant’s Termination of Service if such Termination of Service is a
result of the Participant’s death or Disability;

 

(iv)                              immediately upon the Participant’s Termination
of Service if such Termination of Service is by the Company or an Affiliate for
Cause;

 

(v)                                 except to the extent permitted by
Section 5(e)(v) of the Plan or Section 11, the date on which the Option or any
part thereof or right or privilege relating thereto is transferred (otherwise
than by will or by the laws of descent and distribution), assigned, pledged,
hypothecated, attached or otherwise disposed of by the Participant; and

 

(vi)                              except as otherwise permitted by the
Committee, the date on which the Participant breaches any confidentiality,
non-competition or non-solicitation agreement between the Participant and the
Company or the date on which the Participant engages in a Detrimental Activity. 
For purposes of this Agreement, a “Detrimental Activity” means (1) the rendering
of services for any organization or engaging directly or indirectly in any
business which is or becomes competitive with the Company, or which organization
or business, or the rendering of services to such organization or business, is
or becomes otherwise prejudicial to or in conflict with the interests of the
Company; (2) the disclosure to anyone outside the Company, or the use in other
than the Company’s business without the prior written authorization from the
Company, of any confidential information or material; (3) any attempt to
directly or indirectly induce any employee of the Company (or any person who was
an Employee or Consultant during the six-month period preceding the
Participant’s Termination of Service) to be employed or perform services
elsewhere; (4) any attempt directly or indirectly to solicit the trade or
business of any current or prospective customer (or entity that was a customer
during the six-

 

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month period preceding the Participant’s Termination of Service); or (5) any
other conduct or act determined to be injurious, detrimental or prejudicial to
any interest of the Company, in each case as determined by the Committee in its
sole discretion.  For purposes of this clause (vi), the term “Company” means the
Company and its Affiliates.

 

(b)                                 Anything contained herein to the contrary
notwithstanding, the Option shall not be affected by any change of duties or
position of the Participant (including a transfer to or from the Company or any
of its Affiliates), so long as the Participant continues to be an Employee or a
Consultant.

 

5.                                       Procedure for Exercise.

 

(a)                                  The Option may be exercised, from time to
time, in whole or in part (but for the purchase of whole shares only) by
(i) delivery of a written notice (in such form as provided by the Company) or
(ii) any other method approved by the Committee.

 

(b)                                 Payment of the Option Price for the Optioned
Shares shall be made (i) in cash with a cashier’s check or certified check
payable to the Company, or through a wire transfer, (ii) by tendering (either
actually or by attestation) owned and unencumbered shares of Common Stock
acceptable to the Committee and having a Fair Market Value on the date of
exercise of the Option equal to or less than the aggregate Option Price of the
Optioned Shares (which tendered shares, if deemed necessary by the Company’s
independent accounting firm to avoid an accounting charge to earnings for
compensation on account of the exercise of the Option, must be Mature Shares),
(iii) in compliance with any broker-assisted cashless exercise program approved
by the Committee in its sole discretion; or (iv) a combination of the methods
set forth in the foregoing clauses (i), (ii) and (iii).  Notwithstanding the
foregoing, in no event shall a Participant be permitted to exercise an Option in
the manner described in clause  (iii) or (iv) of the preceding sentence if the
Committee determines that exercising the Option in such manner would violate the
Sarbanes-Oxley Act of 2002, as amended, or any other applicable law or the
applicable rules and regulations of the Securities and Exchange Commission or
the applicable rules and regulations of any securities exchange or inter dealer
quotation system on which the securities of the Company or any Affiliates are
listed or traded.  For purposes of this Agreement, the term “Mature Shares”
means shares of Common Stock that have been held unencumbered by the Participant
for at least six months or such other period of time determined by the Company’s
independent financial accounting firm to be necessary to avoid an accounting
charge to earnings for compensation on account of the exercise of the Option.

 

6.                                       Withholding.

 

The Committee shall be entitled to require as a condition of delivery of shares
of Option Stock in connection with the exercise of an Option that the
Participant remit or, in appropriate cases, agree to remit when due, an amount
sufficient to satisfy all current or estimated future federal, state and local
and foreign withholding tax and employment tax requirements relating thereto
(the “Tax Related Items”).  The Committee may in its discretion permit the Tax
Related Items be satisfied by one or a combination of the following: 
(i) require the Participant to pay Tax-Related Items in cash with a cashier’s
check or certified check payable to the Company, or through a wire transfer;
(ii) accepting from the Participant the delivery of unencumbered shares of
Common Stock (which shares, if deemed necessary by the Company’s independent
accounting firm to avoid an accounting charge to earnings for compensation on
account of the

 

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exercise of the Option, must be Mature Shares (as defined in Section 4(b));
(iii) withholding from the proceeds of a broker-assisted cashless exercise as
described in Section 5 above; or (iv) withholding in shares of Common Stock
otherwise issuable to the Participant, provided that the Company withholds only
the number of shares of Common Stock necessary to satisfy the minimum statutory
withholding amount (or if there is no minimum statutory withholding amount, such
amount as may be necessary to avoid adverse accounting treatment) using the Fair
Market Value of the Common Stock on the date of the relevant taxable event.

 

The Committee shall be entitled to require as a condition of delivery of shares
of Option Stock in connection with the exercise of an Option that the
Participant remit or, in appropriate cases, agree to remit when due, an amount
sufficient to satisfy all current or estimated future federal, state and local
and foreign withholding tax and employment tax requirements relating thereto
(the “Tax Related Items”).  The Committee may in its discretion permit the Tax
Related Items be satisfied by

 

7.                                       No Rights as a Stockholder.

 

The Participant shall have all of the rights of a shareholder of the Company
holding Common Stock that is subject to such Option when the shares of Option
Stock have been issued pursuant to the exercise of the Option.  No shares of
Common Stock will be issued pursuant to the exercise of the Option unless such
issuance and such exercise shall comply with all relevant provisions of this
Agreement and the Plan.

 

8.                                       Adjustments.

 

(a)                                  Changes in Capital Structure.  Subject to
Section 8(b), if the Option Stock is changed by reason of a change in corporate
capitalization, such as a stock split, reverse stock split, stock dividend or
recapitalization, or converted into or exchanged for other securities as a
result of a merger, consolidation or reorganization, the Committee shall make
such adjustments as shall be equitable and appropriate in order to make any
outstanding Option, as nearly as may be practicable, equivalent to the portion
of the Option outstanding as of the effective date of such transaction. 
Anything contained in the Plan or in this Agreement to the contrary
notwithstanding, in the case of ISOs, no adjustment under this
Section 8(a) shall be appropriate if such adjustment (i) would constitute a
modification, extension or renewal of such ISOs within the meaning of Sections
422 and 424 of the Code, and the regulations promulgated by the Treasury
Department thereunder, or (ii) would, under Section 422 of the Code and the
regulations promulgated by the Treasury Department thereunder, be considered the
adoption of a new plan requiring stockholder approval.

 

(b)                                 Change in Control.  Notwithstanding any
provision of the Plan to the contrary, in the event of a Change in Control, the
Committee may make such adjustments and/or settlements of the outstanding
portion of the Option as it deems appropriate and consistent with the Plan’s
purposes, including, without limitation, canceling the Option if the Option
Price exceeds the price paid for a share of Option Stock in connection with a
Change in Control; provided, however, that (1) in the event of any inconsistency
between the provisions of this subsection (b) and any provision in the Notice of
Grant regarding vesting upon a Change in Control, the provisions in the Notice
of Grant shall govern and (2) in the event of the assumption of the Option by,
or the substitution for such Option of a new option covering the stock of, the
surviving, successor or purchasing corporation, or a parent or subsidiary
thereof, with

 

4

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appropriate adjustments as to the number, kind and option price of shares
subject to such option, the Committee shall, in the case of ISOs, to the extent
not inconsistent with the best interests of the Company or its Affiliates (such
best interests to be determined in good faith by the Committee in its sole
discretion), use its best efforts to ensure that any such assumption or
substitution will not constitute a modification, extension or renewal of the
ISOs within the meaning of Section 424(h) of the Code and the regulations
promulgated by the Treasury Department thereunder.

 

(c)                                  Any adjustments referred to in
Section 8(a) or (b) shall be made by the Committee in its sole discretion and
shall be conclusive and binding on the Participant.

 

9.                                       Additional Provisions Related to
Exercise.

 

(a)                                  The Option shall be exercisable only on
such date or dates and during such period and for such number of shares of
Option Stock as are set forth in this Agreement.

 

(b)                                 To exercise the Option, the Participant
shall follow the procedures set forth in Section 5 hereof.  Upon the exercise of
the Option at a time when there is not in effect a registration statement under
the Securities Act of 1933, as amended (the “Securities Act”), relating to the
shares of Option Stock issuable upon exercise of the Option, the Committee in
its discretion may, as a condition to the exercise of the Option, require the
Participant (i) to make the representations set forth in Exhibit B hereto and
(ii) to make such other representations and warranties as are deemed appropriate
by counsel to the Company.  No shares of Option Stock shall be issued and
delivered upon the exercise of the Option unless and until the Company and/or
the Participant shall have complied with all applicable Federal or state
registration, listing and/or qualification requirements and all other
requirements of law or of any regulatory agencies having jurisdiction.

 

10.                                 No Evidence of Employment or Consulting
Relationship.

 

Nothing contained in the Plan or in this Agreement shall confer upon the
Participant any right with respect to the continuation of his or her employment
by, or service relationship with, the Company or any Affiliate or interfere in
any way with the right of the Company or any Affiliate (subject to the terms of
any separate agreement to the contrary), at any time to terminate such
employment or service relationship or to increase or decrease the compensation
of the Participant from the rate in existence at the time of the grant of the
Option.  For the avoidance of doubt, this Option shall not guarantee employment
for the length of all, or any portion of, the vesting schedule set forth in the
Notice of Grant.

 

11.                                 Restriction on Transfer.

 

The Option may not be transferred, pledged, assigned, hypothecated or otherwise
disposed of in any way by the Participant, except by will or by the laws of
descent and distribution, and may be exercised during the lifetime of the
Participant only by the Participant.  If the Participant dies, the Option shall
thereafter be exercisable, during the period specified in Section 4(a)(iii), by
the Participant’s executors or administrators to the full extent to which the
Option was exercisable by the Participant at the time of the Participant’s
death. The Option shall not be subject to execution, attachment or similar
process.  Any attempted assignment, transfer, pledge, hypothecation or other
disposition of the Option contrary to the provisions hereof, and

 

5

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the levy of any execution, attachment or similar process upon the Option, shall
be null and void and without effect.

 

12.                                 Disqualifying Dispositions.

 

If Optioned Shares acquired by exercise of an ISO are disposed of within two
years following the date of this Agreement or one year following the issuance
thereof to the Participant (a “Disqualifying Disposition”), the Participant
shall, immediately prior to such Disqualifying Disposition, notify the Company
in writing of the date and terms of such Disqualifying Disposition and provide
such other information regarding the Disqualifying Disposition as the Company
may reasonably require.

 

13.                                 Notices.

 

All notices or other communications which are required or permitted hereunder
shall be in writing and sufficient if (i) personally delivered, (ii) sent by
nationally-recognized overnight courier or (iii) sent by registered or certified
mail, postage prepaid, addressed as follows:

 

if to the Participant, to the address set forth on the Notice of Grant; and

 

if to the Company, to:

 

NetSpend Holdings, Inc.

c/o NetSpend Corporation

Austin Centre

701 Brazos Street, 12th Floor

Austin, TX  78701

Attention:  Legal Department:  Equity Incentive Plan

 

or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith.  Any such
communication shall be deemed to have been given (x) when delivered, if
personally delivered, (y) on the first Business Day (as hereinafter defined)
after dispatch, if sent by nationally-recognized overnight courier, or (z) on
the third Business Day following the date on which the piece of mail containing
such communication is posted, if sent by mail.  As used herein, “Business Day”
means a day that is not a Saturday, Sunday or a day on which banking
institutions in the city to which the notice or communication is to be sent are
not required to be open.  Additionally, the Company may deliver notices and
other communications as set forth in Section 19(d) hereof.

 

14.                                 No Waiver.

 

No waiver of any breach or condition of this Agreement shall be deemed to be a
waiver of any other or subsequent breach or condition, whether of like or
different nature.

 

15.                                 Participant Undertaking.

 

The Participant hereby agrees to take whatever additional actions and execute
whatever additional documents the Company may in its reasonable judgment deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on the Participant pursuant to the express
provisions of this Agreement.

 

6

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16.                                 Successors and Assigns.

 

Except as otherwise provided herein, this Agreement shall bind and inure to the
benefit of and be enforceable by the Participant and the Company and their
respective successors, assigns, heirs, representatives and estates, as the case
may be (including subsequent holders of Optioned Shares); provided, however,
that the rights and obligations of the Participant under this Agreement shall
not be assignable except in connection with a Permitted Transfer of Optioned
Shares hereunder (so long as the transferee agrees in writing in advance to
become bound by the terms and conditions hereof).

 

17.                                 Modification of Rights.

 

The rights of the Participant are subject to modification and termination in
certain events as provided in this Agreement and the Plan.

 

18.                                 Governing Law.

 

(a)                                  This Agreement shall be deemed to be a
contract made under, and shall be construed in accordance with, the laws of the
State of Delaware, without giving effect to conflict of laws principles thereof.

 

(b)                                 Each of the parties hereto hereby
irrevocably and unconditionally submits, for himself or herself and his or her
property, to the nonexclusive jurisdiction of any Delaware State court or any
federal court of the United States of America sitting in the State of Delaware,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in any such Delaware State court or, to the extent permitted by
law, in any such federal court.  Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

 

(c)                                  Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent that he or she may legally and
effectively do so, any objection that he or she may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
the Agreement in any Delaware state or federal court sitting in the State of
Delaware.  Each of the parties hereto irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.

 

19.                                 Electronic Delivery.

 

(a)                                  If, to the extent permitted by the
Committee, the Participant executes this Agreement electronically, for the
avoidance of doubt Participant acknowledges and agrees that his or her execution
of this Agreement electronically (through an on-line system established and
maintained by the Company or another third party designated by the Company, or
otherwise) shall have the same binding legal effect as would execution of this
Agreement in paper form. Participant acknowledges that upon request of the
Company he or she shall also provide an executed, paper form of this Agreement.

 

7

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(b)                                 If the Participant executes this Agreement
in paper form, for the avoidance of doubt the parties acknowledge and agree that
it is their intent that any agreement previously or subsequently entered into
between the parties that is executed electronically shall have the same binding
legal effect as if such agreement were executed in paper form.

 

(c)                                  If Participant executes this Agreement
multiple times (for example, if the Participant first executes this Agreement in
electronic form and subsequently executes the Agreement in paper form), the
Participant acknowledges and agrees that (i) no matter how many versions of this
Agreement are executed and in whatever medium, this Agreement only evidences a
single Option relating to the number of shares of Common Stock set forth in the
Notice of Grant and (ii) any subsequent execution of this Agreement in the same
or a different medium shall in no way impair the binding legal effect of this
Agreement as of the time of original execution.

 

(d)                                 The Company may, in its sole discretion,
decide to deliver by electronic means any documents related to the Option, to
participation in the Plan, or to future awards granted under the Plan, or
otherwise required to be delivered to the Participant pursuant to the Plan or
under applicable law, including but not limited to, the Plan, the Agreement, the
Plan prospectus and any reports of the Company generally provided to
shareholders. Such means of electronic delivery may include, but do not
necessarily include, the delivery of a link to the Company’s intranet or the
internet site of a third party involved in administering the Plan, the delivery
of documents via electronic mail (“e-mail”) or such other means of electronic
delivery specified by the Company. By executing this Agreement, the Participant
hereby consents to receive such documents by electronic delivery. At the
Participant’s written request to the Legal Department of the Company, the
Company shall provide a paper copy of any document at no cost to the
Participant.

 

20.                                 Counterparts.

 

This Agreement may be executed in one or more counterparts, each of which shall
be deemed to be an original, but all of which together shall constitute one and
the same instrument.

 

21.                                 Entire Agreement.

 

This Agreement (including the Notice of Grant), the Plan and, upon execution,
the Exercise Notice (if applicable), constitute the entire agreement between the
parties with respect to the subject matter hereof, and supersede all previously
written or oral negotiations, commitments, representations and agreements with
respect thereto.

 

[Signature page follows]

 

8

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22.                                 WAIVER OF JURY TRIAL.  NO PARTY TO THIS
AGREEMENT OR ANY ASSIGNEE, SUCCESSOR, HEIR OR PERSONAL REPRESENTATIVE OF A PARTY
SHALL SEEK A JURY TRIAL IN ANY LAWSUIT, PROCEEDING, COUNTERCLAIM OR ANY OTHER
LITIGATION PROCEDURE BASED UPON OR ARISING OUT OF THIS AGREEMENT.  NO PARTY WILL
SEEK TO CONSOLIDATE ANY SUCH ACTION, IN WHICH A JURY TRIAL HAS BEEN WAIVED, WITH
ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT OR HAS NOT BEEN WAIVED.  THE
PROVISIONS OF THIS SECTION HAVE BEEN FULLY DISCUSSED BY THE PARTIES HERETO, AND
THESE PROVISIONS SHALL BE SUBJECT TO NO EXCEPTIONS.  NEITHER PARTY HAS IN ANY
WAY AGREED WITH OR REPRESENTED TO THE OTHER PARTY THAT THE PROVISIONS OF THIS
SECTION WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

NetSpend Holdings, Inc.

 

 

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

Participant

 

 

 

 

 

 

 

Name:

 

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