EXHIBIT 10.18


 


EMPLOYMENT AGREEMENT


 

















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


2.  Compensation.


 


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


 


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


 


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


 


3.  Benefits.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


6.  Termination of Employment; Death.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


8.  Change in Control.


 


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


 


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


 


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


 


9.  Certain Reduction of Payments by the Bank.


 


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


 


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


 


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


 


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


 


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


 


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


 


10.  Non-competition


 


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


 


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


 


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


 


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


 


11.  No Assignments.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


 


	
   

  	
  METABANK

  
	
   

  	
   

  
	
   

  	
  /s/
  E. Wayne Cooley 

  
	
   

  	
  E.
  Wayne Cooley 

  
	
   

  	
  Chairman,
  Compensation Committee

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
  /s/
  David W Leedom

  
	
   

  	
  David
  W. Leedom

  
	
   

  	
  Senior
  Vice President and Chief Financial Officer

  



 


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