Exhibit
10.7


 


MANAGEMENT
EMPLOYMENT AGREEMENT


 


THIS MANAGEMENT EMPLOYMENT AGREEMENT (this “Employment
Agreement”) is dated as of January  4th, 2010 (the “Effective
Date”) by and between NETSPEND CORPORATION, a Delaware corporation (the “Company”)
and James DeVoglaer, 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 continued
services of the Executive 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 continue to employ the Executive 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.


 


(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 any of
NetSpend Holdings, Inc. (“Holdings”) and/or any other subsidiary of
Holdings or other Affiliate. During the Term, the Executive shall not engage in
any business activity which, in the reasonable judgment of the Board of
Directors of the Company (the “Board”), conflicts with the duties of the
Executive hereunder, whether or not such activity is pursued for gain, profit
or other pecuniary advantage; provided however, that, notwithstanding this Section 1(b) or
any other provision of this Agreement, the following activities (“Permitted
Activities”) shall not be considered a violation of any provisions of this
Agreement: (a) ownership of a 49% interest in Kaian, Inc. (“Kaian”),
and exercising rights as a shareholder of Kaian; (b) receiving any
distributions to shareholders or payments from Kaian for services rendered
prior to commencement of the Term; and (c) providing uncompensated advice
to management of Kaian so long as such advice (i) does not detract from
the performance of his duties described in the last two sentences of Section 5.1,
(ii) does not relate to any business relationship or transaction between
Kaian and the Company, (iii) does not result in the misuse of property of
the Company or any Confidential Information described in Section 6(a),
and (iv) does not relate to or involve any direct or indirect competitor


 

















 


of the Company or compete, directly or indirectly, with any of the
Company’s Current Lines of Business (as hereinafter defined).


 


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. This Employment
Agreement shall automatically renew for additional one (1) year terms
beginning on the first (1st) anniversary of the Effective Date 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 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
$260,000.00 (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
Company 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. For the purposes of this Agreement, “Base Salary” shall refer
to the Executive’s Base Salary on an annualized basis and as adjusted pursuant
to the terms of this Agreement.


 


(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 such Bonus Program; provided that the Executive
shall be eligible to earn a bonus of up to 40% of the Base Salary at 100%
target, with a maximum bonus of 60% of the Base Salary. For purposes of
clarification, the Board may elect to eliminate or modify any 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,


 


2

















 


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.


 


(f)                                         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 the Company determines, in its sole discretion,
that (i) the Executive has committed any felony or other offense involving
moral turpitude or any crime relating to his employment, (ii) the
Executive has violated this Employment Agreement or any other written agreement
with the Company or any Affiliate, in any material respect, and fails to cure
such violation within fourteen (14) calendar days after notice of such conduct,
(iii) the Executive has committed any act of fraud, theft or personal
dishonesty with respect to the Company or any Subsidiary or otherwise
detrimental to the Company or any Subsidiary, (iv) the Executive has, in
the good faith opinion of the Board, failed to perform his duties hereunder or
has performed such duties in a grossly negligent manner or with willful
malfeasance, (v) the Executive has failed to observe material Company
policies applicable to executives of the Company, or (vi) the Executive
has violated 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.


 


3

















 


(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 or provide to the
Executive the Base Salary or any reduction in the Base Salary; or (ii) 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.
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 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


 


4

















 


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) 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 (C) 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 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.


 


(iii)                                    In addition, if
during the Term and in connection with or during the twelve-month period
following a Change in Control (as defined in the Amended and Restated NetSpend
Holdings, Inc. 2004 Stock Option Plan), the Company terminates the Term
pursuant to Section 4(d) hereof or the Executive terminates
the Term pursuant to Section 4(e) hereof, the Company shall pay to
the Executive an amount equal to 40% of the Base Salary, as in effect on the
Termination Date, payable in a lump sum within sixty (60) Business Days
following the Termination Date. If the Executive violates Section 6
hereof, then the Company shall have no obligation to make the payment set forth
under this Section 5(a)(iii).


 


(b)                                 Payments upon
Termination by Company for Cause, Termination by Executive Without Good Reason,
Death or Disability. If the Term is terminated by the Company


 


5

















 


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.


 


(c)                                  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.


 


(d)                                 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:


 


(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 of the Company (whether such customers
were customers 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,
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


 


6

















 


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 with the Company, 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
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, third party processor, 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, distribution partners 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.


 


7

















 


(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, supplier or account
of the Company, or any potential customer, supplier or account whose identity
the 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 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 and/or 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.


 


8

















 


(j)                                     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:


 


(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(j)(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.


 


(k)                                  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.


 


(1)                                  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.


 


(m)                               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


 


9

















 


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
(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:


 


10














 


(i)            if to the Company, to:


 


	
  NetSpend Corporation

  
	
  Austin Centre

  
	
  701 Brazos Street, 12th Floor 

  
	
  Austin, TX 78701

  
	
  Telephone:

  	
  (512) 532-8280

  
	
  Fax:

  	
  (512) 469-9951

  
	
  Attn:

  	
  General
  Counsel

  



 


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 offer letter
by and between the Company and the Executive dated as of July 18, 2006 and
the Management Employment Agreement, dated as of September 7, 2006, by and
among the Executive, the Company and Holdings. 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


 


11

















 


any right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder.


 


(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 of 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 any
entity from time to time owned or controlled by the Company.


 


“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.


 


12

















 


“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.


 


“Subsidiary” means any corporation or other
entity of which securities or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned by the Company.


 


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)


 


13

















 


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 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.


 


[Remainder
of page intentionally left blank.]


 


14

















 


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


 


 


	
   

  	
  NETSPEND CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paige K. Ellis

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ James DeVoglaer

  
	
   

  	
  James DeVoglaer

  
	
   

  	
  Address: 

  	
   

  
	
   

  	
   

  
				



 


15