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Exhibit 10.39

FIRST MODIFICATION TO CREDIT AGREEMENT

    This First Modification to Credit Loan Agreement (this "Modification") is
entered into by and between TIER TECHNOLOGIES, INC. ("Borrower") and IMPERIAL
BANK ("Bank") as of this June 18, 2001, at Inglewood, California.

RECITALS

    This Modification is entered into upon the basis of the following facts and
understandings of the parties, which facts and understandings are acknowledged
by the parties to be true and accurate:

    Bank and Borrower previously entered into a Credit Agreement dated
August 25, 2000. The Credit Agreement shall be referred to herein as the
"Agreement."

    NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as set forth
below.

AGREEMENT

    1.  Incorporation by Reference.  The Recitals and the documents referred to
therein are incorporated herein by this reference. Except as otherwise noted,
the terms not defined herein shall have the meaning set forth in the Agreement.

    2.  Modification to the Agreement.  Subject to the satisfaction of the
conditions precedent as set forth in Section 3 hereof, the Agreement is hereby
modified as set forth below.

    A.  Section 1.01 of the Agreement is hereby deleted in its entirety and
replaced with the following:

"1.01A. Revolving Credit Commitment.

(a) Revolving Line of Credit. Subject to the terms and conditions of this
Agreement, provided that no event of default then has occurred and is
continuing, Bank shall, upon Borrower's request make advances ("Revolving
Loans") to Borrower, for general corporate funding requirements, including,
without limitation, financing capital expenditures, repaying existing debt and
financing acquisitions and the issuance of letters of credit, in an amount not
to exceed Fifteen Million Dollars ($15,000,000) (the "Revolving Line of Credit")
until February 28, 2004 (the "Revolving Line of Credit Maturity Date").
Revolving Loans may be repaid and reborrowed, subject to the provisions of the
LIBOR Addendum attached to this Agreement, provided that all outstanding
principal and accrued interest on the Revolving Loans shall be payable in full
on the Revolving Line of Credit Maturity Date.

(b) Letter of Credit Usage and Sublimit. Subject to availability under the
Revolving Line of Credit, at any time and from time to time from the date hereof
through the banking day immediately prior to the Revolving Line of Credit
Maturity Date, Bank shall issue for the account of Borrower such standby and
commercial letters of credit ("Letters of Credit") as Borrower may request,
which requests shall be made by delivering to Bank a duly executed letter of
credit application on Bank's standard form; provided, however, that the
outstanding and undrawn amounts under all such Letters of Credit (i) shall not
at any time exceed Two Million Five Hundred Thousand Dollars ($2,500,000)
("Letter of Credit Sublimit") and (ii) shall be deemed to constitute Revolving
Loans for the purpose of calculating availability under the Revolving Line of
Credit. Unless agreed to in writing by Bank, no Letter of Credit shall have an
expiration date that is later than the Revolving Line of Credit Maturity Date.
All Letters of Credit shall be in form and substance acceptable to Bank in its
sole discretion

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and shall be subject to the terms and conditions of Bank's form application and
letter of credit agreement and other agreements required by Bank. Borrower will
pay all usual issuance and other fees that Bank notifies Borrower it will be
charged for issuing and processing Letters of Credit for Borrower.

(c) Revolving Loans Interest. Borrower further promises to pay to Bank from the
date of the advance of the initial Revolving Loan through the Revolving Line of
Credit Maturity Date, on or before the last day of each month, interest on the
unpaid balance of the Revolving Loans at a rate of interest equal to one-quarter
percent (0.25%) per annum in excess of the rate of interest which Bank has
announced as its prime lending rate (the "Prime Rate"), which shall vary
concurrently with any change in the Prime Rate; or at the LIBOR Rate plus two
and one-half percent (2.50%) as determined in accordance with the LIBOR Addendum
attached hereto. Interest shall be computed at the above rate on the basis of
the actual number of days during which the principal balance of the Revolving
Loans are outstanding divided by 360, which shall for interest computation
purposes be considered one (1) year or as otherwise applicable under the LIBOR
Addendum.

(d) Late Charge. If any installment payment, interest payment, principal payment
or principal balance due under the Revolving Line of Credit is delinquent twenty
(20) or more days, Borrower agrees to pay Bank a late charge in the amount of
two and one-half percent (2.50%) of the payment so due and unpaid, in addition
to the payment; but nothing in this paragraph is to be construed as any
obligation on the part of the Bank to accept any past due payment or less than
the total unpaid principal balance after maturity. All payments, at Bank's sole
discretion, shall be applied first to any late charges owing, then to interest
and the remainder, if any, to principal.

(e) Default Rate. If an Event of Default occurs hereunder, then during the
continuance thereof at the Bank's option, the interest rate shall be two and
one-half percent (2.50%) per year in excess of the rate otherwise applicable.

(f) Interest Calculations. The term "Prime Rate" shall mean the rate that the
Bank has announced as its prime lending rate, which shall vary concurrently with
any change in the Prime Rate. The term "LIBOR Rate" shall mean the LIBOR rate as
specified in the addendum annexed hereto. Interest based on the Prime Rate shall
vary concurrently with any change in the Prime Rate. All interest shall be
computed at the rate specified in any note on the basis of the actual number of
days during which the principal balance of the corresponding Loans are
outstanding divided by 360, which shall for interest computation purposes be
considered one (1) year or as otherwise applicable under the LIBOR Addendum.

1.01B. Converting Non-Revolving Credit.

(a) Converting Non-Revolving Line of Credit Commitment. Subject to the terms and
conditions of this Agreement, between the date of this Agreement and
February 28, 2002, (the "Converting "Non-Revolving Line Termination Date"),
provided that no event of default has occurred and is continuing, Bank hereby
agrees to make advances ("Converting Non-Revolving Loans") to Borrower from time
to time not to exceed at any one time the aggregate principal amount of Two
Million Five Hundred Thousand Dollars ($2,500,000) (the "Converting
Non-Revolving Line of Credit"), the proceeds of which shall only be used by
Borrower for financing equipment acquisitions, however, the Borrower may use up
to Two Hundred Fifty Thousand Dollars ($250,000) for financing capital
expenditures in foreign countries. Borrower may from time to time through the
Converting Non-Revolving Termination Date borrow, partially or wholly repay its
outstanding borrowings, but may not reborrow any amount of the Converting Non
Revolving Loans repaid, subject to all of the limitations, terms and conditions
contained herein or in the promissory note representing the

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Converting Non-Revolving Line of Credit; provided however, that the total
outstanding borrowings under the Converting Non-Revolving Line of Credit shall
not at any time exceed the maximum principal amount available thereunder, as set
forth above. After the Converting Non-Revolving Line Termination Date any
amounts repaid may not be reborrowed. All outstanding principal and accrued
interest on the Converting Non-Revolving Loans not converted into a term loan on
or before the Non-Revolving Line Termination Date shall be due and payable in
full on that date.

(b) Converting Non-Revolving Note. The interest rate, payment terms, maturity
date, term conversion provisions and certain other terms of the Converting
Non-Revolving Loans will be contained in a promissory note dated the date of
this Agreement, as such may be amended or replaced from time to time."

    B.  In Subsection 4.05(e) of the Agreement: (i) the term "within 15 days
from each month-end" is hereby deleted and replaced with the term "within
46 days from each quarter-end;" and (ii) the sentence "In addition, Borrower
will supply a listing of total Unbilled Accounts by customer that reconciles to
Borrower's general ledger." is hereby deleted in its entirety.

    C.  Subsections 4.05(f) and (g) of the Agreement are hereby deleted in their
entirety and replaced with the following:

"(f) Intentionally left blank.

(g) Intentionally left blank."

    D.  Section 4.06 of the Agreement is hereby deleted in its entirety and
replaced with the following:

"4.06 Quick Ratio. Maintain on a quarterly basis a quick ratio (defined as the
sum of unencumbered cash, marketable securities, customer receivables (billed
and unbilled) net of any allowance for doubtful accounts divided by total
current liabilities plus the aggregate outstanding principal balance on the
Revolving Line of Credit of at least 1.15 to 1.00."

    E.  Section 4.07 of the Agreement is hereby deleted in its entirety and
replaced with the following:

"4.07 Tangible Net Worth. Maintain on a quarterly basis a Tangible Net Worth
(defined as the net book value of assets excluding goodwill and other
acquisition related intangible assets less total liabilities) of not less than
Twenty Million Dollars ($20,000,000). Such requirement shall increase
semi-annually by 75% of net income (without decreasing for net losses) beginning
on September 30, 2001."

    F.  Sections 4.15 and 4.16 of the Agreement are hereby deleted in their
entirety and replaced with the following:

"4.15 Intentionally left blank.

4.16 Intentionally left blank."

    G.  Article 4 of the Agreement is hereby amended by adding the following at
the end thereof:

"4.17 Fixed Charge Coverage Ratio. Maintain on a quarterly basis, a ratio of
(a) net profit after tax plus depreciation and amortization, to (b) current
portion of long term debt (exclusive of any indebtedness to Bank under the
Revolving Line of Credit) plus current portion capital leases, of not less than
1.35 to 1.00. This ratio will be calculated at the end of each fiscal quarter,
using the results of that quarter and each of the 3 immediately preceding
quarters.

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4.18 Domestic Accounts. Maintain at least 80% of its cash and short term
investments in domestic accounts. Promptly upon Bank's request, Borrower shall
deliver to Bank, copies of statements from depository institutions or brokerage
firms, or other evidence acceptable to the Bank of the Borrower's cash and short
term investments."

    H.  Article 5 of the Agreement is hereby amended by adding the following at
the end thereof:

"5.06 Dividends, Repurchase of Borrower's Stock. Declare or pay any dividend or
make any other distribution on any of its capital stock now outstanding or
hereafter issued or purchase, redeem or retire any of such stock other than in
dividends or distributions payable in Borrower's capital stock, except for the
repurchase of Borrower's capital stock from officers, directors, employees or
consultants of Borrower upon termination of their employment with or rendering
of service to Borrower; provided, however, that anything contained in the
forgoing to the contrary notwithstanding, from time to time Borrower may
exchange any issued and outstanding shares of Borrower's Series A common stock
for shares of Borrower's publicly traded common stock, so long as in connection
with any such exchange all such shares of Borrower's Series A common stock so
exchanged shall be permanently retired."

    3.  Legal Effect.  Except as specifically set forth in this Modification,
all of the terms and conditions of the Agreement remain in full force and
effect. The effectiveness of this Modification is conditioned upon receipt by
Bank of this Modification, and any other documents which Bank may require to
carry out the terms hereof, including but not limited to the following:

    A.  this Modification, duly executed by Borrower;

    B.  a fully earned, non-refundable loan fee of Twelve Thousand Five Hundred
Dollars ($12,500);

    C.  a non-refundable documentation fee of One Hundred Fifty Dollars ($150),
plus any Bank Expenses incurred through the date of this Amendment;

    D.  Corporate Resolutions to Borrow; and

    E.  such other documents, and completion of such other matters, as Bank may
reasonably deem necessary or appropriate.

    4.  Integration.  This is an integrated Modification and supersedes all
prior negotiations and agreements regarding the subject matter hereof. All
amendments hereto must be in writing and signed by the parties.

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    IN WITNESS WHEREOF, the parties have agreed as of the date first set forth
above.

Tier Technologies, Inc.   Imperial Bank
X
 
/s/ Laura B. DePole

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X
 
/s/ Mike Hazlewood

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By:   Laura B. DePole   By:   Michael Hazlewood Title:   CFO/Secretary   Title:
  Senior Vice President

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LIBOR ADDENDUM TO CREDIT AGREEMENT

    This Addendum to Credit Agreement (this "Addendum") is entered into as of
this 18th day of June, 2001, by and between Imperial Bank ("Bank") and Tier
Technologies, Inc. ("Borrower"). This Addendum supersedes the LIBOR Addendum to
Credit Agreement entered into as of August 25, 2000, between the Bank and the
Borrower, and any credit outstanding accruing at the LIBOR Rate thereunder shall
be deemed to be outstanding under this Addendum.

1. Definitions.

    a.  Advance.  As used herein, "Advance" means a borrowing requested by
Borrower and made by Bank under the Note, including a LIBOR Option Advance
and/or a Prime Rate Option Advance.

    b.  Business Day.  As used herein, "Business Day" means any day except a
Saturday, Sunday or any other day designated as a holiday under Federal or
California statute or regulation.

    c.  LIBOR.  As used herein, "LIBOR" means the rate per annum (rounded upward
if necessary, to the nearest whole 1/8 of 1%) and determined pursuant to the
following formula:

LIBOR   =   Base LIBOR

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100% - LIBOR Reserve Percentage

(1)"Base LIBOR" means the rate per annum determined by Bank at which deposits
for the relevant LIBOR Period would be offered to Bank in the approximate amount
of the relevant LIBOR Option Advance in the inter-bank LIBOR market selected by
Bank, upon request of Bank at 10:00 a.m. California time, on the day that is the
first day of such LIBOR Period.

(2)"LIBOR Reserve Percentage" means the reserve percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
"Eurocurrency Liabilities" (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by Bank for expected changes in such reserve
percentage during the applicable LIBOR Period.

    d.  LIBOR Business Day.  As used herein, "LIBOR Business Day" means a
Business day on which dealings in Dollar deposits may be carried out in the
interbank LIBOR market.

    e.  LIBOR Period.  As used herein, "LIBOR Period" means, with respect to a
LIBOR Option Advance:

(1) initially, the period commencing on, as the case may be, the date the
Advance is made or the date on which the Advance is converted to a LIBOR Option
Advance, and continuing for, in every case, a term of up to 180 days thereafter
so long as the LIBOR Option is quoted for such period in the applicable
interbank LIBOR market, as such period is selected by Borrower in the notice of
Advance as provided in the Note or in the notice of conversion as provided in
this Addendum; and

(2) thereafter, each period commencing on the last day of the next preceding
LIBOR Period applicable to such LIBOR Option Advance and continuing for, in
every case, a term of up to 180 days thereafter so long as the LIBOR Option is
quoted for such period in the applicable interbank LIBOR market, as such period
is selected by Borrower in the notice of continuation as provided in this
Addendum.

    f.  Note.  As used herein, "Note" means that certain Credit Agreement dated
August 25, 2000, by and between Borrower and Bank.

    g.  Regulation D.  As used herein, "Regulation D" means Regulation D of the
Board of Governors of the Federal Reserve System as amended or supplemented from
time to time.

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    h.  Regulatory Development.  As used herein, "Regulatory Development" means
any or all of the following: (i) any change in any law, regulation or
interpretation thereof by any public authority (whether or not having the force
of law); (ii) the application of any existing law, regulation or the
interpretation thereof by any public authority (whether or not having the force
of law); and (iii) compliance by Bank with any request or directive (whether or
not having the force of law) of any public authority.

2. Interest Rate Options. Borrower shall have the following options regarding
the interest rate to be paid by Borrower on Advances under the Note:

a.A rate equal to two and one-half percent (2.50%) above Bank's LIBOR, (the
"LIBOR Option"), which LIBOR Option shall be in effect during the relevant LIBOR
Period; or

b.A rate equal to one-quarter percent (0.25%) above the "Prime Rate" as
referenced in the Note and quoted from time to time by Bank as such rate may
change from time to time (the "Prime Rate Option").

3. LIBOR Option Advance. The minimum LIBOR Option Advance will not be less than
One Million Dollars ($1,000,000) for any LIBOR Option Advance.

4. Payment of Interest on LIBOR Option Advances. Interest on each LIBOR Option
Advance shall be payable pursuant to the terms of the Note. Interest on such
LIBOR Option Advance shall be computed on the basis of a 360-day year and shall
be assessed for the actual number of days elapsed from the first day of the
LIBOR Period applicable thereto but not including the last day thereof.

5. Bank's Records Re: LIBOR Option Advances. With respect to each LIBOR Option
Advance, Bank is hereby authorized to note the date, principal amount, interest
rate and LIBOR Period applicable thereto and any payments made thereon on Bank's
books and records (either manually or by electronic entry) and/or on any
schedule attached to the Note, which notations shall be prima facie evidence of
the accuracy of the information noted.

6. Selection/Conversion of Interest Rate Options. At the time any Advance is
requested under the Note and/or Borrower wishes to select the LIBOR Option for
all or a portion of the outstanding principal balance of the Note, and at the
end of each LIBOR Period, Borrower shall give Bank notice specifying (a) the
interest rate option selected by Borrower; (b) the principal amount subject
thereto; and (c) if the LIBOR Option is selected, the length of the applicable
LIBOR Period. Any such notice may be given by telephone so long as, with respect
to each LIBOR Option selected by Borrower, (i) Bank receives written
confirmation from Borrower not later than three (3) LIBOR Business Days after
such telephone notice is given; and (ii) such notice is given to Bank prior to
10:00 a.m., California time, on the first day of the LIBOR Period. For each
LIBOR Option requested hereunder, Bank will quote the applicable fixed LIBOR
Rate to Borrower at approximately 10:00 a.m., California time, on the first day
of the LIBOR Period. If Borrower does not immediately accept the rate quoted by
Bank, any subsequent acceptance by Borrower shall be subject to a
redetermination of the rate by Bank; provided, however, that if Borrower fails
to accept any such quotation given, then the quoted rate shall expire and Bank
shall have no obligation to permit a LIBOR Option to be selected on such day. If
no specific designation of interest is made at the time any Advance is requested
under the Note or at the end of any LIBOR Period, Borrower shall be deemed to
have selected the Prime Rate Option for such Advance or the principal amount to
which such LIBOR Period applied. At any time the LIBOR Option is in effect,
Borrower may, at the end of the applicable LIBOR Period, convert to the Prime
Rate Option. At any time the Prime Rate Option is in effect, Borrower may
convert to the LIBOR OPTION, and shall designate a LIBOR Period.

7. Default Interest Rate. From and after the maturity date of the Note, or such
earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of the Note shall
bear interest until paid in full at an increased rate per annum

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(computed on the basis of a 360-day year, actual days elapsed) equal to three
percent (3.00%) above the rate of interest from time to time applicable to the
Note.

8. Prepayment. Bank is not under any obligation to accept any prepayment of any
LIBOR Option Advance except as described below or as required under applicable
law. Borrower may prepay a Prime Rate Option Advance at any time, without paying
any Prepayment Amount, as defined below. Borrower may prepay any LIBOR Option
Advance in increments of Five Hundred Dollars ($500.00) prior to the end of the
LIBOR Period, as long as (i) Bank is provided written notice of such prepayment
at least five (5) LIBOR Business Days prior to the date thereof (the "Prepayment
Date"); and (ii) Borrower pays the Prepayment Amount. The notice of prepayment
shall contain the following information: (a) the Prepayment Date; and (b) the
LIBOR Option Advance which will be prepaid. On the Prepayment Date, Borrower
shall pay to Bank, in addition to any other amount that may then be due on the
Note, the Prepayment Amount. Bank, in its sole discretion, may accept any
prepayment of a LIBOR Option Advance even if not required to do so under the
Note and may deduct from the amount to be applied against the LIBOR Option
Advance any other amounts required to be paid as part of the Prepayment Amount.

    The Prepaid Principal Amount (as defined below) will be applied to the LIBOR
Option Advance being prepaid as Bank shall determine in its sole discretion.

    If Bank exercises its right to accelerate the payment of the Note prior to
maturity based upon an Event of Default under the Note, Borrower shall pay to
Bank, in addition to any other amounts that may then be due on the Note, on the
date specified by Bank as the Prepayment Date, the Prepayment Amount.

    Bank's determination of the Prepayment Amount shall be conclusive in the
absence of obvious error or fraud. If requested in writing by Borrower, Bank
shall provide Borrower a written statement specifying the Prepayment Amount.

    The following (the "Prepayment Amount") shall be due and payable in full on
the Prepayment Date:

    a.  If the principal amount of the LIBOR Option Advance being prepaid
exceeds Seven Hundred Fifty Thousand Dollars ($750,000), then the Prepayment
Amount is the sum of: (i) the amount of the principal balance of the LIBOR
Option Advance which Borrower has elected to prepay or the amount of the
principal balance of the LIBOR Option Advance which Bank has required Borrower
to prepay because of acceleration, as the case may be (the "Prepaid Principal
Amount"); (ii) interest accruing on the Prepaid Principal Amount up to, but not
including, the Prepayment Date; (iii) Five Hundred Dollars ($500.00); plus
(iv) the present value, discounted at the Reinvestment Rates (as defined below)
of the positive amount by which (A) the interest Bank would have earned had the
Prepaid Principal Amount not been paid prior to the end of the LIBOR Period at
the Note's interest rate exceeds (B) the interest Bank would earn by reinvesting
the Prepaid Principal Amount at the Reinvestment Rates.

    b.  If the principal amount of the LIBOR Option Advance being prepaid is
Seven Hundred Fifty Thousand Dollars ($750,000) or less, then the Prepayment
Amount is the sum of: (i) the principal amount of the LIBOR Option Advance which
Borrower has elected to prepay or the principal amount of the LIBOR Option
Advance which Bank has required Borrower to prepay because of acceleration due
to an Event of Default under the Note, as the case may be (the "Prepaid
Principal Amount"); (ii) interest accruing on the Prepaid Principal Amount up
to, but not including, the Prepayment Date; plus (iii) an amount equal to two
percent (2%) of the Prepaid Principal Amount.

    "Reinvestment Rates" mean the per annum rates of interest equal to one half
percent (1/2%) above the rates of interest reasonably determined by Bank to be
in effect not more than seven (7) days prior to the Prepayment Date in the
secondary market for United States Treasury Obligations in amount(s)

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and with maturity(ies) which correspond (as closely as possible) to the LIBOR
Option Advance being prepaid.

    BY INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT: (A) THERE IS
NO RIGHT TO PREPAY ANY LIBOR OPTION ADVANCE, IN WHOLE OR IN PART, WITHOUT PAYING
THE PREPAYMENT AMOUNT, EXCEPT AS OTHERWISE REQUIRED UNDER APPLICABLE LAW;
(B) BORROWER SHALL BE LIABLE FOR PAYMENT OF THE PREPAYMENT AMOUNT IF BANK
EXERCISES ITS RIGHT TO ACCELERATE PAYMENT OF ANY LIBOR OPTION ADVANCE AS PART OR
ALL OF THE OBLIGATIONS OWING UNDER THE NOTE, INCLUDING WITHOUT LIMITATION,
ACCELERATION UNDER A DUE-ON-SALE PROVISION; (C) BORROWER WAIVES ANY RIGHTS UNDER
SUCCESSOR STATUTE; AND (D) BANK HAS MADE EACH LIBOR OPTION ADVANCE PURSUANT TO
THE NOTE IN RELIANCE ON THESE AGREEMENTS.

______________________
BORROWER'S INITIALS

9. Hold Harmless and Indemnification. Borrower agrees to indemnify Bank and to
hold Bank harmless from, and to reimburse Bank on demand for, all losses and
expenses which Bank sustains or incurs as a result of (i) any payment of a LIBOR
Option Advance prior to the last day of the applicable LIBOR Period for any
reason, including, without limitation, termination of the Note, whether pursuant
to this Addendum or the occurrence of an Event of Default; (ii) any termination
of a LIBOR Period prior to the date it would otherwise end in accordance with
this Addendum; or (iii) any failure by Borrower, for any reason, to borrow any
portion of a LIBOR Option Advance.

10. Funding Losses. The indemnification and hold harmless provisions set forth
in this Addendum shall include, without limitation, all losses and expenses
arising from interest and fees that Bank pays to lenders of funds it obtains in
order to fund the loans to Borrower on the basis of the LIBOR Option(s) and all
losses incurred in liquidating or re-deploying deposits from which such funds
were obtained and loss of profit for the period after termination. A written
statement by Bank to Borrower of such losses and expenses shall be conclusive
and binding, absent manifest error, for all purposes. This obligation shall
survive the termination of this Addendum and the payment of the Note.

11. Regulatory Developments Or Other Circumstances Relating To Illegality or
Impracticality of LIBOR. If any Regulatory Development or other circumstances
relating to the interbank Euro-dollar markets shall, at any time, in Bank's
reasonable determination, make it unlawful or impractical for Bank to fund or
maintain, during any LIBOR Period, to determine or charge interest rates based
upon LIBOR, Bank shall give notice of such circumstances to Borrower and:

    (i)  In the case of a LIBOR Period in progress, Borrower shall, if requested
by Bank, promptly pay any interest which had accrued prior to such request and
the date of such request shall be deemed to be the last day of the term of the
LIBOR Period; and

    (ii) No LIBOR Period may be designated thereafter until Bank determines that
such would be practical.

12. Additional Costs. Borrower shall pay to Bank from time to time, upon Bank's
request, such amounts as Bank determines are needed to compensate Bank for any
costs it incurred which are attributable to Bank having made or maintained a
LIBOR Option Advance or to Bank's obligation to make a LIBOR Option Advance, or
any reduction in any amount receivable by Bank hereunder with respect to any
LIBOR Option or such obligation (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"), resulting from any
Regulatory Developments, which (i) change the basis of taxation of any amounts
payable to Bank hereunder with respect to taxation of any amounts payable to
Bank hereunder with respect to any LIBOR Option Advance (other than taxes
imposed on the overall net income of Bank for any LIBOR Option Advance by the
jurisdiction where Bank is

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headquartered or the jurisdiction where Bank extends the LIBOR Option Advance;
(ii) impose or modify any reserve, special deposit, or similar requirements
relating to any extensions of credit or other assets of, or any deposits with or
other liabilities of, Bank (including any LIBOR Option Advance or any deposits
referred to in the definition of LIBOR); or (iii) impose any other condition
affecting this Addendum (or any of such extension of credit or liabilities).
Bank shall notify Borrower of any event occurring after the date hereof which
entitles Bank to compensation pursuant to this paragraph as promptly as
practicable after it obtains knowledge thereof and determines to request such
compensation. Determinations by Bank for purposes of this paragraph, shall be
conclusive, provided that such determinations are made on a reasonable basis.

13. Legal Effect. Except as specifically modified hereby, all of the terms and
conditions of the Note remain in full force and effect.

    IN WITNESS WHEREOF, the parties have agreed to the foregoing as of the date
first set forth above.

Tier Technologies, Inc.   Imperial Bank
X
 
/s/ Laura B. DePole

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X
 
/s/ Mike Hazlewood

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

By:   Laura B. DePole   By:   Michael Hazlewood Title:   CFO/Secretary   Title:
  Senior Vice President

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QuickLinks

Exhibit 10.39

FIRST MODIFICATION TO CREDIT AGREEMENT
RECITALS
AGREEMENT
LIBOR ADDENDUM TO CREDIT AGREEMENT