Exhibit 10.61
EMPLOYMENT AGREEMENT
     This Employment Agreement (the “Agreement”) is made and entered into as of
the 11th day of December, 2006, by and between Tier Technologies, Inc., a
Delaware corporation (together with its successors and assigns, the “Company”),
and David E. Fountain (the “Executive”).
W I T N E S S E T H
     WHEREAS, the Company desires to continue to employ the Executive as its
Chief Financial Officer and to enter into an employment agreement embodying the
terms of such employment; and
     WHEREAS, the Executive desires to enter into this Agreement and to accept
such continued employment, subject to the terms and provisions of this
Agreement;
     NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is mutually acknowledged, the Company and the Executive,
intending to be legally bound, agree as follows:
     1. Definitions.
          (a) “Base Salary” shall mean the Executive’s base salary as determined
in accordance with Section 4 below, including any applicable increases.
          (b) “Board” shall mean the Board of Directors of the Company.
          (c) “Cause” shall mean a finding by the Company of:

  (i)   a conviction of the Executive of, or a plea of guilty or nolo contendere
by the Executive to, any felony;     (ii)   an intentional violation by the
Executive of federal or state securities laws;     (iii)   willful misconduct or
gross negligence by the Executive that has or is reasonably likely to have a
material adverse effect on the Company;     (iv)   a failure of the Executive to
perform his reasonably assigned duties for the Company that has or is reasonably
likely to have a material adverse effect on the Company;     (v)   a material
violation by the Executive of any material provision of (i) the Company’s Code
of Ethics for Chief Executive, Chief Financial, and Chief Accounting Officers or
its Business Code of Conduct (or successor

 

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      policies on similar topics) or (ii) the Executive’s Proprietary and
Confidential Information, Developments, Noncompetition and Nonsolicitation
Agreement (the “Noncompetition/NDA”); or     (vi)   fraud, embezzlement, theft
or dishonesty by the Executive against the Company,

provided that no finding of Cause shall be made pursuant to subsections (ii),
(iii), (iv), (v) or (vi) hereof unless the Company has provided the Executive
with written notice in accordance with Section 21 below stating with specificity
the facts and circumstances underlying the allegations of Cause and the
Executive has failed to cure such violation, if curable, within thirty
(30) calendar days of receipt thereof. The Board shall determine whether a
violation is curable and/or cured in its reasonable discretion.
          (d) “Change in Control” shall occur upon:

  (i)   any person, entity or affiliated group becoming the beneficial owner or
owners of more than fifty percent (50%) of the outstanding equity securities of
the Company, or otherwise becoming entitled to vote shares representing more
than fifty percent (50%) of the undiluted total voting power of the Company’s
then-outstanding securities eligible to vote to elect members of the Board (the
“Voting Securities”);     (ii)   a consolidation or merger (in one transaction
or a series of related transactions) of the Company pursuant to which the
holders of the Company’s equity securities immediately prior to such transaction
or series of related transactions would not be the holders immediately after
such transaction or series of related transactions of more than fifty percent
(50%) of the Voting Securities of the entity surviving such transaction or
series of related transactions;     (iii)   the sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or
substantially all of the assets of the Company;     (iv)   the dissolution or
liquidation of the Company; or     (v)   the date on which (i) the Company
consummates a “going private” transaction pursuant to Section 13 and Rule 13e-3
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or
(ii) no longer has a class of equity security registered under the Exchange Act.

          (e) “Code” shall mean the Internal Revenue Code of 1986, as amended
from time to time.
          (f) “Compensation Committee” shall mean the Compensation Committee of
the Board or another committee of the Board that performs the functions
typically associated with a compensation committee.

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          (g) “Date of Termination” shall mean (i) if the Executive’s employment
is terminated by reason of his death, the date of his death, or (ii) if the
Executive’s employment is terminated pursuant to any other section, the date
specified in the written notice provided in accordance with Section 21 below.
          (h) “Disability” shall mean, for purposes of this Agreement, the
Executive’s inability to substantially perform his duties and responsibilities
under this Agreement for a period of six (6) consecutive months due to a
physical or mental disability, as the term “physical or mental disability” is
defined in the Company’s long-term disability insurance plan then in effect (or
would be so found if the Executive applied for coverage or benefits under such
plan).
          (i) “Effective Date” shall mean December 11, 2006.
          (j) “Good Reason” shall mean, without the Executive’s prior written
consent, the occurrence of any of the following events or actions, provided that
no finding of Good Reason shall be made pursuant to subsections (ii), (iii),
(iv), (v), or (vi) hereof unless the Executive has provided the Company with
written notice in accordance with Section 21 below stating with specificity the
facts and circumstances underlying the allegations of Good Reason and the
Company has failed to cure such violation within thirty (30) calendar days of
receipt thereof:

  (i)   any reduction in the Executive’s Base Salary or a reduction in minimum
Bonus Opportunity below fifty percent (50%) of Base Salary,     (ii)   a
material change in the applicable performance goals used to determine the
Executive’s bonus that makes it materially less likely for the goals to be
achieved and which change (I) is not reasonable in light of the Company’s
business, (II) is designed to make it materially less likely to obtain the Bonus
Opportunity, or (III) is applied solely to the Executive (except to the extent
relating only to the functions of a Chief Financial Officer);     (iii)   any
reduction in the Executive’s title, position or reporting status, unless the
Executive is provided with a comparable title, position or reporting status, or
any material diminution of the Executive’s duties, responsibilities, powers or
authorities; provided, however, that the Executive agrees that the change in his
duties, responsibilities, powers or authorities that result solely from the
Company’s ceasing to be a public company by virtue of a Change in Control under
Section 1(d)(v) hereof shall not constitute Good Reason, unless he resigns on
the basis of such a Change in Control no later than thirty (30) calendar days
after the occurrence of the Change in Control;     (iv)   any material reduction
in the scope or value of the medical or health programs in which the Executive
is entitled to participate or any material reduction in other employee benefit
plans and programs that does not apply to other similarly situated executives;

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  (v)   any requirement imposed on the Executive to (I) relocate his principal
residence, (II) materially increase his travel time between his principal
residence and a relocated corporate headquarters beyond his customary travel
time from his date of hire to the Effective Date, or (III) travel away from his
office in the course of discharging his responsibilities or duties hereunder at
least 20% more (in terms of aggregate days in any calendar year or in any
calendar quarter when annualized for purposes of comparison to any prior year)
than was required of Executive in the year immediately prior to the Change in
Control; or     (vi)   a material breach by the Company of any material
provision of this Agreement.

          (k) “Term of Employment” shall mean the period specified in Section 2
below, as such period may be extended.
     2. Term of Employment.
          The Company hereby continues to employ the Executive, and the
Executive hereby accepts such continued employment, for the period commencing on
the Effective Date and ending on the second anniversary of the Effective Date,
subject to earlier termination of the Term of Employment in accordance with the
terms of this Agreement. This Agreement shall be automatically renewed for
additional one (1) year periods on each anniversary of the Effective Date
thereafter, unless either party notifies the other party in writing of his or
its intention not to renew this Agreement not less than thirty (30) calendar
days prior to such expiration date or anniversary, as the case may be.
     3. Position, Duties and Responsibilities.
          As of the Effective Date, the Executive shall be employed as the Chief
Financial Officer of the Company or in such other reasonably comparable position
as the Chief Executive Officer of the Company (the “Chief Executive Officer”) or
the Board may determine from time to time. In this capacity, the Executive shall
be assigned such duties and responsibilities inherent in such position and such
other duties and responsibilities as the Chief Executive Officer or the Board
shall from time to time reasonably assign to him. The Executive shall serve the
Company faithfully, conscientiously, and to the best of the Executive’s ability
and shall promote the interests and reputation of the Company. The Executive
shall devote all of the Executive’s time, attention, knowledge, energy and
skills during normal working hours, and at such other times as the Executive’s
duties may reasonably require, to the duties of the Executive’s employment;
provided, however, that the Executive may (a) serve on civic or charitable
boards or committees; or (b) with the approval of the Chief Executive Officer or
the Board, serve on corporate boards or committees. The Executive shall report
to the Chief Executive Officer in carrying out his duties and responsibilities
under this Agreement. The Executive agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein that may be adopted from time to time.

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     4. Base Salary.
          As of the Effective Date, the Executive shall be paid an annualized
Base Salary of Three Hundred Twenty-Five Thousand Dollars ($325,000) for the
one-year period commencing on the Effective Date, payable in accordance with the
regular payroll practices of the Company. The Base Salary shall be subject to
increase but not decrease thereafter, as determined by the Board in its sole
discretion.
     5. Incentive Compensation Arrangements.
          During the Term of Employment, the Executive shall be entitled to
participate in any Company incentive compensation plans, programs and/or
arrangements applicable to senior-level executives as established and modified
from time to time by the Compensation Committee in its sole discretion
including, without limitation, the Executive Incentive Compensation Plan (the
“Incentive Plan”). In no event shall the minimum annual incentive opportunity
(the “Bonus Opportunity”) for the Executive be less than fifty percent (50%) of
that year’s Base Salary, assuming satisfaction of applicable performance goals.
(For the avoidance of doubt, the Company may choose to pay no bonus if
applicable performance goals are not met.)
     6. Equity Compensation Programs.
          During the Term of Employment, the Executive shall be entitled to
participate in any equity-based plans, programs or arrangements applicable to
senior-level executives as established and modified from time to time by the
Board or the Compensation Committee in its sole discretion, to the extent that
the Executive is eligible under (and subject to the provisions of) the plan
documents governing those programs.
     7. Employee Benefit Programs.
          During the Term of Employment, the Executive shall be entitled to
participate in all employee welfare and pension benefit plans, programs and/or
arrangements applicable to senior-level executives, to the extent that the
Executive is eligible under (and subject to the provisions of) the plan
documents governing those programs.
     8. Reimbursement of Business Expenses.
          The Company shall reimburse the Executive for all reasonable travel,
entertainment and other expenses incurred or paid by the Executive in connection
with, or related to, the performance of his duties, responsibilities or services
under this Agreement, upon presentation by the Executive of documentation,
expense statements, vouchers and/or such other supporting information as the
Company may request; provided, however, that the amount available for such
travel, entertainment and other expenses may be fixed in advance by the Board.
          The Company will provide the Executive with a corporate apartment
located within a reasonable daily commuting distance from the Company’s
corporate headquarters and reimburse the Executive for airfare for the Executive
or his spouse between the city of Executive’s current residence and the
Company’s corporate headquarters and out of pocket expenses (including but not
limited to parking, taxicabs and meals) subject to the Company’s normal business
travel

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policies. From time to time the Executive may choose to fly directly to another
city instead of to his city of residence. The airfare and out of pocket expenses
(but not his lodging or meals) for such travel shall also be reimbursed by the
Company, subject to the limitation that the airfare for any such travel shall
not be reimbursed to the extent that it exceeds 100% of the airfare to
Executive’s city of residence.
          If the Executive recognizes income for income tax purposes as a result
of the Company’s payment of certain expenses pursuant to this Section 8 or
Section 9(b) below, regardless of whether he recognizes such income before or
after his employment terminates, the Company shall make a tax gross-up payment
to the Executive based on the additional tax liability that he incurs by reason
of his recognition of such income.
     9. Perquisites.
          (a) During the Term of Employment, the Executive shall be entitled to
participate in the Company’s executive fringe benefit programs applicable to the
Company’s senior-level executives (if any) in accordance with the terms and
conditions of such programs as in effect from time to time, to the extent that
the Executive is eligible under (and subject to the provisions of) the plan
documents governing those programs.
          (b) If Executive is required to relocate, the Company shall reimburse
the Executive for reasonable moving and travel expenses incurred by the
Executive in moving himself and his immediate family to the Company’s corporate
headquarters in accordance with its relocation policy. In accordance with
Company policy, the Executive will be required to repay a pro-rata portion of
the reimbursed amount if he resigns (other than under Section 11(e) below) or is
terminated for Cause within twelve (12) months of the date of relocation.
     10. Vacation.
          The Executive shall be entitled to twenty-four (24) days of paid time
off per calendar year, prorated during the calendar year in which the Executive
is initially hired and the calendar year in which the Executive’s employment
terminates, to be taken at such times as may be approved by the Chief Executive
Officer. Executive may carry over up to forty-eight (48) days of unused paid
time off.
     11. Termination of Employment.
          (a) Termination of Employment by the Company for Disability or
Termination of Employment by Death. Upon a termination of the Executive’s
employment by the Company for Disability or a termination of the Executive’s
employment by reason of the Executive’s death, the Executive or his estate
and/or beneficiaries, as the case may be, shall be entitled to the following
amounts, payable within thirty (30) calendar days following such termination:

  (i)   Base Salary earned but not paid prior to the Date of Termination and any
accrued prior year bonus not paid prior to such date;     (ii)   any amounts
earned, accrued or owing to the Executive but not yet paid under Sections 7, 8,
9 or 10 above prior to the Date of Termination;

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  (iii)   in the event of termination of employment by reason of death or, in
the event the Executive is not covered by the Company’s short- and long-term
disability policies, disability:

  (I)   one year’s Base Salary, plus a bonus equal to the average annual bonus
paid to the Executive (or for the most recent year, accrued for the Executive)
for the previous three years (or such shorter period during which the Executive
was employed) (the “Average Historic Bonus”), prorated for the number of months
worked in the fiscal year in which the date of death occurs;     (II)   a bonus
equal to the Average Historic Bonus; and     (III)   payment by the Company of
the premiums for any covered beneficiary of the Executive’s coverage under COBRA
health continuation benefits over the twelve (12) month period immediately
following the date of death, assuming such individual elects and remains
eligible for such coverage;

  (iv)   immediate vesting of one additional year on all stock options; and    
(v)   such other or additional benefits, if any, as may be provided under
applicable plans, programs and/or arrangements of the Company.

The Company must provide written notice to the Executive in accordance with
Section 21 below upon a termination of the Executive’s employment for
Disability.
Notwithstanding the provisions of clause (iii) above, the Company may provide
life insurance coverage for the Executive payable in an amount that exceeds the
amount payable under such clause (the “Minimum Death Benefit”) and shall have no
obligation to the Executive under such clause if an amount at least equal to the
Minimum Death Benefit is paid in a lump sum to the Executive’s estate within
(30) calendar days of his death. In the event that the insurance policy is paid
out after such thirty (30) calendar day period, the Executive’s estate shall
reimburse the Company for any amounts paid to it by the Company up to the amount
of the Minimum Death Benefit. This provision refers to life insurance coverage
that supplements any group term life coverage for which the Executive is or may
become eligible under terms generally applicable to executives.
          (b) Termination of Employment by the Company for Cause, by the
Executive or by Notice of Nonrenewal by the Executive. Upon a termination of the
Executive’s employment by the Company for Cause, a termination of the
Executive’s employment by the Executive (except as provided in Section 11(e)),
or a termination of the Executive’s employment by virtue of non-renewal by the
Executive pursuant to Section 2, the Executive shall be entitled to the
following:

  (i)   Base Salary earned but not paid prior to the Date of Termination and any
accrued prior year bonus not paid prior to such date;

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  (ii)   any amounts earned, accrued or owing to the Executive but not yet paid
under Sections 7, 8, 9 or 10 above prior to the Date of Termination; and    
(iii)   such other or additional benefits, if any, as may be provided under
applicable plans, programs and/or arrangements of the Company.

The Executive must provide written notice to the Company in accordance with
Section 21 below at least fifteen (15) calendar days prior to the actual Date of
Termination upon a termination of the Executive’s employment. A termination by
the Company for Cause and by notice of nonrenewal by the Executive must be made
as set forth herein.
          (c) Termination of Employment by the Company Without Cause. Upon a
termination of the Executive’s employment by the Company without Cause
(including through notice of nonrenewal by the Company pursuant to Section 2),
other than under the circumstances described in Section 11(d), the Executive
shall be entitled to the following amounts, payable within thirty (30) calendar
days following such termination, subject to the provisions of Section 23 below:

  (i)   Base Salary earned but not paid prior to the Date of Termination and any
accrued prior year bonus not paid prior to such date;     (ii)   any amounts
earned, accrued or owing to the Executive but not yet paid under Sections 7, 8,
9 or 10 above prior to the Date of Termination;     (iii)   such other or
additional benefits, if any, as may be provided under applicable plans, programs
and/or arrangements of the Company;     (iv)   a prorated portion of the Average
Historic Bonus (prorated for the number of months worked in the fiscal year in
which the Date of Termination falls);     (v)   one (1) times the Base Salary in
effect on the Date of Termination, plus a bonus equal to the Average Historic
Bonus;     (vi)   immediate vesting of any stock options that would have vested
before the end of the term of this Agreement (taking into account any renewals
that have occurred under Section 2) or, if greater, one additional year of
vesting on all stock options; and     (vii)   payment by the Company of the
premiums for the Executive’s and any covered beneficiary’s coverage under COBRA
health continuation benefits over the twelve (12) month period immediately
following the Date of Termination, assuming such individuals elect and remain
eligible for such coverage;

provided that the Executive must execute and not revoke a severance agreement
and release of claims drafted by and reasonably satisfactory to the Company (the
“Severance Agreement”) to be eligible for the payments in Sections 11(c)(iv)
through (vii) herein, which will contain a full

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release of the Company (other than for exceptions specified therein), and will
be in substantially the form attached hereto as Exhibit A (with such additional
reasonable grounds for release of the Company as changes in law or circumstances
may require). The Company must provide written notice to the Executive in
accordance with Section 21 below upon a termination of the Executive’s
employment without Cause.
          (d) Termination of Employment by the Company after a Change in
Control. Upon a termination of the Executive’s employment by the Company without
Cause within one (1) year after a Change in Control, the Executive shall be
entitled to the following amounts, payable within thirty (30) calendar days
following such termination, subject to the provisions of Section 23 below:

  (i)   Base Salary earned but not paid prior to the Date of Termination and any
accrued prior year bonus not paid prior to such date;     (ii)   any amounts
earned, accrued or owing to the Executive but not yet paid under Sections 7, 8,
9 or 10 above prior to the Date of Termination;     (iii)   such other or
additional benefits, if any, as may be provided under applicable plans, programs
and/or arrangements of the Company;     (iv)   a prorated portion of the Average
Historic Bonus (prorated for the number of months worked in the fiscal year in
which the Date of Termination falls);     (v)   three (3) times the sum of
(A) the Base Salary in effect on the Date of Termination plus (B) a bonus equal
to the Average Historic Bonus, but in no event shall the Average Historic Bonus
used to calculate the amount payable under this clause (v) be in an amount less
than fifty percent (50%) of the then current Base Salary;     (vi)   immediate
vesting of any stock options; and     (vii)   payment by the Company of the
premiums for the Executive’s and any covered beneficiary’s health insurance over
the thirty-six (36) month period immediately following the Date of Termination;

provided that the Executive must execute and not revoke the Severance Agreement
(with the conditions contained in the proviso to Section 11(c)) to be eligible
for the payments in Sections 11(d)(iv) through (vii) herein. The Company must
provide written notice to the Executive in accordance with Section 21 below upon
a termination of the Executive’s employment without Cause.
          (e) Resignation for Good Reason by the Executive due to a Change in
Control. The Executive may terminate his employment for Good Reason within one
(1) year after a Change in Control (extended to two (2) years after a Change in
Control defined in Section 1(d)(v)), in which event the Executive shall be
entitled to the payments in and subject to

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the conditions of Section 11(d). The Executive must provide written notice to
the Company of a proposed resignation for Good Reason in accordance with
Section 21 below.
     12. Nondisclosure, Inventions, Noncompetition and Nonsolicitation.
          The Executive shall execute, simultaneously with the execution of this
Agreement or otherwise upon the Company’s request, the Noncompetition/NDA
attached hereto as Exhibit B.
     13. Assignability; Binding Nature.
          This Agreement shall be binding upon and inure to the benefit of both
parties and their respective successors and assigns, including any corporation
or entity with which or into which the Company may be merged or that may succeed
to its assets or business; provided, however, that the obligations of the
Executive are personal and shall not be assigned by him.
     14. Representation.
          The Company represents and warrants that it is fully authorized and
empowered to enter into this Agreement. The Executive states and represents that
he has had an opportunity to fully discuss and review the terms of this
Agreement with an attorney. The Executive further states and represents that he
has carefully read this Agreement, understands the contents herein, freely and
voluntarily assents to all of the terms and conditions hereof, and signs his
name of his own free act.
          The Company will pay or reimburse the Executive’s reasonable
attorneys’ fees and expenses in connection with the drafting and negotiation of
this Agreement, to an amount not to exceed $22,000. In addition, the Company
agrees that, if a dispute arises that concerns this Agreement, the
NDA/Noncompete, or the Separation Agreement and the Executive is the prevailing
party in the dispute, he shall be entitled to recover all of his reasonable
attorney’s fees and expenses incurred in connection with the dispute. For this
purpose, the Executive will be the “prevailing party” if he is successful on any
significant substantive issue in the action and achieves either a judgment in
his favor or some other affirmative recovery.
          Upon the occurrence of a Change in Control, the following additional
provisions shall be in effect and shall remain in effect until the first
anniversary of the effective date of such Change in Control (or such longer
period as is needed to resolve disputes relating to the first year after a
Change in Control (or, to the extent a two (2) year period applies under
Section 11(e), two (2) years): It is the intent of the Company that the
Executive not be required to incur legal fees and the related expenses
associated with the negotiation, execution, interpretation, enforcement or
defense of Executive’s rights under this Agreement by litigation or otherwise
because the cost and expense thereof would substantially detract from the
benefits intended to be extended to the Executive hereunder. Accordingly, if it
should appear in good faith to the Executive that the Company has failed to
comply with any of its obligations under this Agreement or in the event that the
Company or any other person takes or threatens to take any action to declare
this Agreement void or unenforceable, or institutes any litigation or other
action or proceeding designed to deny, or to recover from the Executive, the
benefits provided or intended to be provided to the Executive hereunder, the
Company irrevocably authorizes the Executive from time to time to retain counsel
of Executive’s choice , at the expense of the

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Company as hereafter provided, to advise and represent the Executive in
connection with any such interpretation, enforcement or defense, including
without limitation the initiation or defense of any litigation or other legal
action, whether by or against the Company or any Director, officer, stockholder
or other person affiliated with the Company. Notwithstanding any existing or
prior attorney-client relationship between the Company and any such counsel, the
Company irrevocably consents to the Executive’s entering into an attorney client
relationship with such counsel, and in that connection the Company and the
Executive agree that a confidential relationship shall exist between the
Executive and such counsel. Without respect to whether the Executive prevails,
in whole or in part, in connection with any of the foregoing, the Company will
pay and be solely financially responsible for any and all attorneys’ and related
fees and expenses incurred by the Executive in good faith in connection with any
of the foregoing. The Company will pay the Executive’s legal fees as invoices
are presented by the Executive’s legal counsel. The special provisions of this
paragraph do not apply to the Noncompete/NDA, disputes with respect to which are
covered by the preceding paragraph.
          In the event that Employee’s employment is terminated during the
applicable one or two year period, as the case may be, pursuant to Sections
11(d) or 11(e) hereof, the additional provisions shall also apply to any
payments owed him as specified in the Severance Agreement and shall remain in
effect with respect to such payments as long as necessary to receive (or be
found not entitled to) such payments.
     15. Entire Agreement.
          This Agreement contains the entire understanding and agreement between
the parties concerning the subject matter hereof and supersedes all prior
agreements, understandings, discussions, negotiations and undertakings, whether
written or oral, with respect thereto, including, without limitation, the Offer
Letter dated as of May 2, 2005.
     16. Amendment or Waiver.
          No provision in this Agreement may be amended unless such amendment is
agreed to in writing and signed by the Executive and an authorized officer of
the Company. No waiver by either party of any breach by the other party of any
condition or provision contained in this Agreement to be performed by such other
party shall be deemed a waiver of a similar or dissimilar condition or provision
at the same or any prior or subsequent time. Any waiver must be in writing and
signed by the Executive or an authorized officer of the Company, as the case may
be.
     17. Withholding.
          The Company may withhold from any amounts payable under this Agreement
such federal, state and local taxes as may be required to be withheld pursuant
to any applicable law or regulation.
     18. Severability.
          In the event that any provision of this Agreement shall be determined
by a court of competent jurisdiction to be invalid or unenforceable for any
reason, in whole or in part, the

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remaining parts, terms or provisions of this Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest extent
permitted by law.
     19. Survivorship.
          The respective rights and obligations of the parties hereunder shall
survive any termination of the Executive’s employment to the extent necessary to
preserve such rights and obligations.
     20. Governing Law; Jurisdiction; Dispute Resolution.
          This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Virginia (without reference to the conflict of
laws provisions thereof). In case of any controversy or claim arising out of or
related to this Agreement or relating to the Executive’s employment (including
but not limited to claims relating to employment discrimination), except as
expressly excluded herein, each party to this Agreement agrees to give the other
party notice of non-compliance with this Agreement and ten (10) days to cure.
Should resolution of any controversy or claim not be reached following provision
of notice and a reasonable opportunity to cure, then the dispute shall be
settled by arbitration, under the American Arbitration Association’s National
Rules for the Resolution of Employment Disputes (the “National Rules”). A single
arbitrator shall be selected in accordance with the National Rules, and the
costs of such arbitration shall be shared equally between the parties, except to
the extent expressly set forth in Section 14 above. Any claim or controversy not
submitted to arbitration in accordance with this Section 20 (other than as
provided under the Noncompetition/NDA) shall be waived, and thereafter no
arbitrator, arbitration panel, tribunal, or court shall have the power to rule
or make any award on any such claim or controversy. In determining a claim or
controversy under this Agreement and in making an award, the arbitrator must
consider the terms and provisions of this Agreement, as well as all applicable
federal, state, or local laws. The award rendered in any arbitration proceeding
held under this Section 20 shall be final and binding and judgment upon the
award may be entered in any court having jurisdiction thereof. Claims for
workers’ compensation or unemployment compensation benefits are not covered by
this Section 20. Without limiting the provisions of this Section 20, the Company
and the Executive agree that the decision as to whether a party is the
prevailing party in an arbitration, or a legal proceeding that is commenced in
connection therewith will be made in the sole discretion of the arbitrator or,
if applicable, the court and the arbitrator or court may award reasonable
attorneys’ fees, costs and expenses, except to the extent expressly to the
contrary in Section 14 above. The Company and the Executive each hereby
irrevocably waive any right to a trial by jury in any action, suit or other
legal proceeding arising under or relating to any provision of this Agreement.

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     21. Notices.
          All notices shall be in writing, shall be sent to the following
addresses listed below using a reputable overnight express delivery service and
shall be deemed to be received one (1) calendar day after mailing.

     If to the Company:   10780 Parkridge Blvd.
4th Floor
Reston, Virginia 20191
Attention: General Counsel
 
with a copy to: The Chief Executive Officer

     If to the Executive:   At his current or last known residential address

Any notice of termination must include a Date of Termination in accordance with
the relevant provisions of this Agreement.
     22. Headings.
          The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.
     23. Compliance with Code Section 409A.
          To the extent any payment, compensation or other benefit provided to
the Executive in connection with his employment termination is determined to
constitute “nonqualified deferred compensation” within the meaning of
Section 409A of the Code and the Executive is a specified employee as defined in
Section 409A(2)(B)(i), such payment, compensation or other benefit shall not be
paid before the day that is six (6) months plus one (1) day after the Date of
Termination (the “New Payment Date”). The aggregate of any payments that
otherwise would have been paid to the Executive during the period between the
Date of Termination and the New Payment Date shall be paid to the Executive in a
lump sum on such New Payment Date. Thereafter, any payments that remain
outstanding as of the day immediately following the New Payment Date shall be
paid without delay over the time period originally scheduled, in accordance with
the terms of this Agreement.
     24. Excise Tax Gross-Up.
          Under certain circumstances the Executive may become entitled to a
gross-up payment with respect to the excise tax imposed by Section 4999 of the
Code. The terms governing the gross-up payment are set forth in Exhibit C, which
is incorporated herein by reference.

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     25. Counterparts.
          This Agreement may be executed in two or more counterparts, and such
counterparts shall constitute one and the same instrument. Signatures delivered
by facsimile shall be deemed effective for all purposes to the extent permitted
under applicable law.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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

                  TIER TECHNOLOGIES, INC.
 
           
 
  By:                  
 
      Name:    
 
      Title:    
 
                THE EXECUTIVE
 
                          David E. Fountain

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Exhibit A
FORM OF SEPARATION AGREEMENT AND RELEASE
     This Separation Agreement and Release (the “Agreement”) is made by and
between Tier Technologies, Inc., a Delaware corporation (the “Company”), and
___(the “Employee”) (collectively, the “Parties”), as of the Separation Date (as
defined below).
     WHEREAS, the Employee entered into an employment agreement dated as of
December ___, 2006 (the “Employment Agreement”) and [RECITE AGREEMENTS]
(together, the “Prior Agreements”);
WHEREAS, the Employee has been [TITLES];
     WHEREAS, the Parties desire to set forth the terms of their joint
agreements regarding the Employee’s separation from the Company and establish
the terms of the Employee’s severance arrangement; and
     WHEREAS, the Company advises the Employee to consult with an attorney of
his own choosing prior to executing this Agreement;
     NOW, THEREFORE, in consideration of the promises and conditions set forth
herein, the receipt and sufficiency of which is hereby acknowledged, the Company
and the Employee agree as follows:
     Separation Date and Termination of Prior Agreements. The Employee’s
effective date of separation from the Company [was] [shall be] [date] (the
“Separation Date”). Provided that the Employee does not revoke this Agreement
pursuant to Section 18 below, the Employee acknowledges that the Prior
Agreements terminated effective as of the Separation Date, except as provided
herein, and that the Company no longer has any obligations thereunder, including
any obligations to provide benefits or perquisites to the Employee and/or his
family pursuant to the

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Prior Agreements.
     Consideration. In return for the timely execution and non-revocation of
this Agreement and provided that the Employee has complied with all conditions
set forth in this Agreement, the Company agrees to provide the Employee with the
following consideration (the “Consideration”):
     [Reflect payments from Employment Agreement or other compensatory
agreement.]
[Any other applicable consideration]
Release.
     In exchange for the Consideration, which the Employee acknowledges he would
not otherwise be entitled to receive, and except as otherwise provided in this
Agreement, the Employee hereby fully, forever, irrevocably and unconditionally
releases, remises and discharges the Company, its officers, directors,
affiliates, subsidiaries, parent companies, agents and employees (each in their
individual and corporate capacities) (hereinafter, the “Released Parties”) from
any and all claims, charges, complaints, demands, actions, causes of action,
suits, rights, debts, sums of money, costs, accounts, reckonings, covenants,
contracts, agreements, promises, doings, omissions, damages, executions,
obligations, liabilities and expenses (including attorneys’ fees and costs), of
every kind and nature that the Employee ever had or now has against any or all
of the Released Parties, including, but not limited to, all claims arising out
of his employment with and/or separation from the Company including, but not
limited to, all employment discrimination claims under Title VII of the Civil
Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Americans With Disabilities
Act of 1990, 42 U.S.C. § 12101 et seq., the Age Discrimination in Employment
Act, 29 U.S.C., § 621 et seq., the Virginia Human Rights Act,

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Va. Code § 2.2-3900 et seq., Va. Code Ann. § 51.5-40 et seq. (Virginia rights of
persons with disabilities law) and Va. Code § 40.1-28.6 (Virginia equal pay
law), all as amended, all claims arising out of the Fair Credit Reporting Act,
15 U.S.C. § 1681 et seq. and the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq., all as amended, any claims to have been or
to be considered as a “whistleblower” or other protected person under Federal or
state law, including Section 806 of the Corporate and Criminal Fraud
Accountability Act; all common law claims including, but not limited to, actions
in tort, defamation and breach of contract (including, without limitation,
claims arising out of or related to the Prior Agreements), all claims to any
non-vested ownership interest in the Company, contractual or otherwise,
including, but not limited to, claims to stock or stock options, and any claim
or damage arising out of the Employee’s employment with and/or separation from
the Company (including a claim for retaliation) under any common law theory or
any federal, state or local statute or ordinance not expressly referenced above.
The Employee understands and agrees that by entering into this Agreement, he is
waiving any and all rights or claims you might have under the Age Discrimination
in Employment Act, as amended by the Older Workers Benefits Protection Act, and
that he has received consideration beyond that to which he was previously
entitled. It is understood that this release does not affect any rights the
Employee has under this Agreement, any vested rights that Employee may have
under any pension or retirement plans sponsored by the Company for its
employees, or any rights the Employee and his beneficiaries may have to
continued medical coverage under the continuation coverage provisions of the
Internal Revenue Code, ERISA, or applicable state law, nor does it prevent the
Employee from (a) filing, cooperating with, or participating in any proceeding
before the EEOC or a state fair employment practices agency (except that the
Employee acknowledges and understands that he

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may not be able to recover any monetary benefits in connection with any such
claim, charge or proceeding); or (b) making claims for indemnification and/or
advancement of fees pursuant to Section 6 hereof.
     Known and Unknown Claims. The Employee understands and agrees that the
claims released in Section 3(a) above include not only claims presently known to
him, but also include all unknown or unanticipated claims, rights, demands,
actions, obligations, liabilities and causes of action of every kind and
character that would otherwise come within the scope of the released claims as
described in Section 3. The Employee understands that he may hereafter discover
facts different from what he now believes to be true, which if known, could have
materially affected this Agreement, but he nevertheless waives and releases any
claims or rights based on different or additional facts.
     Proprietary and Confidential Information, Developments, Noncompetition and
Nonsolicitation Agreement. The Employee represents and agrees that, as a
condition of the payment of the Consideration herein described, he has complied
with and will continue to comply with the Proprietary and Confidential
Information, Developments, Noncompetition and Nonsolicitation Agreement he
executed previously and any successor agreements thereto.
     Cooperation. The Employee agrees to fully cooperate with the Company in the
investigation, defense or prosecution of any government investigation, claims or
actions now in existence or which may be brought in the future against or on
behalf of the Company or any of its owners, shareholders, predecessors,
successors, assigns, agents, directors, officers, employees, representatives,
attorneys, subsidiaries, affiliates or parents (and agents, directors, officers,
employees, representatives and attorneys of such subsidiary, affiliate or
parent) and all persons acting by, through, under or in concert with any of
them. Such cooperation shall include, but not

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be limited to, meeting with representatives of the Company upon reasonable
notice at reasonable times and locations to prepare for discovery or any
mediation, arbitration, trial, administrative hearing or other proceeding or to
act as a witness. In furtherance of the cooperation to be provided under this
Section 5, the Employee agrees that he will provide accurate and complete
information and testimony. Moreover, unless otherwise prohibited by law, the
Employee shall notify the General Counsel of the Company if the Employee is
asked by any person, entity or agency to assist, testify or provide information
in any such proceeding or investigation. Such notice shall be in writing and
sent by overnight mail within two (2) business days of the time the request for
assistance, testimony, or information is received by the Employee. If the
Employee is not legally permitted to provide such notice, he agrees that he
shall request that the person, entity, or agency seeking assistance or
information provide notice consistent with this Section 5. If and to the extent
that the cooperation is required after the period for which the Employee is
receiving payments, if any, under Section 11 of the Employment Agreement (i.e.,
after one year in connection with the payment of one year’s base salary and
after three years in connection with a Change in Control payment (where “Change
in Control” is defined in Section 1(d) of the Employment Agreement)), the
Corporation shall pay the Employee reasonable per diem compensation for time
spent by Employee for which he is not otherwise compensated by the Corporation
or any third party while providing such cooperation. The Board must approve the
rate of compensation and estimated time involved and may not unreasonably
withhold approval. In addition, the Company shall reimburse the Employee for all
expenses (including attorney’s fees) actually and reasonably incurred by the
Employee in providing such cooperation under this Section 5.

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     Indemnification. The Company agrees that the Employee is not releasing any
claims he/she may have for indemnification under state or other law or the
charter, articles, or by-laws of the Company and its affiliated companies, or
under any indemnification agreement with the Company or under any insurance
policy providing directors’ and officers’ coverage for any lawsuit or claim
relating to the period when he or she was a director or officer of the Company
or any affiliated company; provided, however, that (i) the Company’s execution
of this Agreement is not a concession or guaranty that the Employee has any such
rights to indemnification, (ii) that this Agreement does not create any
additional rights to indemnification, and (iii) that the Company retains any
defenses it may have to such indemnification or coverage.
     Resignation from Officer and Board Positions. The Employee agrees that
he/she [will cease] [has ceased], effective as of the Separation Date, to be
[TITLES], as well as to hold any and all other positions as an officer or
director of any of the Company’s subsidiaries or affiliates.
     Business Expenses and Final Compensation. The Company shall promptly
reimburse the Employee for all business expenses incurred in conjunction with
the performance of his employment duties and consistent with the Company
policies. The Company shall promptly pay, to the extent not already paid, the
Employee’s salary through the Separation Date and any accrued, unused paid time
off days that the Employee has as of the Separation Date. Upon such payments,
the Employee acknowledges and agrees that he will have received payment in full
for all services rendered in conjunction with his employment by the Company and
that no other compensation, including salary, bonuses, or severance payments or
benefits pursuant to any plan, policy or practice, will be or are owed to him
(other than payments specified herein).
     Return of Company Property. The Employee confirms he has returned to the
Company all keys, files, records (and copies thereof), equipment (including, but
not limited to, computer

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hardware, software and printers, wireless handheld devices, cellular phones and
pagers), Company identification, Company vehicles, Company confidential and
proprietary information and any other Company-owned property in his possession
or control and has left intact all electronic Company documents, including, but
not limited to, those that he developed or helped to develop during his
employment. The Employee further confirms that he has cancelled all accounts for
his benefit, if any, in the Company’s name, including, but not limited to,
credit cards, telephone charge cards, cellular phone and/or pager accounts and
computer accounts.
     Nondisparagement. The Employee understands and agrees that as a condition
for payment to him of the Consideration described herein, he will not make any
false, disparaging or derogatory statements to any media outlet, industry group,
financial institution or current or former employee, consultant, client or
customer of the Company or to any other entity or person regarding the Company
or any of its officers, directors, agents, consultants, employees, customers or
suppliers or about the Company’s business affairs or financial condition;
provided, however, that this shall not apply to truthful communications the
Employee is required by law to make to the Board or any governmental entity or
in any litigation or arbitration. The Company understands and agrees that (i) as
a condition for the release provided under this Agreement, it will instruct its
directors and officers not to make and (ii) that its directors and officers
shall not make any false, disparaging or derogatory statements to any media
outlet, industry group, financial institution or current or former employee,
consultant, client or customer of the Company or to any other entity or person
regarding the Employee or any members of his family; provided, however, that
this shall not apply to truthful communications the Company or its directors or
officers are required by law to make to the Board or any governmental entity or
in any litigation or arbitration or as part of any required public disclosures.

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     [Confidentiality. The Parties understand and agree that the contents of the
negotiations and discussions resulting in this Agreement shall be maintained as
confidential and shall not be disclosed, provided that the Employee may make
disclosure hereunder: (i) to the extent that such disclosure is specifically
required by law or legal process or as authorized in writing by the Company;
(ii) to the extent that such disclosure is necessary to enforce or implement the
provisions of this Agreement; (iii) to his tax advisors, accountants, attorneys,
representatives and members of his immediate family; and (iv) to the extent the
Company has publicly disclosed a provision of this Agreement; and provided
further that the Company may make disclosure hereunder: (i) to the extent that
such disclosure is specifically required by law or legal process or as
authorized in writing by the Employee; (ii) to the extent that such disclosure
is necessary to enforce or implement the provisions of this Agreement; and
(iii) to its tax advisors, accountants, and attorneys. Notwithstanding the
foregoing, the Employee acknowledges that the Company must promptly describe the
materials terms of this Agreement on a Form 8-K and will satisfy its obligation
of filing this Agreement by providing this Agreement as an exhibit to that Form
8-K.]
     Nature of Agreement. The Parties understand and agree that this Agreement
is a severance and settlement agreement and does not constitute an admission of
liability or wrongdoing on the part of the Company.
     Amendment. This Agreement shall be binding upon the Parties and may not be
modified in any manner except by an instrument in writing of concurrent or
subsequent date signed by a duly authorized representative of the Parties
hereto. This Agreement is binding upon and shall inure to the benefit of the
Parties and their respective agents, assigns, heirs, executors, successors and
administrators.
     Waiver of Rights. No delay or omission by the Company or the Employee in
exercising

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any rights under this Agreement shall operate as a waiver of that or any other
right. A waiver or consent given by the Company or the Employee on any one
occasion shall be effective only in that instance and shall not be construed as
a bar to or waiver of any right on any other occasion.
     Validity. Should any provision of this Agreement be declared or be
determined by any court of competent jurisdiction to be illegal or invalid, the
validity of the remaining parts, terms or provisions shall not be affected
thereby and said illegal or invalid part, term or provision shall be deemed not
to be a part of this Agreement.
     Governing Law; Jurisdiction; Dispute Resolution. This Agreement shall be
governed by and construed in accordance with the laws of the Commonwealth of
Virginia (without reference to the conflict of laws provisions thereof). The
dispute resolution provisions of Section 20 of the Employment Agreement apply to
this Agreement.
     Acknowledgments. The Employee acknowledges that he has been given at least
twenty-one (21) calendar days to consider this Agreement and that the Company
advised the Employee in writing to consult with an attorney of his own choosing
prior to executing it. The Employee further acknowledges that any change made to
this Agreement, whether material or immaterial, does not restart the running of
the twenty-one (21) day period. The Employee further understands that he may
revoke this Agreement for a period of seven (7) calendar days after he executes
it, and that it shall not be effective or enforceable until the expiration of
this seven (7) day revocation period.
     Voluntary Assent. The Employee affirms that no other promises or agreements
of any kind have been made to or with him by any person or entity whatsoever to
cause him to sign this Agreement, and that he fully understands the meaning and
intent of this Agreement. The Employee states and represents that he has had an
opportunity to discuss fully and review the

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terms of this Agreement with an attorney. The Employee further states and
represents that he has carefully read this Agreement, understands the contents
herein, freely and voluntarily assents to all of the terms and conditions
hereof, and signs his name of his own free act.
     Entire Agreement. Except as provided in Sections 4, 6, or 16 herein or as
specified below, this Agreement contains and constitutes the entire
understanding and agreement between the Parties hereto with respect to severance
and settlement and terminates and supersedes all previous oral and written
negotiations, agreements, commitments and writings in connection therewith,
including, but not limited to, the Prior Agreements. Notwithstanding the
foregoing sentence, Section 14 (“Representation”) of the Employment Agreement
shall apply in accordance with its terms to disputes under this Agreement.
     Recital Paragraphs. The recital paragraphs at the beginning of this
Agreement are incorporated by reference as if fully set forth herein.
     Counterparts. This Agreement may be executed in two (2) signature
counterparts, each of which shall constitute an original, but all of which taken
together shall constitute one and the same instrument.
     IN WITNESS WHEREOF, the Parties have set their hand and seal to this
Agreement as of the date set forth below.

     
 
  Signatures on Page Following

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            TIER TECHNOLOGIES, INC.
      By:           Name:           Title:        

         
 
       
 
  Dated:    
 
       
 
       
 
             
 
  [Employee]    
 
       
 
  Dated:    
 
       

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Exhibit B
PROPRIETARY AND CONFIDENTIAL INFORMATION, DEVELOPMENTS,
NONCOMPETITION AND NONSOLICITATION AGREEMENT
     This Proprietary and Confidential Information, Developments, Noncompetition
and Nonsolicitation Agreement (the “Agreement”) is made by and between Tier
Technologies, Inc. (the “Company”) and David E. Fountain (the “Employee”).
     IN CONSIDERATION of the Employee’s employment and/or continued employment
with the Company and for other valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Employee agrees as follows:
     26. Condition of Employment.
     The Employee acknowledges that the Employee’s employment and/or the
continuance of that employment with the Company is contingent upon the
Employee’s agreement to sign and adhere to the provisions of this Agreement.
Employee is receiving enhanced severance protection and additional benefits in
connection with executing an employment agreement and this Agreement. The
Employee further acknowledges that the nature of the Company’s business is such
that protection of its proprietary and confidential information is critical to
its business’s survival and success. For purposes of Sections 2, 3 and 4, the
“Company” shall include Tier Technologies, Inc. and any of its subsidiaries,
corporate affiliates, and/or associated companies.
     27. Proprietary and Confidential Information.
     (a) The Employee agrees that all information and know-how, whether or not
in writing, of a private, secret, or confidential nature concerning the
Company’s business or financial affairs (collectively, “Proprietary
Information”) is and shall be the exclusive property of the Company. By way of
illustration, but not limitation, Proprietary Information may include systems,
software and codes, whether existing, in the course of development, or being
planned or proposed; customer and prospect lists; contacts at or knowledge of
customers or prospective

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customers, customer accounts and other customer financial information; price
lists and all other pricing, marketing and sales information relating to the
Company or any customer or supplier of the Company; databases, modules,
products, product improvements, product enhancements, processes, methods, and
techniques; patent and patent applications; negotiation strategies and
positions; operations, projects, developments, and plans; research data and
techniques; financial data; and personnel data. The Employee will not disclose
any Proprietary Information to others outside the Company or use the same for
any unauthorized purposes without written approval by an officer of the Company,
either during or at any time after the Employee’s employment with the Company,
unless and until such Proprietary Information has become public knowledge
without fault by the Employee. While employed by the Company, the Employee will
use the Employee’s best efforts to prevent publication or disclosure of any
confidential or Proprietary Information concerning the business, products,
processes, or affairs of the Company.
     (b) The Employee agrees that all disks, files, documents, letters,
memoranda, reports, records, data, drawings, notebooks, program listings, or any
other written, photographic or other record containing Proprietary Information,
whether created by the Employee or others, that come into the Employee’s custody
or possession, shall be and are the exclusive property of the Company to be used
only in the performance of the Employee’s duties for the Company. Upon
termination or cessation of the Employee’s employment with the Company for any
reason or at the Company’s request, the Employee agrees to return to the Company
any and all materials and copies thereof in the Employee’s custody, possession
or control containing Proprietary Information.
     (c) The Employee acknowledges that the Employee’s obligations with regard
to Proprietary Information set out in subsections 2(a) and 2(b) above extend to
all information, know-how, records and tangible property of customers of the
Company or suppliers to the Company or of any third party who may have disclosed
or entrusted the same to the Company or to the Employee in the course of the
Company’s business.
     28. Developments.
     (a) The Employee will make full and prompt disclosure to the Company of all
inventions, creations, improvements, discoveries, methods, developments,
software and works of authorship, whether patentable or not, that are created,
made, conceived or reduced to practice by the Employee or under the Employee’s
direction or jointly with others during the Employee’s employment by the
Company, whether or not during normal working hours or on the premises of the
Company (all of which are collectively referred to in this Agreement as
“Developments”).
     (b) The Employee agrees to assign and does hereby assign to the Company (or
any person or entity designated by the Company) all of the Employee’s right,
title and interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications. However, this subsection
3(b) shall not apply to Developments that do not relate to the present or
planned business or research and development of the Company and that are made
and conceived by the Employee not during normal working hours, not on the
Company’s premises and not using the Company’s tools, devices, equipment or
Proprietary Information. The Employee understands that, to the extent this
Agreement shall be construed in accordance with the laws of any state that
precludes a requirement in an employee agreement to assign

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certain classes of inventions made by an employee, this subsection 3(b) shall be
interpreted not to apply to any invention that a court rules and/or the Company
agrees falls within such classes. The Employee hereby also waives all claims to
moral rights in any Developments.
     (c) The Employee agrees to cooperate fully with the Company, both during
and after the Employee’s employment with the Company, with respect to the
procurement, maintenance and enforcement of copyrights, patents and other
intellectual property rights (both in the United States and foreign countries)
relating to Developments. The Employee shall sign all papers, including, but not
limited to, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights and powers of attorney, that
the Company may deem necessary or desirable to protect its rights and interests
in any Development. The Employee further agrees that if the Company is unable,
after reasonable effort, to secure the Employee’s signature on any such papers,
any executive officer of the Company shall be entitled to execute any such
papers as the Employee’s agent and attorney-in-fact, and the Employee hereby
irrevocably designates and appoints each executive officer of the Company as the
Employee’s agent and attorney-in-fact to execute any such papers on the
Employee’s behalf, and to take any and all actions as the Company may deem
necessary or desirable to protect its rights and interests in any Development
under the conditions described in this sentence.
     29. Noncompetition and Nonsolicitation.
     (a) While the Employee is employed by the Company and for a period of
eighteen (18) months following the termination or cessation of such employment
for any reason (except as provided in Section 4(b)) (the “Restricted Period”),
the Employee will not directly or indirectly:
In the geographical area where the Company does business or has done business at
the time of the termination or cessation of the Employee’s employment, engage in
any business or enterprise (whether as an owner, partner, officer, employee,
director, investor, lender, consultant, independent contractor or otherwise,
except as the holder of not more than one percent (1%) of the combined voting
power of the outstanding stock of a publicly-held company) that is competitive
with the Company’s business, including, but not limited to, any business or
enterprise that develops, designs, produces, markets, sells or renders any
product or service competitive with any product or service developed, designed,

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produced, marketed, sold or rendered by the Company while the Employee was
employed by the Company;
Either alone or in association with others, (i) solicit, recruit, or induce, or
attempt to solicit, recruit, or induce, any employee of the Company to leave the
employ of the Company, or (ii) recruit, solicit or hire as an employee or engage
as an independent contractor, or attempt to recruit, solicit or hire as an
employee or engage as an independent contractor, any person who was employed by
the Company at any time during the period of the Employee’s employment with the
Company, except for an individual whose employment with the Company ceased at
least six (6) months earlier; or
Either alone or in association with others, solicit, divert or take away, or
attempt to solicit, divert or take away, the business or patronage of any of the
clients, customers or accounts, or prospective clients, customers or accounts,
of the Company that the Employee contacted, solicited or served while the
Company employed the Employee. The terms “client” and “customer” include any
person, firm, corporation, governmental department or agency, or other entity or
any parent, subsidiary, or affiliate thereof but excludes clients and customers
who have had no business relationship with the Company within the twelve
(12) months preceding the Employee’s proposed activity with respect to such
client or customer. To the extent that any customers or clients, as defined
herein, are governmental entities, the prohibition stated herein shall apply
only to the

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specific branch, division, office, group, or other subentity of the government
with which the Company had the contract.
     (b) The Restricted Period shall be limited to the Employee’s period of
employment for purposes of clause (1) of Section 4(a) with respect to
nongovernmental lines of business.
     (c) If any court of competent jurisdiction finds any restriction set forth
in this Section 4 to be unenforceable because the restriction extends for too
long a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.
     (d) The Employee agrees to provide a copy of this Agreement to all persons
and entities with whom the Employee seeks to be hired or do business before
accepting employment or engagement with any of them.
     (e) If the Employee violates the provisions of this Section 4, the Employee
shall continue to be held by the restrictions set forth in this Section 4 until
a period equal to the period of restriction has expired without any violation.
     30. Other Agreements.
     The Employee hereby represents that, except as the Employee has disclosed
in writing to the Company, the Employee is not bound by the terms of any
agreement with any previous employer or other party to refrain from using or
disclosing any trade secret or confidential or proprietary information in the
course of the Employee’s employment with the Company, to refrain from competing,
directly or indirectly, with the business of such previous employer or other
party, or to refrain from soliciting employees, customers or suppliers of such
previous employer or other party. The Employee further represents that the
Employee’s performance of all of the terms of this Agreement and the performance
of the Employee’s duties as an employee of the Company do not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by the Employee in confidence or in trust prior to the Employee’s
employment with the Company. The Employee also represents that the Employee

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will not disclose to the Company or induce the Company to use any confidential
or proprietary information or material belonging to any previous employer or
others.
     31. United States Government Obligations.
     The Employee acknowledges that the Company from time to time may have
agreements with other persons or with the United States Government, or agencies
thereof, that impose obligations or restrictions on the Company regarding
inventions made during the course of work under such agreements or regarding the
confidential nature of such work. The Employee agrees to be bound by all such
obligations and restrictions that are made known to the Employee and to take all
action necessary to discharge the obligations of the Company under such
agreements.
     32. Not An Employment Contract.
     The Employee acknowledges that this Agreement does not constitute a
contract of employment and does not imply that the Company will continue the
Employee’s employment for any period of time.
     33. General Provisions.
     (a) No Conflict. The Employee represents that the execution and performance
by him/her of this Agreement does not and will not conflict with or breach the
terms of any other agreement by which the Employee is bound.
     (b) Acknowledgements and Equitable Remedies. The Employee acknowledges that
the restrictions contained in this Agreement are necessary for the protection of
the business and goodwill of the Company and considers the restrictions to be
reasonable for such purpose. The Employee agrees that any breach or threatened
breach of this Agreement will cause the Company substantial and irrevocable
damage that is difficult to measure. Therefore, in the event of any such breach
or threatened breach, the Employee agrees that the Company, in addition to such
other remedies that may be available, shall have the right to seek specific
performance and injunctive relief without posting a bond. The Employee hereby
waives the adequacy of a remedy at law as a defense to such relief.
     (c) Entire Agreement. This Agreement supersedes all prior agreements,
written or oral, between the Company and the Employee relating to the subject
matter of this Agreement. This Agreement may not be modified, changed or
discharged in whole or in part, except by an agreement in writing signed by an
executive officer of the Company and the Employee. The Employee agrees that any
change or changes in the Employee’s employment

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duties or compensation after the signing of this Agreement shall not affect the
validity or scope of this Agreement.
     (d) Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect or impair the validity or enforceability of any
other provision of this Agreement.
     (e) Waiver. No delay or omission by the Company in exercising any right
under this Agreement will operate as a waiver of that or any other right. A
waiver or consent given by the Company on any one occasion is effective only in
that instance and will not be construed as a bar to or waiver of any right on
any other occasion.
     (f) Successor and Assigns. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any corporation or entity with which or into which the Company may be
merged or that may succeed to all or substantially all of its assets or
business; provided, however, that the obligations of the Employee are personal
and shall not be assigned by the Employee.
     (g) Governing Law, Forum and Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the Commonwealth of Virginia
without regard to conflicts of law provisions. The dispute resolution provisions
of Section 20 of the Employee’s employment agreement with the Company dated as
of December ___, 2006 (the “Employment Agreement”) apply to this Agreement,
except to the extent that either party seeks injunctive relief to enforce any
provision of this Agreement, in which case that party may bring an action, suit,
or other legal proceeding in a court of competent jurisdiction. Any such action,
suit or other legal proceeding that is commenced to resolve any matter arising
under or relating to such injunctive relief shall be commenced only in a court
of the Commonwealth of Virginia (or, if appropriate, a federal court located
within the Commonwealth of Virginia), and the Company and the Employee each
consents to the jurisdiction of such a court. Section 14 (“Representation”) of
the Employment Agreement applies in accordance with its terms to disputes under
this Agreement. The Company and the Employee each hereby irrevocably waive any
right to a trial by jury in any action, suit or other legal proceeding arising
under or relating to any provision of this Agreement.
     (h) Captions. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
     THE EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

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                              TIER TECHNOLOGIES, INC.
 
               
Date:
          By:    
 
               
 
                                          (print name and title)
 
                            DAVID E. FOUNTAIN
 
               
Date:
          (Signature)    
 
               

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EXHIBIT C
Excise Tax Gross-Up
     1. Gross-Up Payment — If any payment or benefit received or to be received
by the Executive from the Company pursuant to the terms of the Agreement to
which this Exhibit C is attached or otherwise (the “Payments”) would be subject
to the excise tax (the “Excise Tax”) imposed by section 4999 of the Internal
Revenue Code (the “Code”) as determined in accordance with this Exhibit C, the
Company shall pay the Executive, at the time specified below, an additional
amount (the “Gross-Up Payment”) such that the net amount that the Executive
retains, after deduction of the Excise Tax on the Payments and any federal,
state, and local income tax upon the Gross-Up Payment (but not upon the
Payments) and the Excise Tax upon the Gross-Up Payment, and any interest,
penalties, or additions to tax payable by the Executive with respect thereto,
shall be equal to the total present value (using the applicable federal rate (as
defined in section 1274(d) of the Code) in such calculation) of the Payments at
the time such Payments are to be made.
     2. Calculations — For purposes of determining whether any of the Payments
shall be subject to the Excise Tax and the amount of such excise tax,

  (a)   The total amount of the Payments shall be treated as “parachute
payments” within the meaning of section 280G(b)(2) of the Code, and all “excess
parachute payments” within the meaning of section 280G(b)(1) of the Code shall
be treated as subject to the excise tax, except to the extent that, in the
written opinion of independent counsel selected by the Company and reasonably
acceptable to the Executive (“Independent Counsel”), a Payment (in whole or in
part) does not constitute a “parachute payment” within the meaning of section
280G(b)(2) of the Code, or such “excess parachute payments” (in whole or in
part) are not subject to the Excise Tax;     (b)   The amount of the Payments
that shall be subject to the Excise Tax shall be equal to the lesser of (i) the
total amount of the Payments or (ii) the amount of “excess parachute payments “
within the meaning of section 280G(b)(1) of the Code (after applying clause (a),
above); and     (c)   The value of any noncash benefits or any deferred payment
or benefit shall be determined by Independent Counsel in accordance with the
principles of section 280G(d)(3) and (4) of the Code.

     3. Tax Rates — For purposes of determining the amount of the Gross-Up
Payment, the Executive shall be deemed to pay federal income taxes at the
highest marginal rates of federal income taxation applicable to individuals in
the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rates of taxation applicable to
individuals as are in effect in the state and locality of the Executive’s
residence in the calendar year in which the Gross-Up Payment is to be made, net
of the maximum reduction in federal income taxes that can be obtained from
deduction of such state and local taxes, taking into

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account any limitations applicable to individuals subject to federal income tax
at the highest marginal rates.
     4. Time of Gross-Up Payments — The Gross-Up Payments provided for in this
Exhibit C shall be made upon the earlier of (a) the payment to the Executive of
any Payment or (b) the imposition upon the Executive, or any payment by the
Executive, of any Excise Tax.
     5. Adjustments to Gross-Up Payments — If it is established pursuant to a
final determination of a court or an Internal Revenue Service proceeding or the
written opinion of Independent Counsel that the Excise Tax is less than the
amount previously taken into account hereunder, the Executive shall repay the
Company, within 30 days of his receipt of notice of such final determination or
opinion, the portion of the Gross-Up Payment attributable to such reduction
(plus the portion of the Gross-Up Payment attributable to the Excise Tax and
federal, state, and local income tax imposed on the Gross-Up Payment being
repaid by the Executive if such repayment results in a reduction in Excise Tax
or a federal, state, and local income tax deduction) plus any interest received
by the Executive on the amount of such repayment, provided that if any such
amount has been paid by the Executive as an Excise Tax or other tax, the
Executive shall cooperate with the Company in seeking a refund of any tax
overpayments, and the Executive shall not be required to make repayments to the
Company until the overpaid taxes and interest thereon are refunded to the
Executive.
     6. Additional Gross-Up Payment — If it is established pursuant to a final
determination of a court or an Internal Revenue Service proceeding or the
written opinion of Independent Counsel that the Excise Tax exceeds the amount
taken into account hereunder (including by reason of any payment the existence
or amount of which cannot be determined at the time of the Gross-Up Payment),
the Company shall make an additional Gross-Up Payment in respect of such excess
within 30 days of the Company’s receipt of notice of such final determination or
opinion.
     7. Change In Law or Interpretation — In the event of any change in or
further interpretation of Section 280G or 4999 of the Code and the regulations
promulgated thereunder, the Executive shall be entitled, by written notice to
the Company, to request a written opinion of Independent Counsel regarding the
application of such change or further interpretation to any of the foregoing,
and the Company shall use its best efforts to cause such opinion to be rendered
as promptly as practicable.
     8. Fees And Expenses — All fees and expenses of Independent Counsel
incurred in connection with this Exhibit C shall be borne by the Company.
     9. Survival — The Company’s obligation to make a Gross-Up Payment with
respect to Payments made or accrued before the end of the Term of Employment
shall survive the Term of Employment.
     10. Defined Terms — Except where clearly provided to the contrary, all
capitalized terms used in this Exhibit C shall have the definitions given to
those terms in the Agreement to which this Exhibit C is attached.

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