Exhibit 10.2

 
EMPLOYMENT AGREEMENT
 
This Employment Agreement (the “Agreement”) is made and entered into as of the
9th day of August 2007, by and between Tier Technologies, Inc., a
Delaware corporation (together with its successors and assigns, the “Company”),
and Mr. Kevin Connell (the “Executive”).
 
W I T N E S S E T H
 
WHEREAS, the Company desires to continue to employ the Executive as its Senior
Vice President, Sales & Marketing, 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;
 
WHEREAS, the parties also wish to enter into this Agreement to terminate and
supersede all prior agreements including but not limited to the Employment
Agreement between the Executive and the Company executed on July 8, 2002;
 
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 or her reasonably assigned duties for
the Company that has or is reasonably likely to have a material adverse effect
on the Company;

 
1

(v)  
a material violation by the Executive of any material provision of the Company’s
Business Code of Conduct (or successor policies on similar topics) or any other
applicable policies in place;

 
(vi)  
a violation by the Executive of any provision of  the Proprietary and
Confidential Information, Developments, Noncompetition and Nonsolicitation
Agreement (“NDA”) attached hereto as Exhibit A; or

 
(vii)  
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), (vi) or (vii) 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.
 
2

(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.
 
(g)  “Date of Termination” shall mean (i) if the Executive’s employment is
terminated by reason of his or her death, the date of his or her death, or
(ii) if the Executive’s employment is terminated pursuant to any other section,
the prospective 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 or her 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 [Date of Execution].
 
(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) or (iv)
hereof unless the Executive has provided the Company with written notice in
accordance with Section 21 below within ninety (90) days after the occurrence of
such event or action 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;

 
(ii)  
any material diminution of the Executive’s duties, responsibilities, powers or
authorities;

 
(iii)  
any relocation of his or her principal place of employment by more than fifty
(50) miles or requirement that the Executive relocate his or her principal place
of residence by more than fifty (50) miles; or

 
(iv)  
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.  The expiration of the Term of Employment will not constitute
either a termination without Cause or a resignation for Good
3

Reason and no severance will be payable upon or after such expiration, except as
provided in a generally applicable Company plan.
 
3.  
Position, Duties and Responsibilities.

 
As of the Effective Date, the Executive shall be employed as the Senior Vice
President, Sales & Marketing, 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 or her.  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 or her 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.
 
4.  
Base Salary.

 
As of the Effective Date, the Executive shall be paid an annualized Base Salary
of Two Hundred and Fifty Thousand Dollars ($250,000) 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.  Any increase to the Base Salary is to be determined by the
Compensation Committee, in consultation with the Chief Executive Officer.
 
5.  
Incentive Compensation Arrangements.

 
Through the fiscal year ending September 30, 2007, the Executive shall continue
to be eligible to participate in the Official Payments Corporation Fiscal Year
2007 SVP Sales & Business Development Plan.  Thereafter, and for the remaining
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 consultation with the Chief Executive Officer. In no
event shall the annual incentive opportunity effective as of October 1, 2007 for
the Executive be more than seventy-five percent (75%) of the Executive’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.

 
4

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 Chief Executive
Officer or the Board in their 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 or her 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 Chief Executive Officer or the Board.
 
9.  
Perquisites.

 
During the Term of Employment, the Executive shall be entitled to participate in
the Company’s executive fringe benefit programs (if any) applicable to the
Company’s senior-level executives 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.
 
10.  
Paid Time Off.

 
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.
 
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 or her estate and/or
beneficiaries, as the case may be, shall be entitled to the following amounts,
payable on the business day coinciding with or next following the thirtieth
(30th) calendar day following such termination, subject to the provisions of
Section 23 below and excluding the payments under clause (iv) below (which will
be paid as premiums are due):
5

 
(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)  one (1) times the Base Salary in effect on the Date of Termination;
 
(iv)  
payment by the Company of the premiums for the Executive and 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 or
Disability, assuming such individual elects and remains eligible for such
coverage; 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.
 
(b)  Termination of Employment by the Company for Cause or by the
Executive.  Upon a termination of the Executive’s employment by the Company for
Cause or a termination of the Executive’s employment by the Executive (except as
provided in Section 11(e)), 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;

 
(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 fourteen (14) calendar days prior to the actual Date
of Termination upon a termination of the Executive’s employment by the
Executive.  A termination by the Company for Cause must be made as set forth
herein.
 
(c)  Termination of Employment by the Company Without Cause or by the Executive
With Good Reason.  Upon a termination of the Executive’s employment by the
Company without Cause or by the Executive with Good Reason, other than under the
circumstances described in Section 11(d), the Executive shall be entitled to the
following amounts, payable on the business day coinciding with or next following
the thirtieth (30th) calendar day following such termination, subject to the
provisions of Section 23 below and excluding the payments under clause (v) below
(which will be paid as premiums are due):
6

 
(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)  
one (1) times the Base Salary in effect on the Date of Termination; and

 
(v)  
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;

 
providedthat 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) and
(v) herein, which will contain a full release of the Company (other than for
exceptions specified therein).  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 on the business day coinciding with or next following
the thirtieth (30th) calendar day following such termination, subject to the
provisions of Section 23 below, and excluding the payments under clause (vii)
below (which will be paid as premiums are due):
 
(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)  
two (2) times the sum of (A) the Base Salary in effect on the Date of
Termination and (B) 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) over a three-year look back period, which average will include any
payments under Official Payments Corporation Fiscal Year 2007 SVP Sales &
Business Development Plan;

 
7

(v)  
vesting of options granted on August 24, 2006, in accordance with the Change of
Control provisions as described under Section 2 of the Executive’s Incentive
Stock Option Agreement;

 
(vi)  
for all other options granted to the Executive, other than those under (v)
above, immediate vesting of options that would have vested within eighteen (18)
months following the effective date of termination of Executive’s employment;
and

 
(vii)  
payment by the Company of the premiums for the Executive’s and any covered
beneficiary’s health insurance over the eighteen (18) 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 or her employment for Good Reason in a
manner consistent with the definition of Good Reason within one (1) year after a
Change in Control, in which event the Executive shall be entitled to the
payments in and subject to the conditions of Section 11(d) and the provisions of
Section 23.  The Executive must provide written notice to the Company of a
proposed resignation for Good Reason in accordance with Section 21 below and
must actually resign under this provision no later than the six month
anniversary of the date he or she specifies as that of the adverse event or
action.
 
12.  
Proprietary and Confidential Information Agreement.

 
The Executive shall execute, simultaneously with the execution of this Agreement
or otherwise upon the Company’s request, the NDA.
 
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 or her.
 
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 or she
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 or she
has carefully read this Agreement,
8

understands the contents herein, freely and voluntarily assents to all of the
terms and conditions hereof, and signs his or her name of his or her own free
act.
 
In addition, the Company agrees that, if a dispute arises that concerns this
Agreement, the Proprietary and Confidential Information Agreement, or the
Severance Agreement and the Executive is the prevailing party in the dispute, he
or she shall be entitled to recover all of his or her reasonable attorney’s fees
and expenses incurred in connection with the dispute. For this purpose, the
Executive will be the “prevailing party” if he or she is successful on any
significant substantive issue in the action and achieves either a judgment in
his or her favor or some other affirmative recovery.
 
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
Employment Agreement executed on July 8, 2002.
 
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 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.
9

 
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 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.
 
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:  Vice President, Human Resources
 
       with a copy to:  The Chief Executive Officer
 
If to the Executive:                            At his or her current or last
known residential address
10

 
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 or her 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(a)(2)(B)(i) as determined by Tier in accordance with its procedures, by
which determination the Executive agrees that he or she is bound, such payment,
compensation or other benefit shall not be paid before the day that is six (6)
months plus one (1) day after the Executive’s separation from service as
determined under Section 409A (the “New Payment Date”).  The aggregate of any
payments that otherwise would have been paid to the Executive during the period
between the separation from service 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.  In any event, the Company makes no
representations or warranty and shall have no liability to the Executive or any
other person, other than with respect to payments made by Tier in violation of
the provisions of this Agreement, if any provisions of or payments under this
Agreement are determined to constitute deferred compensation subject to Code
Section 409A but not to satisfy the conditions of that section.
 
24.  
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.
 
Signatures on Page Following
 

11

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

 
TIER TECHNOLOGIES, INC.
 
 
 
By:________________________________________________
Name:
Title:
 
 
THE EXECUTIVE
 
_____________________________________________________
 
Kevin Connell

12

EXHIBIT A

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 Kevin Connell (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:
1.  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.
2.  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 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
2

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.
3.  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
3

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.
4.  Noncompetition and Nonsolicitation.
(a)  While the Employee is employed by the Company and for a period of twelve
(12) months following the termination or cessation of such employment for any
reason (the “Restricted Period”), the Employee will not directly or
indirectly:  
4

              

(1)  
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, licenses, sells or renders
any technology, product or service competitive with any technology, product or
service, developed, designed, produced, marketed, licensed, sold or rendered, or
planned to be developed, designed, produced, marketed, licensed, sold or
rendered, by the Company while the Employee was employed by the Company;

 
(2)  
Either alone or in association with others (including any organization directly
or indirectly controlled by the Employee), (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

 
5

(3)  
Either alone or in association with others (including any organization directly
or indirectly controlled by the Employee), solicit, divert, interfere with,
disrupt or take away, or attempt to solicit, divert, interfere with, disrupt 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
specific branch, division, office, group, or other subentity of the government
with which the Company had the contract.

 
(b)  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
6

extend only over the maximum period of time, range of activities or geographic
area as to which it may be enforceable.
(c)  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.
(d)  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.
5.  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
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.
7

6.  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.
7.  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.
8.  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
8

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, including, but not limited, to the Nondisclosure and
Proprietary/Confidential Information/Non-Solicitation Agreement between the
Company and the Employee dated ____________ __, ____.  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 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)  Successors 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.
9

(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 August 9, 2007 (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.
 
[The rest of this page left intentionally blank.]
 
[Signature Page Follows]
10

 

 

 
TIER TECHNOLOGIES, INC.
Date:  ___________________________________                                       
By:                                                         
 
(print name and title)
 
[______________________________]
Date:   ___________________________________                                                
(Signature)

 

11

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