Exhibit 10.1
TIER TECHNOLOGIES, INC.
Change in Control
Equity Vesting Acceleration Plan
 

 
Establishment of Plan
Tier Technologies, Inc. (the “Company”) hereby establishes the Tier
Technologies, Inc. Change in Control Equity Vesting Acceleration Plan (the
“Plan”).  The Plan is in effect for “Covered Executives” (as defined below)
whose employment is terminated without “Cause” (as defined below”) by the
Company on or within 12 months after the closing of a “Change in Control” (as
defined below) or, for certain Covered Executives, ends during such 12 month
period (the “Covered Period”) as a result of a resignation for “Good Reason” (as
referenced below).  The effective date of the Plan is November 3, 2011 (the
“Effective Date”).
 
Purpose of Plan
The Compensation Committee (the “Compensation Committee”) of the Board of
Directors (the “Board”) of the Company has previously determined that equity
compensation forms an important part of the compensation and retention package
for the senior leadership team (the “SLT”) of the Company, i.e., the Chief
Executive Officer and executives reporting directly to the Chief Executive
Officer.  Consistent with evolving best practices for executive compensation,
the Company has moved away from automatic single trigger acceleration of vesting
or exercisability for its equity compensation, toward vesting in situations in
which the equity compensation recipients not only (x) participate in a change in
control of the Company but also (y) lose their employment at or following the
change in control in a “Covered Termination” (as defined below).  The
Compensation Committee has determined that it would be appropriate to provide
for full acceleration of vesting and exercisability of equity compensation on a
Covered Termination within the Covered Period.
 
Participants
The members of the SLT on the Effective Date are specified on Exhibit A to this
Plan.  Each person specified on Exhibit A is a participant (a “Covered
Executive” or “Participant”) for purposes of this Plan.  No person will be a
Participant unless the Compensation Committee designates him or her for
participation.  The Compensation Committee may designate additional employees
for participation in its sole discretion. An individual who is a Covered
Executive may not be removed from the list of Covered Executives, provided that
if the individual ceases to be employed through a termination that is not a
Covered Termination (as defined below) or, while remaining employed, ceases to
be a full-time employee, the individual will cease to be a Covered Executive
unless the Compensation Committee determines otherwise.

 
 

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Change in Control
For the purpose of this Plan, “Change in Control” means any Reorganization Event
(as defined in the Company’s Amended and Restated 2004 Stock Incentive Plan, or
a comparable definition of reorganization event or change in control in the
successor plan under which or by reference to which an applicable grant was
made) and, even if not a Reorganization Event, any of the following:
 
(i)  the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
“Exchange Act”) (a “Person”)) of beneficial ownership of any capital stock of
the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 under the Exchange Act) 50.01% or more of either (x)
the then-outstanding shares of common stock of the Company (the “Outstanding
Company Common Stock”) or (y) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that
for purposes of this subsection (A), any acquisition directly from the Company
will not be a Change in Control, nor will any acquisition by any entity pursuant
to a Business Combination (as defined below) which complies with subclauses (x)
and (y) of clause (ii) of this definition; and provided, further, that the
formation of a group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act ) that beneficially owns (within the meaning of Rule 13d-3 under
the Exchange Act) 50.01% or more of either the Outstanding Company Common Stock
or the Outstanding Company Voting Securities shall not, by itself, be a Change
in Control if that group includes one or more of the entities listed on Exhibit
B, which are the only entities known to the Company on the date hereof that
beneficially own 5% or more of the Outstanding Company Common Stock, or one or
more affiliates (within the meaning of the Exchange Act, and determined as of
the Effective Date or such later date when the group is formed) of such 5% or
more holders;
 
(ii)  the consummation of a merger, consolidation, reorganization,
recapitalization or share exchange involving the Company or a sale or other
disposition of all or substantially all (i.e., in excess of 85%) of the assets
of the Company (a “Business Combination”), unless, immediately following such
Business Combination, each of the following two conditions is satisfied: (x) all
or substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of the then-outstanding shares of common
stock and the combined voting power of the then-outstanding

 
 
 
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securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include a corporation which as a result of such
transaction owns the Company or substantially all of the Company’s assets either
directly or through one or more subsidiaries) (such resulting or acquiring
corporation is referred to herein as the “Acquiring Corporation”) in
substantially the same proportions as their ownership of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively,
immediately prior to such Business Combination and (y) no Person  beneficially
owns, directly or indirectly, 50.01% or more of the then-outstanding shares of
common stock of the Acquiring Corporation, or of the combined voting power of
the then-outstanding securities of such corporation entitled to vote generally
in the election of directors (except to the extent that such ownership existed
prior to the Business Combination); or
 
(iii)  a change in the composition of the Board that results in the Continuing
Directors (as defined below) no longer constituting a majority of the Board (or,
if applicable, the Board of Directors of a successor corporation to the
Company), where the term “Continuing Director” means at any date a member of the
Board (x) who was a member of the Board on the Effective Date or (y) who was
nominated or elected subsequent to such date by at least a majority of the
directors who were Continuing Directors at the time of such nomination or
election or whose election to the Board was recommended or endorsed by at least
a majority of the directors who were Continuing Directors at the time of such
nomination or election; provided, however, that there shall be excluded from
this clause (y) any individual whose initial assumption of office after the
Effective Date occurred as a result of an actual or threatened election contest
with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents, by or on behalf of a person
other than the Board; or
 
(iv)  the liquidation or dissolution of the Company;
 
provided that, where required to avoid additional taxation under Section 409A of
the Internal Revenue Code of 1986 (“Section 409A” of the “Code”), the event that
occurs must also be a “change in the ownership or effective control of a
corporation, or a change in the ownership of a substantial portion of the assets
of a corporation” as defined in Treasury Reg. § 1.409A-3(i)(5), and provided,
further, that the Board or Compensation Committee may, in advance of an event
that would otherwise be a Change in Control as defined above (other than an
event in which at least 90% of the Outstanding Company Voting Securities are
transferred to or become held

 
 
 
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by a Person through acquisition or Business Combination),  determine not to
treat the event as a Change in Control for purpose of this Plan, except to the
extent that Section 409A requires otherwise with respect to restricted stock
units or other compensation covered by Section 409A.

 
Eligibility for Equity Vesting Acceleration
A Covered Executive will be entitled to “Equity Vesting Acceleration” (as
defined below) if his or her employment with the Company is terminated by the
Company during the Covered Period for any reason other than Cause, death, or
disability (as disability is defined under the applicable Company program
covering the Covered Executive).  In addition, a Covered Executive who has in
effect at the applicable time an employment or severance or retention agreement
(an “Individual Agreement”) that defines “Good Reason” will be treated as
terminated without Cause if he or she resigns for Good Reason, as so defined, in
accordance with the procedures in his or her Individual Agreement, provided that
the relocation of the Reston, Virginia headquarters to Atlanta, Georgia will not
be treated as “Good Reason” for purposes of this Plan (but this sentence does
not override any contractual rights provided directly by such Individual
Agreements).  A termination of employment for reasons described in this
paragraph is a “Covered Termination”
 
For purposes of the Plan, “Cause” will have the meaning provided in the Covered
Executive’s Individual Agreement if any is then effective or, if none exists or
none is then effective, “Cause” will mean any of the following:  (i) fraud by
the Covered Executive; (ii) material misrepresentation by the Covered Executive;
(iii) the Covered Executive’s theft or embezzlement of assets of the Company;
(iv) the Covered Executive’s conviction, or plea of guilty or nolo contendere,
to any felony (or to a felony charge reduced to a misdemeanor), or, with respect
to his or her employment, to any misdemeanor (other than a traffic violation);
(v) the Covered Executive’s material failure to follow the Company’s policies;
(vi) material breach by the Covered Executive of any agreement between him or
her and the Company; and/or (vii) the Covered Executive’s continued failure to
attempt in good faith to perform his or her duties as reasonably assigned by the
Board or, as applicable, the Company.  Before terminating the Covered
Executive’s employment for Cause under clauses (v), (vi), or (vii) above, the
Company will specify in writing the nature of the act, omission, refusal, or
failure that it deems to constitute Cause and, if the Compensation Committee
reasonably considers the situation to be correctable, give the Covered Executive
30 days after he or she receives such notice to correct the situation (and thus
avoid termination for Cause), unless the Company agrees to extend the time for
correction.  The Compensation Committee will determine in its reasonable
discretion whether the Covered Executive’s correction is sufficient.
 
Participants whose active employment with the Company ends for any reason before
the Covered Period begins will not be entitled to the Equity Vesting
Acceleration.  For this purpose, a Participant will not be

 
 
 
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considered employed after the date he or she is no longer actively employed and
his or her employment will not be extended by any notice period mandated under
local law (e.g., active employment does not include a period of “garden leave”
or similar period pursuant to local law).
 
Nothing in the Plan is intended to affect whether and when the Company can
terminate the employment of a Covered Executive but rather specifies only
whether some forms of employment termination will cause Equity Vesting
Acceleration under the Plan.

 
Equity Vesting Acceleration
If a Covered Executive experiences a Covered Termination during the Covered
Period, he or she will receive “Equity Vesting Acceleration” as follows:
 
Each outstanding option to purchase shares of the Company held by the Covered
Executive (to the extent not then currently exercisable) shall become
immediately exercisable in full, each outstanding restricted stock award held by
the Covered Executive shall be deemed to be fully vested and such vested shares
will no longer be subject to any applicable right of repurchase or first refusal
by the Company, and each outstanding restricted share unit award held by the
Covered Executive shall be deemed to be fully vested and such vested shares
shall be distributed to the Covered Executive within 30 calendar days
thereafter.
 
Notwithstanding the foregoing, the Compensation Committee will have the right to
suspend exercises or sales with respect to such equity compensation pending
satisfaction of the release requirement and to cause any equity compensation
receiving such accelerated vesting to expire or be forfeited if the release is
not provided as specified under Release.
 
Release
Upon a Covered Termination, the Equity Vesting Acceleration will occur but the
incremental portion of the Participant’s equity compensation affected by the
Equity Vesting Acceleration will be frozen.  As a condition to benefiting from
the Equity Vesting Acceleration, a Participant must sign a release of claims
prepared by and provided by the Company (the “Release”) and abide by the
provisions of the Release.  Among other things and except as prohibited by local
law, the Release shall contain a release and waiver of any claims the
Participant or his or her representative has or may have against the Company,
its affiliates and/or representatives, and shall release those entities and
persons from any liability for such claims including, but not limited to, all
employment discrimination claims, to the fullest extent that local law
permits.  The Release will also include a requirement to return all Company
property and may include nonsolicitation, nondisparagement and cooperation
requirements.  For persons covered by Individual Agreements that require a
Release, the Release required by such agreement will satisfy this
requirement.  Covered Executives are entitled and advised to consult an attorney
of

 
 
 
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their own choosing before signing the Release.    If the Release requirement
under this provision is not satisfied by the 60th day following the Covered
Termination, any incremental equity vested by the Equity Vesting Acceleration
will be forfeited back to the date of the Covered Termination.

 
Withholding; 409A
Compliance
The Company may withhold from any payment under the Plan any taxes required by
law to be withheld with respect to such payment.  If a Participant is considered
a “specified employee” within the meaning of Section 409A and the Severance
Benefit, payable hereunder would be subject to taxes imposed by Section
409A(a)(1)(B) of the Code but such taxes could be avoided by complying with the
requirements of
Section 409A(a)(2)(B)(i) of the Code, no distribution of shares under a
restricted stock unit (if subject to Section 409A) will be made during the
six-month period following the termination of his or her employment.  Any
distribution that would have occurred during such six-month period but for the
provisions of the preceding sentence shall be paid to the Participant in a lump
sum without interest within the first five days of the seventh month following
the termination of employment.  In any event, the Company makes no
representations or warranty and shall have no liability to the Participant or
any other person, other than with respect to payments made by the Company in
violation of the provisions of this Plan, if any provisions of or payments under
this Plan are determined to constitute deferred compensation subject to Section
409A of the Code but not to satisfy the conditions of that section.
 
Plan Administration
The Compensation Committee, or a designee thereof, shall be the Plan
Administrator.  The general administration of the Plan and the responsibility
for carrying out its provisions shall be vested in the Plan Administrator.
 
The Plan Administrator’s decisions and determinations (including determinations
of the meaning and reference of terms used in the Plan) shall be conclusive upon
all persons.
 
The Plan Administrator shall have the full power and discretionary authority to
administer the Plan in all its details and such powers and discretion as are
necessary to discharge its duties, including, but not limited to, interpretation
and construction of the Plan, the determination of all questions of eligibility,
participation and benefits and all other related or incidental matters, and such
duties and powers of plan administration that are not assumed from time to time
by any other appropriate entity, individual or institution.  The Plan
Administrator shall decide all such questions in accordance with the terms of
the controlling legal documents and applicable law, and its good faith decision
will be binding on the Participant, the Participant’s spouse or other dependent
or beneficiary and all other interested parties.
 
The Plan Administrator shall maintain such records as are necessary to carry out
the provisions of the Plan.

 
 
 
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The Company shall pay all costs and expenses incurred in administering this
Plan, including expenses of the Plan Administrator and its designee(s).

 
Indemnification
To the extent permitted by law, the Plan Administrator and all employees,
officers, directors, agents and representatives of the Plan Administrator shall
be indemnified by the Company and held harmless against any claims and the
expenses of defending against such claims, resulting from any action or conduct
relating to the administration of the Plan, except to the extent that such
claims arise from gross negligence, willful neglect, or willful misconduct.
 
Duration of Plan
The Plan shall continue in force until the Company terminates the Plan.
 
Amendment or  Termination
The Company may amend, modify, or terminate the Plan at any time before or after
but not during the Covered Period.  Such amendment, modification or termination
shall be effected by a written instrument executed by an authorized officer of
the Company.  In no event shall such amendment, modification or termination
reduce or diminish any Equity Vesting Acceleration with respect to equity
compensation granted before the date of the amendment.
 
Successors
This Plan binds the Company and its successors or assigns.
 
Governing Law; Venue
The Plan and the rights of all persons under the Plan shall be construed in
accordance with the laws of the State of Delaware (without regard to conflict of
laws provisions).   For purposes of litigating any dispute that arises under the
Plan, the Company and any Participants submit to and consent to the jurisdiction
of the State of Georgia, and agree that such litigation shall be conducted in
the courts of Atlanta, Georgia, or the federal courts for the United States for
the Northern District of Georgia, where this Plan is established.
 

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Exhibit A

 

 

   Alex P. Hart    Jeff Hodges    Atul Garg    Keith S. Kendrick    Mark Lavin  
 Ben Mitchell    Sandip Mohapatra    Keith S. Omsberg    Anne Welch    

 
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Exhibit B

 
 

   Discovery Group I, LLC    Wells Fargo & Company    Giant Investment, LLC  
 Heartland Advisors, Inc.    Dimensional Fund Advisors LP

 
 

 
 
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