exhibit10-2.htm


                                        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