Exhibit 10.46**EMPLOYMENT AGREEMENT**     This agreement (the ***“Agreement”***) between**Tier technologies, inc.,**a Californiacorporation (the ***“Company”***) and Deanne M. Tully (the ***“Employee”***), is entered into as of July 1,2004 (the ***“Effective Date”***). Those capitalized terms used in this Agreement and not otherwisedefined herein shall have the meanings given to such terms in the Agreement**Agreement**     In consideration of the mutual benefits derived from this Agreement and of the agreements,covenants and provisions hereof, the parties hereto agree as follows:**1. EMPLOYMENT**During the Term (as defined in Section 3 hereof) of this Agreement, the Company shall employEmployee as Vice President, General Counsel and Secretary of the Company, reporting to James R.Weaver, President and Chief Executive Officer, or his designee. Employee will be based at theCompany’s offices in Reston, Virginia. Employee agrees to undertake such business travel as iscustomary to such position, and as shall from time to time be requested of her by the Company.**2. COMPENSATION AND BENEFITS**     **2.1 Base Salary.**In consideration of and as compensation for the services to be performed bythe Employee hereunder, the Company shall pay the Employee a base salary (the ***“Base Salary”***) of notless than $210,000 per year, payable semi-monthly in arrears in accordance with the Company’sregular payroll practices. The Company and Employee shall review Employee’s salary in October 2005and annually thereafter.     **2.2 Incentive Compensation.**At the Company’s sole discretion, Employee may be eligible toreceive additional discretionary incentive compensation based on individual and companyperformance.     **2.3 Participation in Benefit Plans.**During the Term, Employee shall be entitled toparticipate in any pension plans, profit-sharing plans and group insurance, medical,hospitalization, disability and other benefit plans of the Company presently in effect, as such aregenerally applicable to employees of the Company and to the extent Employee is eligible under thegeneral provisions thereof.     **2.4 Paid Time Off.**During the Term of this Agreement, the Employee shall accrue twenty-four(24) days of Paid Time Off per year, subject to Company policy. The Employee shall also beentitled to other paid personal leave in accordance with Company policy.          1 Initials:            Company  Employee     

 
     **2.5 Options.**Employee’s incentive stock options agreements currently in place remain ineffect and are unchanged by this Agreement.**3. TERM AND TERMINATION**     **3.1 Term.**The **“Term”**as used in this Agreement shall commence on July 1, 2004 and expire atthe close of business on June 30, 2007, subject to earlier termination pursuant to this Section 3.     **3.2 Termination for Cause.**The Company may terminate Employee’s employment under thisAgreement, in its sole discretion, “for Cause.” Grounds for the Company to terminate thisAgreement “for **Cause**” shall be limited to the occurrence of any of the following events:          **(a)**the Employee’s failure to substantially perform Employee’s duties with the Company in goodfaith (provided in the case of illness, injury or disability that the Company has providedreasonable accommodation under applicable disabilities laws), after a demand for substantialperformance is delivered to Employee by the Company which identifies, in reasonable detail, themanner in which the Company believes that the Employee has not substantially performed Employee’sduties in good faith and such Employee has not, in the sole discretion of the Company, improved theperformance of Employee’s duties during a period of fourteen (14) days from such demand forsubstantial performance;          **(b)**the Employee’s commission of any act which detrimentally affects the Company, including,without limitation, an act of dishonesty, fraud, willful disobedience, gross misconduct or breachof duty;          **(c)**the Employee’s commission of any act in contravention of Employee’s undertakings containedin Section 5 hereof; or          **(d)**the Employee’s conviction of a felony or a misdemeanor involving dishonesty or moralturpitude.     **3.3 Termination Without Cause.**The Company may terminate Employee’s employment under thisAgreement without cause at any time.     **3.4 Change in Control. “Change in Control”**is defined as:          **(a)**a sale or other disposition of all or substantially all of the assets of the Company;          **(b)**a merger or consolidation in which the Company is not the surviving entity and in whichthe shareholders of the Company immediately prior to such consolidation or merger own less thanfifty percent (50%) of the surviving entity’s voting power immediately after the transaction;          2 Initials:            Company  Employee     

 
          **(c)**a reverse merger in which the Company is the surviving entity but the shares of theCompany’s Common Stock outstanding immediately preceding the merger are converted by virtue of themerger into other property, whether in the form of securities, cash or otherwise, and in which theshareholders of the Company immediately prior to such merger own less than fifty percent (50%) ofthe Company’s voting power immediately after the transaction; or          **(d)**any other capital reorganization in which more than fifty percent (50%) of the shares ofthe Company entitled to vote are exchanged.     **3.5 Effect of Termination Prior to Expiration of the Term of the Agreement**          **(a)**Upon termination of the Employee’s employment as a result of Employee’s disability, theEmployee shall be entitled to receive for an additional thirty (30) days after the date of suchtermination, Employee’s Base Salary in effect at the time of termination and any and all benefitsto which Employee is entitled on the date of such termination under the Company’s pension, life,disability, accident and health and other benefit plans in accordance with the provisions of suchplans.          **(b)**Upon termination of the Employee’s employment as a result of Employee’s death, theEmployee’s heirs, devisees, executors or other legal representatives shall receive for anadditional thirty (30) days from the date of death, Employee’s Base Salary in effect at the time ofdeath.          **(c)**If the Employee’s employment hereunder shall be terminated by the Company without Causeprior to the expiration of the Term of this Agreement, then upon the Employee furnishing to theCompany an executed waiver and release of claims, in the form which is attached hereto as **ExhibitA**, the Employee shall be entitled to the following: (i) the Employee’s Base Salary and accrued andunused Paid Time Off earned through the date of termination; (ii) a lump sum payment or continuedmonthly payment, at the Company’s choice, equivalent to Employee’s Base Salary then in effect forthe remaining duration of the Term of this Agreement; and (iii) if Employee elects continuedcoverage of health benefits under federal COBRA law, the Company shall pay the premiums ofEmployee’s group health insurance coverage, including coverage for Employee’s eligible dependents,for a maximum period of twelve (12) months following such termination; *provided, however,*that theCompany shall pay premiums for Employee’s eligible dependents only for coverage for which thoseeligible dependents were enrolled immediately prior to the termination, and the Company’sobligation to pay such premiums shall cease immediately upon the date Employee becomes coveredunder any other group health plan (as an employee or otherwise). All payments are subject tostandard deductions and withholdings.          **(d)**In the event there is a Change in Control during the Term of this Agreement and Employeeis not offered a substantially similar position with the surviving company at the same Base Salary,with the same benefits including but not limited to maintenance of the employment and severanceagreements between the Company and Tier, and within forty (40) miles of Reston, Virginia, or if theEmployee chooses not to relocate, then upon the Employee furnishing to the Company an executedwaiver and release of claims, in the form          3 Initials:            Company  Employee     

 
which is attached hereto as **Exhibit A**, the Employee shall be entitled to the following: (i)the Employee’s Base Salary and accrued and unused Paid Time Off earned through the date oftermination; (ii) a lump sum payment or continued monthly payment, at the Company’s choice,equivalent to Employee’s Base Salary then in effect for the remaining duration of the Term of thisAgreement; and (iii) if Employee elects continued coverage of health benefits under federal COBRAlaw, the Company shall pay the premiums of Employee’s group health insurance coverage, includingcoverage for Employee’s eligible dependents, for a maximum period of twelve (12) months followingsuch termination; *provided, however,*that the Company shall pay premiums for Employee’s eligibledependents only for coverage for which those eligible dependents were enrolled immediately prior tothe termination, and the Company’s obligation to pay such premiums shall cease immediately upon thedate Employee becomes covered under any other group health plan (as an employee or otherwise). Allpayments are subject to standard deductions and withholdings.          **(e)**If the Employee’s employment hereunder shall be terminated by the Company for Cause or bythe Employee by resignation, the Company shall have no further obligation to the Employee underthis Agreement other than accrued Base Salary and other accrued benefits required by law, proratedto the date of termination.     **3.6 Notice of Termination.**Any purported termination of employment by the Company or by theEmployee shall be communicated by written notice of termination to the other party hereto inaccordance with Section 6.1 hereof. Any notice of termination of employment given hereunder shalleffect termination as of the date specified in such notice, or, in the event no such date isspecified, on the last day of the month in which such notice is delivered or deemed delivered asprovided in Section 6.1 hereof.**4. EXECUTIVE SEVERANCE AND CHANGE IN CONTROL BENEFITS AGREEMENT**Employee and the Company have entered into an Executive Severance and Change in Control BenefitsAgreement (the **“Executive Severance Agreement”**), effective July 30, 2003, which remains in effect.A true and correct copy of the Executive Severance Agreement is attached hereto as **Exhibit B**. Inthe event the Company terminates Employee’s employment prior to the expiration of the Term of thisAgreement, pursuant to section 3.5(c) or (d) hereof, then Employee shall be entitled to thebenefits accorded pursuant to either this Agreement *or*the Executive Severance Agreement, at theEmployee’s choice. It is expressly understood and agreed between the parties that the ExecutiveSeverance Agreement survives the expiration of the Term of this Agreement.**5. NONDISCLOSURE AND PROPRIETARY/CONFIDENTIAL INFORMATION**Employee has executed a Nondisclosure and Proprietary/Confidential Information/Non-SolicitationAgreement, which was signed on May 4, 2004, a true and correct copy of which is attached hereto as**Exhibit C**. The terms of that agreement are hereby incorporated into this Agreement as if fully setforth herein and Employee agrees to continue to abide by those terms.**6. MISCELLANEOUS**          4 Initials:            Company  Employee     

 
     **6.1 Notices.**Any written notice, required or permitted under this Agreement, shall be deemedsufficiently given if either hand delivered or by fax (with written confirmation of receipt) ornationally recognized overnight courier. Written notices must be delivered to the receiving partyat its address or facsimile number on the signature page of this Agreement. The parties may changethe address or facsimile number at which written notices are to be received in accordance with thisSection.     **6.2 Prevailing Party.**If any litigation is commenced between the parties hereto concerningthis Agreement or their respective rights, duties and obligations hereunder, the party prevailingin that litigation shall be entitled to reasonable attorney’s fees, to be fixed by the court aspart of the costs of the litigation or established in a separate action brought to recover thosefees, in addition to any other relief that may be granted.     **6.3 Assignment.**The Employee may not assign, transfer or delegate her rights or obligationshereunder, and any attempt to do so shall be void. This Agreement shall be binding upon and shallinure to the benefit of the Company and its successors and assigns.     **6.4 Entire Agreement.**This Agreement, and the attachments hereto, contain the entireagreement of the parties hereto with respect to the subject matter hereof, and all other prioragreements, written or oral, are hereby merged herein. This Agreement may be modified or amendedonly by a written agreement that is signed by the Company and the Employee. No waiver of anysection or provision of this Agreement shall be valid unless such waiver is in writing and signedby the party against whom enforcement of the waiver is sought. The waiver by the Company of anysection or provision of this Agreement shall not apply to any subsequent breach of this Agreement.Captions to the various Sections of this Agreement are for the convenience of the parties only andshall not affect the meaning or interpretation of this agreement. This Agreement may be executedin several counterparts, each of which shall be deemed an original, but together they shallconstitute one and the same instrument.     **6.5 Severability.**The provisions of this Agreement shall be deemed severable, and if any partof any provision is held illegal, void or invalid under applicable law, such provision may bechanged to the extent reasonably necessary to make the provision, as so changed, legal valid andbinding. If any provision of this Agreement is held illegal, void or invalid in its entirety, theremaining provisions of this Agreement shall not in any way be affected or impaired but shallremain binding in accordance with their terms.     **6.6 Applicable Law.**This Agreement and the rights and obligations of the Company and theEmployee hereunder shall be governed by and construed and enforced under the laws of the Virginia,without reference to any principles of conflict of laws.          5 Initials:            Company  Employee     

 
     **IN WITNESS WHEREOF,**the parties hereto have executed this Agreement as of the date first abovewritten.      **Tier Technologies, Inc.**