Document:

Exhibit 10.5
  
	
  
 
  	
   
 
	
  

  	
   
 

	
  
 
  	
  
Joseph J. McCarthy     
  	
  
Senior Vice   President
  
	
  
 
  	
  
 
  	
  
Walnut Creek   CBS
  

February 9, 2005

Mr. Jeffrey A. McCandless, SVP/CFO
 Tier Technologies, Inc.
 10780 Parkridge Blvd., Suite 400
 Reston, Virginia  20191

 

	
  
Re:
  	
  
Default under Credit and Security Agreement dated January 29, 2003,   in the Original Principal Sum of $15,000,000.00 (the “Agreement”), executed   by Tier Technologies, Inc., a California corporation and Official Payments   Corporation, a Delaware corporation (collectively, “Borrower”) in favor of   City National Bank (“CNB”).
  

Dear Mr. McCandless:

          Section 5.10.4 of the Agreement requires that Borrower maintain Net profits from continuing operations, after taxes, of at least $1.00 for each fiscal quarter.  As of December 31, 2004, Borrower’s Net profits were less than $1.00.  

          Under the terms of Agreement, Borrower’s failure to comply with or observe the provisions of the foregoing Section constitutes an Event of Default.  You have requested that CNB waive the provisions of such Section in connection with such Event of Default.  Subject to the terms and conditions hereof, CNB hereby waives the specific Event of Default set forth in the above paragraph.

          This waiver shall be effective solely with respect to the matters described above and shall not be deemed or construed to be a waiver of any other term or condition of the Agreement or any other term or condition of any of the instruments or agreements referred to therein or executed in connection therewith, or to prejudice any right or rights that CNB may now have or may have in the future under or in connection with the Agreement or the instruments or agreements referred to therein or otherwise executed in connection therewith with respect to any other Events of Default that may exist or arise.  Except as expressly waived herein, all of the terms and conditions of the Agreement shall remain unchanged and in full force and effect.  Capitalized terms not defined herein shall have the respective meanings given them in the Agreement.

Very truly yours,
 City National Bank, a national banking association

	
  
By:
  	
  
/s/ JOSEPH J. MCCARTHY
  	
  
	
  
 
  	
  

  	

  
	
  
 
  	
  
Joseph J.   McCarthy, Senior Vice President
  	
  

	
  

  
	
  
2001 North   Main Street, Suite 200 Walnut Creek, CA 94596
   T: 925.274.5124 F: 925.274.5138 joseph.mccarthy@cnb.com
  	
  
 
  	
  
Member FDICExhibit 10.6

Summary of Board of Directors Compensation

          The members of the Board of Directors (the “Board”) of Tier Technologies, Inc., a California corporation (the “Company”), are reimbursed for reasonable travel expenses incurred in attending Board meetings.  In November 2003, the Board adopted a compensation plan for non-employee members of the Board, which became effective on January 28, 2004.  Under this plan, the Company pays each continuing non-employee member of the Board an annual retainer of $15,000, payable quarterly in arrears, and fees of $1,000 for each Board meeting attended and $500 for each Committee meeting attended.  In October 2004, the Board adopted a revision of this plan, which will become effective on February 8, 2005.  Pursuant to this revision, the Chairman of the Audit Committee will receive an annual retainer of $20,000, payable quarterly in arrears, and each member of the Audit Committee
will receive fees of $1,000 for each Audit Committee meeting attended. 

          Effective January 28, 2004, each non-employee member of the Board shall receive a grant, upon their initial election by the shareholders, or an annual grant, upon their re-election, as the case may be, of a fully vested option to purchase 20,000 shares of Class B Common Stock under the Company’s Amended and Restated 1996 Equity Incentive Plan (the “1996 Plan”).  

          The exercise price of options granted to the directors is 100% of the fair market value of the Class B Common Stock on the date of the option grant.  Options granted to non-employee directors are typically fully vested on the date of grant.  The term of options granted to non-employees is ten years.  In the event of a merger of the Company with or into another corporation or a consolidation, acquisition of assets or other change-in-control transaction involving the Company, at the sole discretion of the Board and to the extent permitted by applicable law (i) any surviving corporation shall assume all stock awards under the 1996 Plan, or shall substitute similar stock awards for those outstanding under the 1996 Plan, (ii) the time during which such stock awards may be exercised shall be accelerated and the stock awards terminated if not exercised prior to such event, or (iii) such stock
awards shall continue in full force and effect.Exhibit 10.1

                              SETTLEMENT AGREEMENT

THIS SETTLEMENT AGREEMENT (the "Agreement") is entered into as of the 15th day
of November, 2004, by and among Vital Health Technologies, Inc. (a.k.a.
Caribbean American Health Resorts, Inc.), a Minnesota corporation (the
"Company"), Aurora Capital Holdings, L.L.C., a Minnesota limited liability
company ("Transferor"), and General Finance and Development, Inc., a Minnesota
corporation ("GFD").

BACKGROUND

WHEREAS, the Company and Caribbean American Health Resorts, Inc., a Nevada
corporation ("CAHR"), entered into an Agreement and Plan of Share Exchange,
dated as of March 10, 2003 (the "Share Exchange Agreement"), whereby the Company
agreed to issue to each CAHR shareholder one share of the Company's common stock
in exchange for each share of CAHR common stock held by such CAHR shareholder;

WHEREAS, as a result of the Share Exchange Agreement, CAHR became a wholly-owned
subsidiary of the Company and the shareholders of CAHR became shareholders of
the Company;

WHEREAS, Section 5(b) of the Share Exchange Agreement provides that as part of
the share exchange transaction, certain existing shareholders of the Company
shall form a separate entity for the sole purpose of purchasing the heart
screening technology of the Company in exchange for returning to the Company
1,850,000 shares of the Company's common stock then held by such shareholders;

WHEREAS, the Transferor owns 1,850,000 shares of the Company's common stock (the
"Shares"), and it was intended that the Transferor would transfer the Shares to
the Company in exchange for a transfer from the Company of certain heart
screening technology and other assets of the Company as set forth on Schedule A
                                                                     ----------
(collectively, the "Assets") to an entity to be formed by the Transferor;

WHEREAS, the Transferor has formed GFD for the purpose of acquiring the Assets,
and has a direct or indirect economic interest in GFD and the acquisition of the
Assets by GFD;

WHEREAS, the Company claims that it has transferred the Assets to the Transferor
and is entitled to receive the Shares, but the Transferor claims that it has not
yet received the Assets and refuses to transfer the Shares to the Company as
contemplated by the Share Exchange Agreement; and

WHEREAS, the parties agree that in order to settle this outstanding dispute, the
Transferor will transfer 1,700,000 of the Shares (the "Redemption Shares") to
the Company, the Company will transfer all of the Assets to GFD pursuant to the
terms and conditions of this Agreement and GFD will grant a non-exclusive
license to the Company to use the Assets as more specifically set forth in the
License Agreement, attached hereto as Exhibit B.
                                      ---------

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<PAGE>

                                    AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:

1.   Redemption. Subject to the terms and conditions herein set forth, in
     ----------
consideration for the transfer of the Assets by the Company to GFD, the
Transferor hereby agrees to sell, transfer and convey to the Company, and the
Company agrees that it will redeem and purchase from the Transferor, on the
Closing Date (as defined below), the Redemption Shares.

2.   Transfer of Assets. Subject to the terms and conditions herein set forth,
     ------------------
in consideration of the transfer of the Redemption Shares by the Transferor to
the Company, the Company agrees that it will transfer the Assets to GFD on the
Closing Date. The Transferor and GFD hereby acknowledge that the Assets are
being transferred at Closing on an "as is" basis and the Company makes no
express or implied representations or warranties about the existence or
condition of the Assets, and explicitly disclaims any implied warranties of
merchantability or fitness for a particular purpose.

3.   Place and Date of Closing. The closing of the transactions contemplated by
     -------------------------
this Agreement (the "Closing") shall take place at the offices of Robins,
Kaplan, Miller & Ciresi L.L.P. in Minneapolis, Minnesota on November 12, 2004,
or such other time as mutually agreed by the parties (the "Closing Date").

4.   Closing Conditions.

4.1  Conditions to Obligations of the Company. The obligation of the Company to
     ----------------------------------------
consummate the transactions contemplated by this Agreement is subject to the
fulfillment, prior to or at the Closing, of all of the following conditions:

(a)  Settlement Agreement. The Transferor and GFD shall have executed and
delivered to the Company this Agreement;

(b)  Certificates. The Company or the Company's transfer agent shall have
received the stock certificates representing the Redemption Shares, accompanied
by stock powers duly endorsed for transfer to the Company; and

(c)  License Agreement. GFD shall have executed and delivered to the Company the
License Agreement in the form attached hereto as Exhibit B.

4.2  Conditions to Obligations of the Transferor and GFD. The obligations of the
     ---------------------------------------------------
Transferor and GFD to consummate the transactions contemplated by this Agreement
are subject to the fulfillment, prior to or at the Closing, of all of the
following conditions:

(a)  Settlement Agreement. The Company shall have executed and delivered to the
Transferor and GFD this Agreement; and

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<PAGE>

(b)  Transfer of Assets. The Company shall have executed and delivered to GFD a
Bill of Sale and such other instruments of conveyance, transfer, assignment and
delivery as GFD shall reasonably request.

5.   Representations of the Transferor and GFD. The Transferor and GFD jointly
     -----------------------------------------
and severally represent and warrant to the Company as follows:

5.1  Ownership. The Shares constitute the only equity interest that the
     ---------
Transferor holds in the Company. The Transferor has no other equity interest in
the Company or any of its subsidiaries or affiliates. The Transferor is the sole
beneficial owner of the Redemption Shares; has the right to vote the Redemption
Shares and exercise all other rights and powers with respect thereto; and has
good and marketable title thereto free from any liens, encumbrances, security
agreements, or claims of any nature. There is no restriction, subscription,
option, warrant, right, call, contract, voting trust, irrevocable proxy, voting
arrangement, commitment, understanding or agreement relating to the sale, voting
or transfer of any of the Redemption Shares held by the Transferor.

5.2  Authority. The Transferor and GFD have all requisite power and authority to
     ---------
do and perform all acts and things required to be done by them under this
Agreement. This Agreement and the agreements contemplated hereby have been or
will be duly executed on or before the Closing Date and delivered by the
Transferor and GFD and constitute or will as of the Closing constitute the
legal, valid and binding obligations of the Transferor and GFD enforceable in
accordance with their respective terms.

5.3  Violations. The performance of this Agreement and the consummation of the
     ----------
transactions contemplated hereby will not result in a breach or violation of any
of the terms or provisions of any other agreement, settlement, judgment or
instrument to which the Transferor or GFD is a party or by which the property of
the Transferor or GFD is bound.

5.4  Access to Information. The Transferor acknowledges that it has had an
     ---------------------
opportunity to discuss the Company's business, management and financial affairs
with the Company's management and has had an opportunity to review the Company's
facilities, corporate books and records, financial information and other related
agreements and documents pertaining to the Company and to ask any questions
regarding the business or prospects of the Company. The Transferor has received
all the information it needs to make an informed decision regarding the sale and
transfer of the Redemption Shares to the Company. The Transferor does not
require or desire any additional information or data pertaining to the Company
in connection with the transactions contemplated by this Agreement.

6.   Representations of the Company. The Company represents and warrants to the
     ------------------------------
Transferor and GFD as follows:

6.1  Authority. The Company has all requisite corporate power and authority to
     ---------
do and perform all acts and things required to be done by it under this
Agreement. This Agreement and the agreements contemplated hereby have been or
will be duly executed on or before the Closing Date and delivered by the Company
and constitute or will as of the Closing constitute the legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms.

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<PAGE>

6.2  Violations. The performance of this Agreement and the consummation of the
     ----------
transactions contemplated hereby will not result in a breach or violation of any
of the terms or provisions of any other agreement, settlement, judgment or
instrument to which the Company is a party or by which the property of the
Company is bound.

7.   Indemnification.
     ---------------

7.1  By the Company. The Company agrees to indemnify, defend and hold harmless
     --------------
the Transferor and GFD from and against any and all losses, damages,
liabilities, obligations, costs or expenses (any one such item being herein
called a "Loss" and all such items being herein collectively called "Losses")
which are caused by or arise out of (i) any breach or default in the performance
by the Company of any covenant or agreement contained in this Agreement, (ii)
any breach of warranty or inaccurate or erroneous representation made by the
Company herein, or (iii) any and all actions, suits, proceedings, claims,
demands, judgments, costs and expenses (including reasonable legal fees) arising
out of the foregoing.

7.2  By the Transferor and GFD. The Transferor and GFD hereby agree to jointly
     -------------------------
and severally indemnify, defend and hold harmless the Company, and its
successors and assigns, together with its officers, directors, and shareholders,
from and against any and all Losses which are caused by or arise out of (i) any
breach or default in the performance by the Transferor or GFD of any covenant or
agreement contained in this Agreement, (ii) any breach of warranty or inaccurate
or erroneous representation made by the Transferor or GFD contained herein, or
(iii) any and all actions, suits, proceedings, claims, demands, judgments, costs
and expenses (including reasonable legal fees) arising out of the foregoing.

8.   Notices. All notices or other communications to a party required or
     -------
permitted hereunder shall be in writing and shall be delivered personally or by
facsimile to such party (or, in the case of an entity, to an executive officer
of such party) or shall be given by a national overnight courier service,
addressed as follows:

if to the Company:         Caribbean American Health Resorts, Inc.

                           9454 Wilshire Boulevard, Suite 600

                           Beverly Hills, California 90212

                           Attention: Halton G. Martin

                           Fax: (310) 860-1882

with a copy to:            Dennis P. R. Codon, Esq.

                           Robins, Kaplan, Miller & Ciresi L.L.P.

                           2049 Century Park East, Suite 3700

                           Los Angeles, California 90067

                           Fax:  (310) 229-5800

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<PAGE>

if to the Transferor:      Aurora Capital Holdings, L.L.C.

                           855 Village Center Drive Suite 315

                           North Oaks, Minnesota 55127

                           Attention:  William Kieger

                           Fax: (651) 483-0825 (Call first)

if to GFD:                 General Finance and Development, Inc.

                           855 Village Center Drive Suite 315

                           North Oaks, Minnesota 55127

                           Attention:  William Kieger

                           Fax: (651) 483-0825 (Call first)

Any party may change the above specified recipient and/or mailing address by
notice to all other parties given in the manner herein prescribed. All notices
shall be deemed given on the day when actually delivered as provided above (if
delivered personally or by facsimile) or on the day after deposit with a
national overnight courier service.

9.   Miscellaneous.
     -------------

9.1  Complete Agreement. This Agreement and the Schedule and Exhibit attached
     ------------------
hereto constitute the entire agreement between the parties hereto with respect
to the subject matter hereof and supersede all prior agreements (including the
Stock Exchange Agreement) whether written or oral relating to the subject matter
hereof.

9.2  Amendment. This Agreement may not be amended except by an instrument in
     ---------
writing signed by each of the parties hereto.

9.3  Waiver, Discharge. The failure of any party hereto to enforce at any time
     -----------------
any of the provisions of this Agreement shall in no way be construed to be a
waiver of any such provision, nor in any way affect the validity of this
Agreement or any part thereof or the right of the party thereafter to enforce
each and every such provision. No waiver of any breach of this Agreement shall
be held to be a waiver of any other or subsequent breach.

9.4  Further Assurances. At such time and from time to time on and after the
     ------------------
Closing Date upon request by any party, the parties will execute, acknowledge
and deliver, or will cause to be done, executed, acknowledged and delivered, all
such further acts, deeds, assignments, transfers, conveyances, powers of
attorney and assurances that may be required or to otherwise carry out the
purposes of this Agreement.

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<PAGE>

9.5  Survival. The representations and warranties of the parties and the
     --------
respective indemnification provisions contained in this Agreement shall survive
the Closing hereunder and continue in full force and effect forever thereafter
(subject to any applicable statutes of limitations).

9.6  Successors and Assigns. This Agreement shall be binding upon and inure to
     ----------------------
the benefit of the parties hereto and the successors or assigns of the parties
hereto; provided that no party may assign its rights herein or delegate its
duties hereunder without the prior written consent of the other parties.

9.7  Governing Law. This Agreement shall be governed by and interpreted in
     -------------
accordance with the laws of the State of Minnesota, including all matters of
construction, validity, performance and enforcement, without giving effect to
principles of conflict of laws of any jurisdiction.

9.8  Counterparts. This Agreement may be executed by facsimile signature and in
     ------------
any number of counterparts, each of which shall be deemed as original and all of
which together, when delivered, shall constitute one instrument.

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<PAGE>

IN WITNESS WHEREOF, the Company, the Transferor and GFD have caused this
Agreement to be signed on the date first above written.

THE COMPANY:

Vital Health Technologies, Inc.

By:      /s/ Halton G. Martin
         Halton G. Martin
         Chief Executive Officer

THE TRANSFEROR:

Aurora Capital Holdings, L.L.C.

By:      /s/ William Kieger
Name:    William Kieger
Its:     President

GFD:

General Finance and Development, Inc.

By:      /s/ William Kieger
Name:    William Kieger
Its:     Chief Executive Officer

                    [SIGNATURE PAGE TO SETTLEMENT AGREEMENT]

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<PAGE>

SCHEDULE A

THE ASSETS

All assets associated with the Company's heart screening business activities,
including the files, furniture, artwork and technology located at the North Star
Mini Storage facility in Shoreview, Minnesota and listed under the Company's
name.

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<PAGE>

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