Document:

Exhibit 10.1.4

 

Exhibit A

 

SCHEDULE OF PARTNERS,

ALLOCATION OF PARTNERSHIP UNITS, PERCENTAGE INTERESTS

AND THE AGREED UPON VALUE OF NON-CASH CAPITAL CONTRIBUTIONS

 

	
  Date
  Admitted

  	
   

  	
  Name and
  address of partners

  	
   

  	
  Value of
  non-

  cash capital

  contribution

  	
   

  	
  Partnership

  units issued

  	
   

  	
  Approx.

  Percentage

  Interests

  	
   

  	
  Federal ID
  #

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  05/22/1998

  	
   

  	
  Eagle Ridge
  Resort LLC

  37 West 57th Street, 12th Floor

  New York, NY  10019

  	
   

  	
  $

  	
  1,198,750

  	
   

  	
  35,794

  	
   

  	
  0.46

  	
  %

  	
  52-2099405

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  02/04/1997

  	
   

  	
  GTA LP, Inc.
  14 North Adger’s Wharf Charleston, SC 29401

  	
   

  	
  $

  	
  —

  	
   

  	
  7,725,599

  	
   

  	
  99.34

  	
  %

  	
  58-2290326

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  02/04/1997

  	
   

  	
  GTA GP, Inc.
  14 North Adger’s Wharf Charleston, SC 29401

  	
   

  	
  $

  	
  —

  	
   

  	
  15,554

  	
   

  	
  0.20

  	
  %

  	
  58-2290217

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Common OP Units

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  7,776,947

  	
   

  	
  100.00

  	
  %

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GTA LP, Inc.

  14 North Adger’s Wharf

  Charleston, SC 29401

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  800,000

  	
   

  	
  100

  	
  %Exhibit
10.41

 

EMPLOYMENT
AGREEMENT

 

This agreement (the “Agreement”) between
TIER TECHNOLOGIES INC., a California corporation (the “Company”) and Mr.
Jeff McCandless (the “Employee”),
is entered into as of July 2, 2003 (the “Effective Date”).  Those capitalized terms used in this
Agreement and not otherwise defined 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:

 

A.                                    AT-WILL
EMPLOYMENT.  The Company employs
Employee as of July 2, 2003 in the capacity of Senior Vice President and
Chief Financial Officer, reporting to Mr. James L. Bildner, Chairman and Chief
Executive Officer or his designee. 
Employee will be based at Company’s offices in Walnut Creek,
California.  Employee agrees to
undertake such business travel as is customary to such position, and as shall
from time to time be requested of him by the Company. The parties agree that
employment at the Company is at will and may be terminated by either the
Company or Employee at any time with or without cause and with or without
notice.  Employee acknowledges that
Employee has no right to be employed for a specific term and no right to insist
on specific grounds for termination. 
Employee acknowledges and agrees that the at will nature of this
Agreement extends to all employment decisions and that any change in the terms
and conditions of employment, including without limitation work assignments,
production standards, job responsibilities, compensation and promotions, shall
be at the Company’s sole discretion.

 

1.                                      COMPENSATION
AND BENEFITS

 

1.1                               Base
Salary.  In consideration of and as
compensation for the services to be performed by the Employee hereunder, the
Company shall pay the Employee a base salary (the “Base Salary”) of not less than $240,000
per year, payable semi-monthly in arrears in accordance with the Company’s
regular payroll practices.  Following
completion of six (6) consecutive months of employment, Employee’s base salary
shall be increased to $250,000 per annum. In addition, Employee will be
entitled to compensation review on an annual basis consistent with the
Effective Date of this Agreement, and any mutually adjusted compensation change
will be based upon individual and Company performance and applicable Tier
policy.

 

1.2                               Bonus.  At the Company’s sole discretion, Employee
may be eligible to participate in Company’s Executive Incentive Compensation
Plan commencing as and from the fiscal year October 1, 2003, for
additional discretionary incentive compensation of up to 50% of base salary or
subject to a higher maximum based upon the then in effect approved incentive
compensation program. Incentive compensation will be defined by Tier’s
Executive Compensation Plan (Exhibit A) as determined by the Compensation
Committee of Tier’s Board of Directors and may be payable in cash and/or stock
options as determined annually by the Compensation Committee.

 

1.3                               Options.  In addition, subject to approval by the
Compensation Committee of the Tier Board of Directors, the Employee will be
granted stock options for 75,000 shares, which are subject to the provisions of
the Tier Equity Incentive Plan.  Options
are typically granted during the first week of the calendar quarter following
the Effective Date of your employment and are priced by the Board of Directors
according to the market price at the time of grant.  Options vest over five years with 20% of the total grant vesting
after completion of each 12-month period from the original date of grant.  Option grant

 

	
  Initials:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Company

  	
   

  	
  Employee

  

 

1

 

and related
documents are sent to each new employee within 30 days following the date of
the grant.  In the event of a merger,
consolidation or other reorganization of the Company (collectively a “Merger”)
in which the Company is not the surviving entity (other than a Merger involving
a majority-owned subsidiary of the Company) at the election of the Board of
Directors either: (i) this option shall become fully vested and exercisable
into shares of the surviving corporation, subject to the applicable Merger
ratio, without any change in the total purchase price; or (ii) the Optionee
shall receive a cash distribution equal to the difference between the exercise
price of the option and the fair market value of the Common Stock on the
effective date of Merger.  Similarly if,
in a single transaction or series of related transactions with a record date
subsequent to the date of the Agreement, there is (i) a transfer of more than
fifty percent (50%) of the voting power of the Company’s then outstanding
Common Stock, or (ii) the issuance of new shares of the Company’s Common Stock
possessing equal or greater voting power than the Company’s outstanding Common
Stock prior to the issuance, this option shall become fully vested and
exercisable.

 

In addition, subject to the approval of Tier’s Compensation Committee,
Employee shall be eligible to receive an additional stock option grant of
25,000 shares to be granted in the first week of the quarter following one year
of consecutive employment with Company as defined by the Effective Date of this
Agreement. Options vest over five years with 20% of the total grant vesting
after completion of each 12-month period from the original date of grant.  Option grant and related documents are sent
to each new employee within 30 days following the date of the grant.    In the event of a merger, consolidation or
other reorganization of the Company (collectively a “Merger”) in which the
Company is not the surviving entity (other than a Merger involving a
majority-owned subsidiary of the Company) at the election of the Board of
Directors either: (i) this option shall become fully vested and exercisable
into shares of the surviving corporation, subject to the applicable Merger
ratio, without any change in the total purchase price; or (ii) the Optionee
shall receive a cash distribution equal to the difference between the exercise
price of the option and the fair market value of the Common Stock on the
effective date of Merger.  Similarly if,
in a single transaction or series of related transactions with a record date
subsequent to the date of the Agreement, there is (i) a transfer of more than
fifty percent (50%) of the voting power of the Company’s then outstanding
Common Stock, or (ii) the issuance of new shares of the Company’s Common Stock
possessing equal or greater voting power than the Company’s outstanding Common
Stock prior to the issuance, this option shall become fully vested and
exercisable.  .

 

1.4                               Participation
in Benefit Plans.  The Employee
shall be entitled to participate in any pension plans, profit-sharing plans and
group insurance, medical, hospitalization, disability and other benefit plans
maintained by the Company from time to time, as such are generally applicable
to employees of the Company and to the extent Employee is eligible under the
general provisions thereof.

 

1.5                               Reimbursement
of Expenses.  The Company shall
reimburse the Employee for all business expenses, including, without
limitation, travel, entertainment and similar expenses, incurred by the
Employee on behalf of the Company if such expenses are ordinary and necessary
business expenses incurred on behalf of the Company pursuant to standard
expense reimbursement policy.  The
Employee shall provide the Company with such itemized accounts, receipts or
documentation for such expenses as are required under the Company’s policy
regarding the reimbursement of such expenses.

 

In addition, the
Employee will be entitled to either the reimbursement of parking expenses at
the Walnut Creek office location or provided with Company paid parking
facilities, as appropriate.

 

1.6                               Vacation
and Personal Leave.  The Employee
shall be entitled to three (3) weeks of vacation per annum, pro-rated in the
year of hire and terminated and accrued on a semi-monthly basis. The Employee
shall also be entitled to other paid personal leave in accordance with The
Company’s

 

2

 

policy.  Company is aware and agrees to Employee’s
vacation request from August 4-8, 2003, such time to be recorded against
annual vacation allowances and accrued benefits at that time.

 

1.7                               Relocation
Allowance.  The Employee shall be
reimbursed for reasonable and customary expenses associated with Employee’s
relocation to Walnut Creek, California in an amount not to exceed $15,000
(fifteen thousand dollars). Reimbursement of incurred relocation expenses will
be made in accordance with Tier’s standard relocation practices and procedures,
and the submission of original documentation in evidence of relocation expenses
claimed. Employee may request at the discretion of Tier’s Chairman and Chief
Executive Officer reimbursement of relocation expenses incurred in excess of
$15,000, and approval for additional expenses will not be unreasonably
withheld, provided that such expenses are reasonable and customary and directly
relate to the relocation process.

 

2.                                      TERMINATION

 

2.1                               Termination.

 

(a)                                  Termination
for Cause.  The Company may terminate Employee’s
employment under this Agreement, in its sole discretion, “for cause.”  Grounds for the Company to terminate this
Agreement “for cause” shall be limited to the occurrence of any of the
following events:

 

(i)                                    the
Employee’s commission of any act which detrimentally affects the Company,
including, without limitation, an act of dishonesty, fraud, willful
disobedience, gross misconduct ,breach of duty, intentional destruction or
theft of Tier property, material violation of Tier policies or falsification of
Tier documents;

 

(ii)                                the
Employee’s commission of any act in contravention of Employee’s undertakings
contained in Section 3 hereof; or

 

(iii)                            the
Employee’s conviction of a felony or a misdemeanor involving dishonesty or
moral turpitude.

 

(b)                                  Termination
Without Cause.  The Company may
terminate Employee’s employment under this Agreement without cause or notice at
any time.

 

(c)                                  Notice
of Termination.  Any purported
termination of employment by the Company or by the Employee shall be
communicated by written notice of termination to the other party hereto in
accordance with Section 4.1 hereof. 
Any notice of termination of employment given hereunder shall effect termination
as of the date specified in such notice, or, in the event no such date is
specified, on the last day of the month in which such notice is delivered or
deemed delivered as provided in Section 4.1 hereof.

 

(d)                                  Effect
of Termination.

 

(i)                                    Upon
the termination of the Employee’s employment as a result of Employee’s
disability, the Employee shall be entitled to receive for an additional thirty
(30) days after the date of such termination, Employee’s Base Salary in effect
at the time of termination and any and all benefits to 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 such plans.

 

3

 

(ii)                                Upon
termination of the Employee’s employment as a result of Employee’s death, the
Employee’s heirs, devisees, executors or other legal representatives shall
receive for an additional thirty (30) days from the date of death, Employee’s
Base Salary in effect at the time of death.

 

(iii)                            If
the Employee’s employment hereunder shall be terminated by the Company without
cause, or if the Employee terminates his employment, then, and only then, shall
the Employee shall be entitled to the Employee’s Base Salary and accrued and
unused vacation earned through the date of termination, subject to standard
deductions and withholdings, and upon the Employee’s furnishing to the Company
an executed waiver and release of claims, in the form of which is attached
hereto as Exhibit B, the Employee
shall also be entitled to continuation of the Employee’s Base Salary in effect
at the time of termination for a period of nine (9) months (the “Severance
Period”), subject to Company standard payroll schedule, deductions and
withholdings.   In addition, Employee
will be entitled to continue group and elective benefits in which Employee
participated on the date of such termination under the Company’s benefit
programs, including life, disability and accident, in accordance with the
provisions of such plans and applicable legislation.

 

(iv)                               If
the Employee’s employment hereunder shall be terminated by the Company for
cause or by the Employee by resignation, the Company shall have no further
obligation to the Employee under this Agreement other than accrued Base Salary
and other accrued benefits required by law, prorated to the date of
termination.

 

3.                                      NON-COMPETITION,
NON-SOLICITATION AND CONFIDENTIALITY

 

3.1                               Non-Competition.  For the period of one year (1) from the date
of termination of Employee’s employment, the Employee shall not, directly or
indirectly:

 

(a)                                  carry
on or engage in with any Person engaged in, in any territory in which the
Continuing Business is carried on during Employee’s employment, any activity that
is in competition with the Continuing Business; or

 

(b)                                  do
or say anything which is harmful to the reputation of the Continuing Business
or which may lead any person to cease to deal with the Continuing Business on
substantially equivalent terms to those previously offered or at all; or

 

(c)                                  seek
to contract with or engage any person who has been contracted with or engaged
to manufacture, assemble, supply or deliver products, goods, materials or
services which will be competitive with the Continuing Business.

 

3.2                               Non-solicitation.  For the period of one (1) year from the
date of termination of Employee’s employment, the Employee shall not, directly
or indirectly:

 

(a)                                  employ
or solicit for employment any person whom Employee knows to be an employee of the
Company or any subsidiary of the Company or induce or attempt to induce any
such person to terminate his or her employment with the Company or such
subsidiary; or

 

(b)                                  seek
in competition with the Company to procure orders from or do business with or procure
directly or indirectly any other person to procure orders from or do business
with any person who has been a customer of the Company at any time.

 

4

 

3.3                               Confidential
Information.

 

(a)                                  The
Employee acknowledges that the Confidential Information (as hereinafter
defined) of the Company is valuable, special and unique to the Continuing
Business, and that such Continuing Business depends on such Confidential
Information; and that the Company wishes to protect such Confidential
Information by keeping it confidential for the use and benefit of the
Company.  Based on the foregoing, the
Employee undertakes:

 

(i)                                    to
keep any and all Confidential Information in trust for the use and benefit of
the Company;

 

(ii)                                except
as required by the Employee’s duties hereunder or as may be authorized in
writing by the Company, not at any time during and for a period of one (1) year
after termination of Employee’s employment with the Company, to disclose or
use, directly or indirectly, any Confidential Information of the Company;

 

(iii)                            to
take all reasonable steps necessary, or reasonably requested by the Company, to
ensure that all Confidential Information of the Company is kept confidential
for the use and benefit of the Company; and

 

(iv)                               upon
termination of Employee’s employment with the Company or at any other time the
Company may in writing so request, to promptly deliver to the Company all
materials constituting Confidential Information (including all copies thereof)
that are in Employee’s possession or under Employee’s control.  Further, the Employee undertakes that, if
requested by the Company, Employee shall return any Confidential Information
pursuant to this subsection and shall not make or retain any copy of or
extract from such materials.

 

(b)                                  For
purposes of this Section, “Confidential
Information” means any and all information developed by or for
the Company of which the Employee gained knowledge by reason of Employee’s
employment with the Company under this Agreement that is not generally known in
the industry in which the Company is or may become engaged.  Confidential Information includes, but is
not limited to, any and all information developed by or for the Company or customers
of the Company, concerning plans, marketing and sales methods, materials,
processes, business forms, procedures, devices used by the Company or
contractors or customers with which the Company has dealt, plans for
development of new products, services and expansion into new areas or markets,
internal operations and any trade secrets and proprietary information of any
type owned by the Company together with all written, graphic and other
materials relating to all or any part of the same.

 

(c)                                  Employee
agrees that as a condition of employment Employee will execute and abide by the
Company’s Nondisclosure and Proprietary/Confidential Information Agreement (the “Confidentiality Agreement”),
attached hereto as Exhibit C. To
the extent the Confidentiality Agreement conflicts with or is inconsistent with
this Agreement, this Agreement shall control.

 

3.4                               Remedies.

 

(a)                                  Injunctive
Relief.  Employee acknowledges and
agrees that the covenants and obligations contained in Sections 3.1, 3.2 and
3.3 hereof relate to special, unique and extraordinary matters and that a
violation of any of the terms of said Sections will cause the Company
irreparable injury for which adequate remedy at law is not available.  Therefore, Employee agrees that the Company
shall

 

5

 

be entitled to an
injunction, restraining order, or other equitable relief from any court of
competent jurisdiction, restraining the Employee from committing any violation
of such covenants and obligations.

 

(b)                                  Remedies
Cumulative.  The Company’s rights
and remedies in respect of this Section are cumulative and are in addition
to any other rights and remedies the Company may have at law or in equity.

 

4.                                      MISCELLANEOUS

 

4.1                               Notices.  Any written notice, required or permitted
under this Agreement, shall be deemed sufficiently given if either hand
delivered or by fax (with written confirmation of receipt) or nationally
recognized overnight courier.  Written
notices must be delivered to the receiving party at its address or facsimile
number on the signature page of this Agreement.  The parties may change the address or facsimile number at which
written notices are to be received in accordance with this Section.

 

4.2                               Prevailing
Party.  If any litigation is
commenced between the parties hereto concerning this Agreement or their
respective rights, duties and obligations hereunder, the party prevailing in
that litigation shall be entitled to reasonable attorney’s fees, to be fixed by
the court as part of the costs of the litigation or established in a separate action
brought to recover those fees, in addition to any other relief that may be
granted.

 

4.3                               Assignment.
The Employee may not assign, transfer or delegate his rights or obligations
hereunder, and any attempt to do so shall be void.  This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns.

 

4.4                               Entire
Agreement.  This Agreement contains
the entire agreement of the parties hereto with respect to the subject matter
hereof, and all other prior agreements, written or oral, are hereby merged
herein and are of no further force or effect. 
This Agreement may be modified or amended only by a written agreement
that is signed by the Company and the Employee.  No waiver of any section or provision of this Agreement
shall be valid unless such waiver is in writing and signed by the party against
whom enforcement of the waiver is sought. 
The waiver by the Company of any section 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 and shall not affect the
meaning or interpretation of this agreement. 
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but together they shall constitute one and the
same instrument.

 

4.5                               Severability.  The provisions of this Agreement shall be
deemed severable, and if any part of any provision is held illegal, void or
invalid under applicable law, such provision may be changed to the extent
reasonably necessary to make the provision, as so changed, legal valid and
binding.  If any provision of this
Agreement is held illegal, void or invalid in its entirety, the remaining
provisions of this Agreement shall not in any way be affected or impaired but
shall remain binding in accordance with their terms.

 

4.6                               Continuing
Obligations.  The provisions
contained in Sections 2.1(d), 3, 4.2, 4.6 and 4.7 of this Agreement shall
continue and survive the termination of this Agreement.

 

6

 

4.7                               Applicable
Law.  This Agreement and the rights
and obligations of the Company and the Employee hereunder shall be governed by
and construed and enforced under the laws of the State of California, without
reference to any principles of conflict of laws.

 

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

 

 

	
   

  	
  TIER
  TECHNOLOGIES, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James R.
  Weaver

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print Name:

  	
   James R. Weaver

  
	
   

  	
   

  	
  Title:

  	
   President
  & CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Jeffrey A.
  McCandless

  
	
   

  	
  [EMPLOYEE]

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  
	
   

  	
  Facsimile:

  	
   

  
						

 

7

 

Exhibit
A

TIER
TECHNOLOGIES, INC.

INCENTIVE
COMPENSATION PLAN

 

ADOPTED
JANUARY 22, 2001

EFFECTIVE
OCTOBER 1, 2000

 

1.                                      Purpose.  The Tier Technologies, Inc. Incentive
Compensation Plan (the “Plan”) is intended to provide incentive compensation
opportunities for key Employees to receive Awards in the form of cash, fully
vested stock options to purchase shares of the Company’s common stock, other
stock grants, or any combination of these, based on (i) the performance of the
Company and/or one or more of its Affiliates and (ii) the individual
Participant’s performance as quantified in the Performance Objectives and
Performance Levels as described herein.

 

2.                                      Definitions.

 

(a)                                  “Affiliate” shall mean any member of
an affiliated group of corporations with the Company under Code
Section 1504.

 

(b)                                  “Award” shall mean the incentive
amount earned under the Plan by a Participant which shall be payable in the
form of cash, fully vested stock options to purchase shares of common stock of
the Company, other stock grants, or any combination of these.

 

(c)                                  “Base Salary” shall mean the actual
base earnings of a Participant for the Plan Year exclusive of any bonus
payments under this Plan or any other prior or present commitment, including
contractual arrangements, any salary advance, any allowance or reimbursement,
and the value of any basic or supplemental employee benefits or
perquisites.  Base Salary refers only to
amounts earned while a Participant during the Plan Year.

 

(d)                                  “Board” shall mean the Board of
Directors of the Company.

 

(e)                                  “Cause” means, with respect to a
particular Participant:  (i) fraud,
misappropriation, embezzlement or other act of misconduct against the Company
or an Affiliate; (ii) conviction of any felony which has a material adverse
effect on the Company or an Affiliate; (iii)

 

8

 

violation of any
rules or regulations of any governmental or regulatory body which has a
material adverse effect on the Company or an Affiliate; (iv) any breach of the
Participant’s duty not to engage in any transaction that represents, directly
or indirectly, self-dealing with the Company or any of its Affiliates, which
has not been approved by the Company or an Affiliate; (v) a breach of any
material term of the Participant’s employment obligations to the Company or an
Affiliate and/or unsatisfactory job performance where such breach and/or
unsatisfactory performance is not cured within fifteen days of receipt of
written notice of such deficiencies (unless such deficiencies are caused by the
Participant’s Permanent Disability); (vi) violation of state or federal law in
connection with the Eligible Employee’s performance of his/her job which has a
material adverse effect on the Company or an Affiliate; or (vii) a leave of
absence exceeding the period allowed by contract, policy or applicable law.  Notwithstanding the foregoing, a
Participant’s Termination due to death or Permanent Disability shall not be
considered termination for Cause.

 

(f)                                    “CEO” shall mean the Chief Executive
Officer of the Company.

 

(g)                                 “Code” shall mean the Internal Revenue
Code of 1986, as amended.

 

(h)                                 “Committee” shall mean the
Compensation Committee of the Board. 
The Committee shall consist solely of outside directors, as defined in
Section 162(m) of the Code.

 

(i)                                    “Company” shall mean Tier
Technologies, Inc., a California corporation.

 

(j)                                    “Covered Employees” shall mean the CEO
and the four (4) highest compensated officers, as defined in
Section 162(m) of the Code, of TIER.

 

(k)                                “Employee” shall mean an employee of
the Company or an Affiliate.

 

(l)                                    “Fiscal Year” shall mean the twelve
(12) consecutive months beginning October 1 and ending September 30.

 

(m)                              “Maximum Award Percentage” shall mean
the maximum percentage of a Participant’s Base Salary (as in effect on the
first day of the Plan Year) as established by the Committee for each Plan Year
that a Participant may receive pursuant to the Plan provided that all
Performance Objectives are met at the Maximum Performance Level (as described
herein) for such Plan Year.

 

(n)                                 “Participant” shall mean an Employee
designated by either the CEO or Committee as eligible to receive an Award under
this Plan for any Plan Year if the applicable Performance Objectives are met at
any of the applicable Performance Levels specified for such Plan Year.

 

(o)                                  “Performance Levels” shall mean a
Participant’s achievement of a Performance Objective at one of the following
levels necessary for an Award:  (1)
Threshold, (2) Target, or (3) Maximum, the specifics of each shall be
established by the Committee for each Plan Year.

 

(p)                                  “Performance Objectives” shall mean
the pre-established goals established by the Committee for each Plan Year upon
which a Participant’s performance will be assessed for each Plan Year.

 

(q)                                  “Permanent Disability” shall mean the
permanent and total disability of a person within the meaning of Section 22(e)(3)
of the Code.

 

9

 

(r)                                  “Plan” shall mean this Tier
Technologies, Inc. Incentive Compensation Plan, as amended from time to time.

 

(s)                                  “Plan Year” shall mean the twelve (12)
consecutive months beginning October 1 and ending September 30 over
which performance is measured under this Plan.

 

(t)                                    “Pro Forma EPS” or “EPS” shall mean the
diluted net income per share of the Company’s common stock as determined on a
pro forma basis consistent with past practice as of Year-end for each Plan
Year.

 

(u)                                 “Retirement” shall mean the
Participant’s voluntary Termination (as defined herein) for reasons other than
Cause (as defined herein) if such Participant satisfies both of the following
as of the date of Termination:  (i) the
Participant has five (5) or more years of service as an Employee and (ii) the
sum of the Participant’s age and years of service as an Employee is equal to or
greater than sixty (60) years.

 

(v)                                   “Revenue” shall mean the consolidated
revenues of the Company for the Plan Year excluding any revenues realized as a
result of contracts assumed by the Company or an Affiliate as a result of
acquisitions consummated by the Company or an Affiliate during the Plan Year.

 

(w)                                “Share Price” shall mean average daily
closing price of the Company’s common stock on the Nasdaq National Market, or
other principal trading market of such common stock for the Plan Year.

 

(x)                                  “Termination” shall mean the
Participant’s ceasing his or her service with the Company or any of its
Affiliates for any reason whatsoever.

 

(y)                                  “TIER” shall mean the Company and all
of its Affiliates.

 

(z)                                  “Year-end” shall mean the end of the
Company’s Fiscal Year.

 

3.                                      Participation
and Awards under the Plan.

 

(a)                                  Participation. 
Plan participation is extended to selected key Employees
who, in the sole and exclusive opinion of the CEO and/or the Committee, have
the opportunity to significantly impact the annual operating success of the
Company and/or its Affiliates. 
Participants will be selected to participate in the Plan at the
beginning of or during the Plan Year as set forth herein.  Participants will be notified in writing of
their selection to participate in the Plan each Plan Year.  This written notification for all
Participants, except Covered Employees, will be signed by the CEO.  The Committee will determine the Plan
participation of all Covered Employees and the written notification to a
Covered Employee will be signed by the Chairman of the Committee.

 

(b)                                  Performance Objectives and Levels.  The Performance Objectives shall be
determined by the Committee for each Plan Year and with respect to each
Participant.  Performance Objectives
shall consist of one, all or a combination of the following:  Pro Forma EPS, Revenue, and Share Price;
provided, however, the Performance Objectives for Participants who are not
Covered Employees (or Participants who are Covered Employees but whose
remuneration, within the meaning of Section 162(m) of the Code, for the
Fiscal Year, in the determination of the Committee, is not expected to exceed
one million dollars ($1,000,000)) may include additional Performance Objectives
in the discretion of the Committee.  The
weight to be given and Performance Levels for each of the applicable

 

10

 

Performance
Objectives shall be determined by the Committee with respect to each
Participant.  The Committee may
establish different Performance Objectives and/or Levels for the Company, and
for one or more Affiliates and may establish different Performance Objectives
and/or Levels for each Participant or group of Participants.

 

(c)                                  Participant Awards.

 

(i)                                    Participant Award Criteria.  Each Participant will be assigned a
Maximum Award Percentage by the Committee. 
The Committee, in its sole and absolute discretion, may consider
recommendations made by the CEO as to individual Maximum Award Percentages for
Participants (other than the CEO).  The
Participant’s Maximum Award Percentage, when multiplied by the Participant’s
Base Salary earned during the Plan Year, represents the maximum Award payable
to such Participant during such Plan Year if all of the applicable Performance
Objectives are met at the Maximum Performance Level for each.  For each Plan Year, each Participant will be
notified of the Maximum Award Percentage applicable to him or her, the
applicable Performance Objectives, the weight to be given each Performance
Objective, the Performance Levels upon which each Performance Objective will be
assessed, and each of these items will be included in the written notification
described in subsection 3(a) above.

 

(ii)                                Form of Awards. 
Awards may be paid and/or granted, as applicable, in any
combination of cash or, in lieu of cash, fully vested stock options to purchase
shares of the Company’s common stock (pursuant to the Company’s Amended and
Restated 1996 Equity Incentive Plan, any subsequently adopted equity incentive
plan, or as otherwise determined by the Committee) with an exercise price equal
to the fair market value of the Company’s common stock on the date of grant of
the option (unless a higher exercise price is required by applicable law), or
other stock grants as determined by the Committee.  The Committee, in its sole and absolute discretion, may determine
the form of any Award at any time prior to the payment and/or grant of such
Award for any Plan Year.  The value of
any stock options granted in lieu of cash (and any other form of Award that
requires application of a valuation model) shall be determined in accordance
with the Black-Scholes valuation model. The Committee may (but need not)
establish different forms of Awards for each Participant or group of
Participants.  The written notification
described in subsection 3(a) above may (but need not) include the form of
any Award that the Participant may earn upon achievement of the Applicable
Performance Objective(s) for such Plan Year (to the extent that the form of
such Award for such Plan Year has been determined by the Committee as of the
date of such written notification).

 

(d)                                  Special Rules for Covered Employees.  Notwithstanding any provision
of the Plan to the contrary, the Committee shall establish Maximum Award
Percentages, Performance Objectives, the weight to be given each Performance
Objective and the Performance Levels applicable to each Performance Objective,
and any other term necessary under the Plan to determine the Awards for Covered
Employees not later than ninety (90) days after the beginning of each Fiscal
Year, provided that at the time such Performance Objectives are established,
the satisfaction of such Performance Objectives is not substantially certain to
be satisfied.  Notwithstanding the
foregoing, the ninety (90) day requirement set forth in the preceding sentence
shall not apply in the case of a Covered Employee whose remuneration, within
the meaning of Section 162(m) of the Code, for the Fiscal Year, in the
determination of the Committee, is not expected to exceed one million dollars
($1,000,000).

 

(e)                                  Maximum Award Per Plan Year.  Notwithstanding any provision of the Plan to
the contrary, the maximum Award payable under the Plan for any Plan Year to any
Participant shall not exceed one million dollars ($1,000,000).

 

11

 

4.                                      Other
Plan Provisions.

 

(a)                                  Performance Assessment.  Assessment of actual performance and payout of
Awards with respect to Revenue and Pro Forma EPS will be subject to completion
of the Year-end independent audit and certification by the Committee that a
Participant has met the applicable Performance Objectives and other material
terms of the Plan, and specifying the Performance Level at which such
Performance Objectives have been met. 
The certification by the Committee with respect to these Performance
Objectives will occur no later than December 15  of each
year.  Assessment of actual performance
and payout of any Award with respect to Share Price will be subject to
certification by the Committee that a Participant has met the applicable
Performance Objective and any other material terms of the Plan, and specifying
the Performance Level at which such Performance Objective has been met.  The certification by the Committee with
respect to this Performance Objective shall occur no later than five (5)
business days after the end of the Plan Year.

 

(b)                                  Award Payment. 
The Award earned, if any, shall be paid and/or granted,
as applicable, in the form of Award as determined by the Committee and shall be
paid and/or granted to the Participant (or the Participant’s heirs in the case
of death) within ten (10) business days following the certification by the
Committee.  Payroll and other taxes will
be withheld and/or reported as required by law.

 

(c)                                  Stockholder Approval.  Notwithstanding the foregoing, for any Plan Year
in which the Company desires a deduction pursuant to Section 162(m) of the
Code with respect to any portion of any Award earned by any Covered Employee
under the Plan during such Plan Year, no Award will be paid to any Covered
Employee under the Plan during such Plan Year until the shareholders of the
Company have approved the material terms of the Plan in accordance with
Section 162(m) of the Code and the requirements set forth in
subsection 3(d) have been fulfilled. 
In addition, the material terms of the Plan must again be approved by
the shareholders of the Company no later than the first shareholders’ meeting
in the fifth year following the year in which the shareholders previously
approved the material terms of the Plan.

 

(d)                                  Employment.  In order to receive an Award under the Plan, a Participant must
be employed by the Company or an Affiliate on the last day of the Plan Year,
except as otherwise provided herein. 
Selection for participation in the Plan does not convey any employment
rights on behalf of any Participant. 
Terms and conditions of Participants’ employment agreements with the
Company or its Affiliates addressing issues other than payment of bonus or
incentive compensation, if any, supersede the terms and conditions of the Plan.

 

(e)                                  Termination.

 

(i)                                    Death, Permanent Disability, or Retirement.  If Termination of a
Participant occurs prior to the end of the Plan Year by reason of the
Participant’s death, Permanent Disability or Retirement (excluding the
Retirement of a Covered Employee), the Participant (or the Participant’s heirs
in the case of death) will be eligible to receive a pro-rata Award based on the
time employed as a Participant up to the date of such Termination if the
Performance Objectives and Performance Levels are achieved for the entire Plan
Year.  Participants who earn an Award on
this basis will receive payment on the same schedule as other
Participants.  The formula used to
pro-rate the Awards shall be to adjust the applicable Award by a fraction, the
numerator of which is the number of days (or whole months) for the which the
Participant was employed as a Participant during the Plan Year and the
denominator of which is 365 (or 12).

 

12

 

(ii)                                Other than Death, Permanent Disability, or
Retirement.  If Termination
of a Participant occurs prior to the end of the Plan Year for any reason other
than the Participant’s death, Permanent Disability or Retirement (whether
voluntarily or involuntarily), the Participant will forfeit the opportunity to
earn an Award under the Plan, except as otherwise provided for by the
Committee; provided, however, that if Termination of a Covered Employee occurs
prior to the end of the Plan Year, such Covered Employee shall not receive an
Award at the discretion of the Committee or otherwise, except as provided in
the preceding paragraph.

 

(f)                                    Other Pro-Rata Awards.  Individuals who have been hired and selected
during the Plan Year for Plan participation and who have served a minimum of
nine (9) months as a Participant will be eligible to receive a pro-rata Award
based on the time employed as a Participant and the Performance Objectives and
Performance Levels achieved by such Participant for the entire Plan Year,
provided that the Participant is employed by the Company or an Affiliate on the
last day of the Plan Year and, in the case of a Covered Employee, is selected
for Plan participation on his or her date of hire.  The Committee will establish the Maximum Award Percentage for
individuals selected for Plan participation during the Plan Year as soon as
practicable after the individuals are selected, but not later than fifteen (15)
days after the selection date.  The
formula used to pro-rate the applicable Award by a fraction, the numerator of
which is the number of days (or whole months) for which the individual was a
Participant during the Plan Year and the denominator of which is 365 (or 12).

 

Plan
Administration.

 

(i)                                    Committee Discretion.  Responsibility for decisions and/or
recommendations regarding Plan administration are divided between the CEO and
the Committee.  Notwithstanding the
foregoing, the Committee retains final authority regarding all aspects of Plan
administration, the resolution of any disputes, and application of the Plan in
any respect to a Covered Employee including, but not limited to, the
determination as to whether a Participant’s Termination was for Cause.  The Committee may, without notice, amend,
suspend or terminate the Plan.

 

(ii)                                Discretionary Participation and Awards.  No Employee has a claim or right to be a
Participant in the Plan, to continue as a Participant, or to be granted an
Award under the Plan.  The Company and
its Affiliates are not obligated to give uniform treatment (e.g., Maximum Award
Percentages) to Employees or Participants under the Plan.

 

(g)                                 No Employment Rights.  Participation in the Plan does not give an
Employee the right to be retained in the employment of the Company or its
Affiliates, nor does it imply or confer any other employment rights.  Nothing contained in the Plan will be construed
to create a contract of employment with any Participant.  The Company and its Affiliates reserve the
right to elect any person to its offices and remove Employees in any manner and
upon any basis permitted by law.

 

(h)                                 No Ownership Rights. 
Nothing contained in the Plan will be deemed to require
the Company or its Affiliates to deposit, invest or set aside amounts for the
payment of any Awards.  Participation in
the Plan does not give a Participant any ownership, security, or other rights
in any assets of the Company or any of its Affiliates.

 

(i)                                    Withholding Tax.  The Company or an Affiliate will deduct from
all Awards paid under the Plan any taxes required by law to be withheld.

 

(j)                                    Effective Date. 
The Plan is effective as of October 1, 2000, and will
remain in effect until suspended or terminated by the Committee.

 

13

 

(k)                                Validity.  In the event any provision of the Plan is held invalid, void, or
unenforceable, the same will not affect, in any respect whatsoever, the
validity of any other provision of the Plan.

 

(l)                                    Applicable Law.  The Plan will be governed by and construed
in accordance with the laws of the State of California.

 

EXHIBIT
B

 

RELEASE
AND WAIVER OF CLAIMS

 

In consideration of the payments and other benefits set forth in
Section 2.1(d)(iii) of the Employment Agreement dated (Month)
      2002, to which this form is attached, I,
           , hereby
furnish Tier Technologies, Inc (“the Company”),  with the following release and waiver (the “Release and Waiver”).

 

I hereby release, and forever discharge the Companies, its officers,
directors, agents, employees, stockholders, successors, assigns, affiliates,
parent, subsidiaries, and benefit plans, of and from any and all claims,
liabilities, demands, causes of action, costs, expenses, attorneys’ fees,
damages, indemnities and obligations of every kind and nature, in law, equity,
or otherwise, known and unknown, suspected and unsuspected, disclosed and
undisclosed, arising at any time prior to and including my employment
termination date with respect to any claims, including but not limited to those
claims relating to my employment and the termination of my employment;
including but not limited to, claims pursuant to any federal, state or local law
relating to employment, including, but not limited to, discrimination claims,
claims under any local statute governing discrimination, and the Federal Age
Discrimination in Employment Act of 1967, as amended (“ADEA”), or claims
for wrongful termination, breach of the covenant of good faith, contract
claims, tort claims, and wage or benefit claims, including but not limited to,
claims for salary, bonuses, commissions, stock, stock options, vacation pay,
fringe benefits, severance pay or any form of compensation.

 

I also acknowledge that I have read and understand Section 1542 of
the California Civil Code or any comparable statute under any other state,
which reads as follows:  “A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially affected his
settlement with the debtor.”  I
hereby expressly waive and relinquish all rights and benefits under that
section and any law of any jurisdiction of similar effect with respect to
any claims I may have against the Companies.

 

I acknowledge that, among other rights, I am waiving and releasing any
rights I may have under ADEA, that this Release and Waiver is knowing and
voluntary, and that the consideration given for this Release and Waiver is in
addition to anything of value to which I was already entitled as an employee of
the Companies.  I further acknowledge
that I have been advised, as required by the Older Workers Benefit Protection
Act, that:  (a) the Release and Waiver
granted herein does not relate to claims which may arise after this Release and
Waiver is executed; (b) I have the right to consult with an attorney prior to

 

14

 

executing this
Release and Waiver (although I may choose voluntarily not to do so); and if I
am over 40 years of age upon execution of this Release and Waiver: (c) I have
twenty-one (21) days from the date of termination of my employment with the
Company in which to consider this Release and Waiver (although I may choose
voluntarily to execute this Release and Waiver earlier); (d) I have seven (7)
days following the execution of this Release and Waiver to revoke my consent to
this Release and Waiver; and (e) this Release and Waiver shall not be effective
until the seven (7) day revocation period has expired.

 

 

	
  Date:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Print Name:

  	
   

  	
   

  
							

 

 

	
  

  	
  EXHIBIT
  C

  	
   

  

 

NONDISCLOSURE and PROPRIETARY/CONFIDENTIAL INFORMATION/

NON-COMPETITION AGREEMENT

 

1.                                      Introduction:

 

This is an
agreement between the employee named below, hereafter referred to as Employee,
in which the Employee agrees not to disclose trade secrets or other
Confidential Information belonging to TIER, hereafter referred to as TIER, and
in which Employee further agrees not to compete with TIER, as described below.

 

2.                                      Agreement:

 

In consideration
of Employee’s association with TIER, Employee agrees to keep all Confidential
Information, as described below, including but not limited to all trade secrets
and/or confidential or proprietary information of TIER (and of its customers,
suppliers, and other third parties who entrust confidential information to
TIER) in strict confidence and to take all reasonable precautions against
accidental disclosure of the same.  This
agreement encompasses all Confidential Information and TIER trade secrets known
to Employee as well as Confidential Information and/or trade secrets known to
Employee during his/her tenure with TIER. 
In addition, Employee agrees that he/she will not use the Confidential
Information or trade secrets of TIER, either directly or indirectly, for any
purposes except for the performance of the Employee responsibilities in
furtherance of TIER’s business, unless otherwise expressly authorized in
writing in advance.

 

3.                                      Confidential
Information and Proprietary Rights:

 

“Confidential
Information” is any information, process, idea, or know-how that is not
generally known in the industry; that TIER considers confidential; that gives
TIER a competitive advantage; or that affects or relates to TIER, its business,
or its methods of operation, or which is confidential information of
third-party customers, contractors, or other parties and which is in the
possession of TIER.  Examples of
Confidential Information include, but are not limited to, the following:

 

•                                          Computer
program listing, source code, and object code.

•                                          Customer
lists, marketing information, financial information, business strategies,
project information, price lists, cost information, business forms, and financial
records.

•                                          Product
design, contents, formulas, packaging, marketing, or anything related to the
unique character or products or TIER’s business.

 

Employee
understands that the above list is intended to be illustrative rather than
comprehensive, and that other Confidential Information covered by the Agreement
may currently exist or arise in the future. 
In the event that Employee is not sure whether certain information is
Confidential Information within the scope of this Agreement, Employee will
treat that information as confidential unless informed in writing by TIER to
the contrary.  In the event of any
dispute relating to use or disclosure of Confidential Information, Employee
agrees that he/she shall have the burden of proof in establishing that the
information was not confidential or that its disclosure was authorized.  Employee understands and hereby agrees that
any misappropriation, disclosure, or misuse of Confidential Information as
provided in this Agreement would cause irreparable harm to TIER and to TIER’s
business.  Employee agrees to surrender
to TIER all notes, records, and documentation in any form that was supplied to
Employee by TIER or was used, created, or controlled by Employee during his/her
association with TIER upon request by TIER, and in any event upon termination
of

 

15

 

Employee’s
association with TIER.  The materials to
be surrendered include all materials whether in written or machine-readable
form.  Employee agrees that he/she shall
not, by virtue of his/her association with TIER, acquire any rights in any
Confidential Information, good will, or other asset or property of TIER,
whether tangible or intangible, and whether or not created by Employee.  If any such rights become vested in Employee
by operation of laws or otherwise, Employee agrees to assign the same to TIER
without further consideration immediately upon TIER’s request.

 

Employee
understands and agrees a) that any and all of his/her work product created, or
in the process of being created, during hours Employee is performing services
for TIER and/or any and all of his/her work product created or in the process
of being created outside hours Employee is performing services for TIER, but
which are related to Confidential Information of TIER, defined above, is and
shall remain the property of TIER, b) that all proprietary rights therein shall
be held by TIER, and c) that Employee shall assist in all reasonable efforts to
protect such rights for TIER, to transfer such rights to TIER, and to verify
that such rights are owned by TIER.

 

Confidential
Information shall not be deemed to include the following:  (i) information that becomes available to
the public other than through breach of this Agreement; or (ii) information that
is lawfully received by Employee from a third party without misappropriation or
breach of this Agreement.

 

4.                                      Non-Competition
Agreement:

 

Because it would
be extremely difficult for Employee, in light of the special, unusual, and
unique services he/she performed for TIER (“Special Services”) and his/her
access to TIER’s Confidential Information, to compete fairly against TIER, and
because it would be impossible for TIER to determine whether any such
prospective competition was in fact unfairly based on said Special Services
and/or Confidential Information, and because TIER has a legitimate and
compelling business need against such unfair competition,  Employee agrees that, without the prior
written permission of TIER’s President or CEO, for a period of six (6) months
after Employee’s date of termination from TIER he shall not be employed as an
independent consultant, employee of another firm, or employee of the client
with respect to any account(s) that the Employee worked or sold on behalf of
TIER, provided however, that such limitation shall apply only to accounts that
the employee worked or sold within the six (6) months immediately preceding the
date of Employee’s termination from TIER. In addition, Employee agrees TIER has
invested substantial time and effort in assembling its present staff of
personnel.  For the same reasons
expressed above, Employee further agrees that, for a period of six (6) months
following the termination of his/her employment, Employee shall not solicit or
otherwise induce employees of TIER to become employed by Employee or by a
business with which Employee is affiliated; nor will Employee solicit or induce
members of TIER to leave TIER.

 

5.                                      Remedies:

 

TIER shall have
all rights and remedies under the Uniform Trade Secret Act (California Civil
Code Section 3426 et seq.)
and Business & Professions Code Section 17200 et seq., in addition to all other rights,
damages, and remedies that the law and/or equity may provide.  TIER’s customers, clients, and other third
parties who have entrusted TIER with Confidential Information are intended
third-party beneficiaries of this Agreement, and may enforce it for their
benefit.

 

6.                                      Attorneys’
Fees:

 

If any arbitration
or other action arises relating to this Agreement, the prevailing party shall
be entitled to recover all costs, expenses, and reasonable attorneys’ fees
incurred, specifically including expert witness fees.

 

7.                                      Duration
and Effect:

 

This Agreement is
considered by both parties to be a binding contract, and shall remain in effect
throughout the period of association between Employee and TIER and for one (1)
year following the termination of association, except that the obligations set
forth in Paragraph 2 shall survive termination of this Agreement.  Should any provision of this Agreement be
held to be invalid, void, or unenforceable, the remaining provisions of this
Agreement shall be unaffected and shall continue in full force and effect, and
such invalid, void, or unenforceable provisions shall be deemed not to be a
part of this Agreement.  If any court or
other decision-making body determines that the term or area of any covenant
herein is too long or too broad to be enforceable, the term and/or area shall
be automatically amended to come within a reasonable and enforceable term and/or
area.

 

8.                                      Applicable
Law and Agreement to Arbitrate:

 

This Agreement
shall be construed under the law of the State of California, without giving any
effect to conflict of law principles. 
The parties hereto agree that any controversy or claim arising out of or
relating to this contract, or the breach thereof, shall be settled by binding
arbitration by one (1) arbitrator, administered by the American Arbitration
Association under its then applicable rules, and that judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof.  Employee hereby knowingly
waives his/her right to a jury trial.

 

Execution:

 

16

 

This Agreement is
executed this          day of
                              .

                                                                                month/year

 

	
   

  	
   

  	
   

  	
   

  
	
  Employee
  Signature

  	
   

  	
  Date

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Please
  PRINT name here

  	
   

  	
   

  

 

17

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