Document:

exhibit10-34.htm

            

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

            Exhibit 10.34

     

    EMPLOYMENT
AGREEMENT

     

    This
Employment Agreement (the “Agreement”)
is made and entered into as of the 1st   day of October, 2008 by
and between Tier Technologies, Inc., a Delaware corporation (together
with its successors and assigns, the “Company”),
and Nina K. Vellayan (the “Executive”).

     

    W
I T N E S S E T H

     

    WHEREAS,
the Company desires to employ the Executive as its Senior Vice President, Chief
Operating Officer, and to enter into an employment agreement embodying the terms
of such employment; and

     

    WHEREAS,
the Executive desires to enter into this Agreement and to accept such
employment, subject to the terms and provisions of this Agreement;

     

    NOW,
THEREFORE, in consideration of the premises and mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is mutually acknowledged, the Company and the Executive,
intending to be legally bound, agree as follows:

     

    
      	
              1.  

            	
              Definitions.

            

    

     

    (a) “Base
Salary” shall mean the Executive’s base salary as determined in
accordance with Section 4 below, including any applicable
increases.

     

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

     

    (c) “Cause”
shall mean a finding by the Company of:

     

    
      	
              (i)        
       

            	
              a
      conviction of the Executive of, or a plea of guilty or nolo contendere by the
      Executive to, any felony;

            

    

     

    
      	
              (ii)       
       

            	
              an
      intentional violation by the Executive of federal or state securities
      laws;

            

    

     

    
      	
              (iii)      
       

            	
              willful
      misconduct or gross negligence by the Executive that has or is reasonably
      likely to have a material adverse effect on the
  Company;

            

    

     

    
      	
              (iv)      
       

            	
              a
      failure of the Executive to perform in any material respect her
      reasonably assigned duties
      for the Company that has or is reasonably likely to have a material
      adverse effect on the Company;

            

    

     

    
      	
              (v)      
        

            	
              a
      material violation by the Executive of any material provision of the
      Company’s Business Code of Conduct (or successor policies on similar
      topics) or any other applicable policies in
  place;

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

       

    

    
      	
              (vi)     
        

            	
              a
      violation by the Executive of any provision of  the Proprietary
      and Confidential Information, Developments, Noncompetition and
      Nonsolicitation Agreement (“NDA”) attached hereto as Exhibit A;
      or

            

    

     

    
      	
              (vii)     
       

            	
              fraud,
      embezzlement, theft or dishonesty by the Executive against the
      Company,

            

    

     

    provided that no finding of
Cause shall be made pursuant to subsections (ii), (iii), (iv), (v), (vi) or
(vii) hereof unless the Company has provided the Executive with written notice
in accordance with Section 21 below stating with specificity the facts and
circumstances underlying the allegations of Cause and the Executive has failed
to cure such violation, if curable, within thirty (30) calendar days of receipt
thereof.  The Board shall determine whether a violation is curable
and/or cured in its reasonable discretion.

     

    (d) “Change in
Control” shall occur upon:

     

    
      	
              (i)        
       

            	
              any
      person, entity or affiliated group becoming the beneficial owner or owners
      of more than fifty percent (50%) of the outstanding equity securities of
      the Company, or otherwise becoming entitled to vote shares representing
      more than fifty percent (50%) of the undiluted total voting power of the
      Company’s then-outstanding securities eligible to vote to elect members of
      the Board (the “Voting
      Securities”);

            

    

     

    
      	
              (ii)      
        

            	
              a
      consolidation or merger (in one transaction or a series of related
      transactions) of the Company pursuant to which the holders of the
      Company’s equity securities immediately prior to such transaction or
      series of related transactions would not be the holders immediately after
      such transaction or series of related transactions of more than fifty
      percent (50%) of the Voting Securities of the entity surviving such
      transaction or series of related
transactions;

            

    

     

    
      	
              (iii)    
        

            	
              the
      sale, lease, exchange or other transfer (in one transaction or a series of
      related transactions) of all or substantially all of the assets of the
      Company;

            

    

     

    
      	
              (iv)    
        

            	
              the
      dissolution or liquidation of the Company;
or

            

    

     

    
      	
              (v)     
        

            	
              the
      date on which (i) the Company consummates a “going private” transaction
      pursuant to Section 13 and Rule 13e-3 of the Securities Exchange Act of
      1934, as amended (the “Exchange
      Act”), or (ii) no longer has a class of equity security registered
      under the Exchange Act.

            

    

     

    (e)  “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to
time.

     

    (f) “Compensation
Committee” shall mean the Compensation Committee of the Board or another
committee of the Board that performs the functions typically associated with a
compensation committee.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    (g) “Date of
Termination” shall mean (i) if the Executive’s employment is
terminated by reason of her death, the date of her death, or (ii) if the
Executive’s employment is terminated pursuant to any other section, the
prospective date specified in the written notice provided in accordance with
Section 21 below.

     

    (h) “Disability”
shall mean, for purposes of this Agreement, the Executive’s inability to
substantially perform her duties and responsibilities as determined by a
qualified physician under this Agreement for a period of six (6)
consecutive months due to a physical or mental disability, as the term “physical or
mental disability” is defined in the Company’s long-term disability
insurance plan then in effect (or would be so found if the Executive applied for
coverage or benefits under such plan).

     

    (i) “Effective
Date” shall mean October 1, 2008.

     

    (j) “Good
Reason” shall mean, without the Executive’s prior written consent, the
occurrence of any of the following events or actions, provided that no finding of
Good Reason shall be made pursuant to subsections (ii) or (iv) hereof unless the
Executive has provided the Company with written notice in accordance with
Section 21 below within ninety (90) days after the occurrence of such event or
action stating with specificity the facts and circumstances underlying the
allegations of Good Reason and the Company has failed to cure such violation
within thirty (30) calendar days of receipt thereof:

     

    
      	
              (i)       

            	
              any
      reduction in the Executive’s Base Salary or a reduction in the minimum
      bonus opportunity below fifty percent (50%) of Base
  Salary;

            

    

     

    
      	
              (ii)   
        

            	
              any
      material reduction in the Executive’s position and reporting status
      (defined as reporting directly to the Chief Executive Officer of the
      Company or equivalent position), or any  material diminution in
      the nature and scope of the Executive’s duties, responsibilities, powers
      or authorities consistent with those immediately following commencement of
      employment by the Executive with the Company or the assignment of duties
      and responsibilities materially inconsistent with Executive’s position of
      Senior Vice President, Chief Operating Officer;
  or

            

    

     

    
      	
              (iii)  
        

            	
              a
      material breach by the Company of any material provision of this
      Agreement.

            

    

     

    (k)  “Term of
Employment” shall mean the period specified in Section 2 below, as such
period may be extended.

     

    
      	
              2.  

            	
              Term of
      Employment.

            

    

     

    The
Company seeks to employ the Executive, and the Executive hereby accepts such
employment, for the period commencing on the Effective Date and ending on the
second anniversary of the Effective Date (“Date of Termination”), subject to
earlier termina­tion of the Term of Employment in accordance with the terms
of this Agreement.

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    
      	
              3.  

            	
              Position, Duties and
      Responsibilities.

            

    

     

    As
of the Effective Date, the Executive shall be employed as the Senior Vice
President, Chief Operating Officer of the Company or in such other reasonably
comparable position
as the Chief Executive Officer of the Company (the “Chief Executive
Officer”) or the Board may determine from time to time.  In
this capacity, the Executive shall be assigned such duties and responsibilities
inherent in such position and such other duties and responsibilities as the Chief Executive Office
or the Board shall
from time to time reasonably assign to her.  The Executive shall serve
the Company faithfully, conscientiously, and to the best of the Executive’s
ability and shall promote the interests and reputation of the
Company.  The Executive shall devote all of the Executive’s time,
attention, knowledge, energy and skills during normal working hours, and at such
other times as the Executive’s duties may reasonably require, to the duties of
the Executive’s employment; provided, however, that the
Executive may (a) serve on civic or charitable boards or committees; or (b) with
the approval of the Chief Executive Officer or the Board, serve on corporate
boards or committees.  The Executive shall report to the Chief
Executive Officer in carrying out her duties and responsibilities under this
Agreement.  The Executive agrees to abide by the rules, regulations,
instructions, personnel practices and policies of the Company and any changes
therein that may be adopted from time to time.

     

    
      	
              4.  

            	
              Base
      Salary.

            

    

     

    As
of the Effective Date, the Executive shall be paid an annualized Base Salary of
Two Hundred Seventy Five Thousand dollars ($275,000) for the one-year period
commencing on the Effective Date, payable in accordance with the regular payroll
practices of the Company.  Any increase to the Base Salary is to be
determined by the Compensation Committee, in consultation with the Chief
Executive Officer, subject to the Company’s standard performance and
compensation review process and schedule, to specifically include participation
in the Company’s compensation review process scheduled for November 2009, for
adjustments applied in December 2009.

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    
      	
              5.  

            	
              Incentive Compensation
      Arrangements.

            

    

     

    During
the Term of Employment, the Executive shall be entitled to participate in any
Company incentive compensation plans, programs and/or arrangements applicable to
senior-level executives as established and modified from time to time by the
Compensation Committee, in consultation with the Chief Executive Officer. In no
event shall the annual incentive opportunity effective for the Executive be less
than fifty percent (50%) of the Executive’s Base Salary to a maximum annual
incentive opportunity of one hundred percent (100%) of the Executive’s Base
Salary, assuming satisfaction of applicable performance goals. The Company
commits to paying the Executive a signing-on bonus of Seventy Five Thousand
dollars ($75,000) gross (“Signing on Payment”) within
thirty (30) calendar days of the Effective Date, to be paid in accordance with
standard payroll practices, subject to standard withholdings and deductions.
Signing on Payment is contingent upon the Executive completing twelve (12)
consecutive months of service from the Effective Date, with a pro-rated
repayment due the Company for termination for cause or voluntary resignation
within that period, to specifically allow for the withholding of any amount due
the Company from the Executive’s final pay.  In addition, the
Executive shall be entitled to participate in any Company incentive compensation
plans, programs and/or arrangements applicable to senior-level executives,
pro-rated in the year of hire, as and from October 1, 2008 or the Effective Date
whichever is the later. (For the avoidance of doubt, the Company may choose not
to pay if applicable performance goals are not met.)

     

    
      	
              6.  

            	
              Equity Compensation
      Programs.

            

    

     

    During
the Term of Employment, the Executive shall be entitled to participate in any
equity-based plans, programs or arrangements applicable to senior-level
executives as established and modified from time to time by the Chief Executive
Officer or the Board in their sole discretion, to the extent that the Executive
is eligible under (and subject to the provisions of) the plan documents
governing those programs.

     

    Subject
to approval by the Compensation Committee, the Executive will be granted stock
options for two hundred thousand (200,000) shares, subject to the provisions of
Tier’s Incentive Stock Option Plan.  Options are typically issued
during the first week of the calendar quarter following the date of hire and are
priced according to the market price at close of business on the last business
day prior to the date of the 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 issuance. The option grant agreement and related documentation
will be sent to the Executive within 30 days following the grant
date.

    

    In
addition, subject to approval by the Compensation Committee, the Executive shall
also be entitled to receive the Enterprise Value Award (“EVA”) Plan
set forth in Exhibit A attached hereto.

     

    

    
      	
              7.  

            	
              Employee Benefit
      Programs.

            

    

     

    During
the Term of Employment, the Executive shall be entitled to participate in all
employee welfare and pension benefit plans, programs and/or arrangements
applicable to senior-

    
      
        
        

      

      
        5

        
          

        

      

      
        
        
level
executives, to the extent that the Executive is eligible under (and subject to
the provisions of) the plan documents governing those
programs.

    

     

    
      	
              8.  

            	
              Reimbursement of
      Business & Relocation
Expenses.

            

    

     

    The
Company shall reimburse the Executive for all reasonable travel, entertainment
and other expenses incurred or paid by the Executive in connection with, or
related to, the performance of her duties, responsibilities or services under
this Agreement, upon presentation by the Executive of documentation, expense
statements, vouchers and/or such other supporting information as the Company may
request; provided, however, that the
amount available for such travel, entertainment and other expenses may be fixed
in advance by the Chief Executive Officer or the Board.

     

    
      	
              9.  

            	
              Perquisites.

            

    

     

                    
During the Term of Employment, the Executive shall be entitled to participate in
the Company’s executive fringe benefit programs (if any) applicable to the
Company’s senior-level executives in accordance with the terms and conditions of
such programs as in effect from time to time, to the extent that the Executive
is eligible under (and subject to the provisions of) the plan documents
governing those programs.

     

     

    
      	
              10.  

            	
              Paid Time
      Off.

            

    

     

    The
Executive shall be entitled to twenty four (24) days of paid time off per
calendar year, prorated during the calendar year in which the Executive is
initially hired and the calendar year in which the Executive’s employment
terminates, to be taken at such times as may be approved by the Chief Executive
Officer. Carry forward on unused paid time off shall be subject to the Company’s
standard paid time off policy, which allows for a maximum carry forward of one
hundred and twenty five (125%) of Executive’s maximum paid time off
accrual.

     

    
      	
              11.  

            	
              Termination of
      Employment.

            

    

     

    (a) Termination of Employment by
the Company for Disability or Termination of Employment by
Death.  Upon a termination of the Executive’s employment by the
Company for Disability or a termination of the Executive’s employment by reason
of the Executive’s death, the Executive  or her estate and/or
beneficiaries, as the case may be, shall be entitled to the following amounts,
payable on the business day coinciding with or next following the thirtieth
(30th) calendar day following such termination, subject to the provisions of
Section 23 below and excluding the payments under clause (iv) below (which will
be paid as premiums are due):

     

    
      	
              (i)    

            	
              Base
      Salary earned but not paid prior to the Date of Termination and any
      accrued prior year bonus not paid prior to such
  date;

            

    

     

    
      	
              (ii)   

            	
              any
      amounts earned, accrued or owing to the Executive but not yet paid under
      Sections 7, 8, 9 or 10 above prior to the Date of
    Termination;

            

    

     

    
      	
               
      

            	
              (iii)   
      

            	
              one
      (1) times the Base Salary in effect on the Date of
      Termination;

            

    

     

    
      
        
        

      

      
        6

        
          

        

      

       

    

    
      	
              (iv) 
       

            	
              payment
      by the Company of the premiums for the Executive and any covered
      beneficiary of the Executive’s coverage under COBRA health continuation
      benefits over the twelve (12) month period immediately following the date
      of death or Disability, assuming such individual elects and remains
      eligible for such coverage; and

            

    

     

    
      	
              (v)  
       

            	
              such
      other or additional benefits, if any, as may be provided under applicable
      plans, programs and/or arrangements of the
  Company.

            

    

     

    The
Company must provide written notice to the Executive in accordance with Section
21 below upon a termination of the Executive’s employment for
Disability.

     

    (b) Termination of Employment by
the Company for Cause or by the Executive.  Upon a termination
of the Executive’s employment by the Company for Cause or a termination of the
Executive’s employment by the Executive (except as provided in Section 11(e)),
the Executive shall be entitled to the following:

     

    
      	
              (i) 
        

            	
              Base
      Salary earned but not paid prior to the Date of Termination and any
      accrued prior year bonus not paid prior to such
  date;

            

    

     

    
      	
              (ii)
        

            	
              any
      amounts earned, accrued or owing to the Executive but not yet paid under
      Sections 7, 8, 9 or 10 above prior to the Date of Termination;
      and

            

    

     

    
      	
              (iii) 
       

            	
              such
      other or additional benefits, if any, as may be provided under applicable
      plans, programs and/or arrangements of the
  Company.

            

    

     

    The
Executive must provide written notice to the Company in accordance with Section
21 below at least fourteen (14) calendar days prior to the actual Date of
Termination upon a termination of the Executive’s employment by the
Executive.  A termination by the Company for Cause must be made as set
forth herein.

     

    (c)
Termination of Employment by
the Company Without Cause or by the Executive With Good
Reason.  Upon a termination of the Executive’s employment by
the Company without Cause or by the Executive with Good Reason, other than under
the circumstances described in Section 11(d), the Executive shall be entitled to
the following amounts, payable on the business day coinciding with or next
following the thirtieth (30th) calendar day following such termination, subject
to the provisions of Section 23 below and excluding the payments under clause
(v) below (which will be paid as premiums are due):

     

    
      	
              (i) 
        

            	
              Base
      Salary earned but not paid prior to the Date of Termination and any
      accrued prior year bonus not paid prior to such
  date;

            

    

     

    
      	
              (ii)
        

            	
              any
      amounts earned, accrued or owing to the Executive but not yet paid under
      Sections 7, 8, 9 or 10 above prior to the Date of
    Termination;

            

    

     

    
      	
              (iii)  

            	
              such
      other or additional benefits, if any, as may be provided under applicable
      plans, programs and/or arrangements of the
  Company;

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

       

    

    
      	
              (iv)  

            	
              one
      (1) times the Base Salary in effect on the Date of Termination;
      and

            

    

     

    
      	
              (v)
        

            	
              payment
      by the Company of the premiums for the Executive’s and any covered
      beneficiary’s coverage under COBRA health continuation benefits over
      the twelve (12) month period
      immediately following the Date of Termination, assuming such individuals
      elect and remain eligible for such
coverage;

            

    

     

    provided that the Executive
must execute and not revoke a severance agreement and release of claims drafted
by and reasonably satisfactory to the Company (the “Severance
Agreement”) to be eligible for the payments in Sections 11(c)(iv) and (v)
herein, which will contain a full release of the Company (other than for
exceptions specified therein).  The Company must provide written
notice to the Executive in accordance with Section 21 below upon a termination
of the Executive’s employment without Cause.

     

    (d) Termination of Employment by
the Company after a Change in Control.  Upon a termination of
the Executive’s employment by the Company without Cause within one (1) year
after a Change in Control, the Executive shall be entitled to the following
amounts, payable on the business day coinciding with or next following the
thirtieth (30th) calendar day following such termination, subject to the
provisions of Section 23 below, and excluding the payments under clause (vii)
below (which will be paid as premiums are due):

     

    
      	
              (i)
          

            	
              Base
      Salary earned but not paid prior to the Date of Termination and any
      accrued prior year bonus not paid prior to such
  date;

            

    

     

    
      	
              (ii) 
        

            	
              any
      amounts earned, accrued or owing to the Executive but not yet paid under
      Sections 7, 8, 9 or 10 above prior to the Date of
    Termination;

            

    

     

    
      	
              (iii)
        

            	
              such
      other or additional benefits, if any, as may be provided under applicable
      plans, programs and/or arrangements of the
  Company;

            

    

     

    
      	
              (iv) 
       

            	
              two
      (2) times the sum of (A) the Base Salary in effect on the Date of
      Termination and (B) a bonus equal to the average annual bonus paid to the
      Executive (or, for the most recent year, accrued for the Executive) for
      the previous three years (or such shorter period during which the
      Executive was employed) over a three-year look back
  period;

            

    

     

    
      	
              (v)  
       

            	
              for
      all options and EVAs granted to the Executive, immediate vesting of all
      options as of the effective date of termination of Executive’s employment;
      and

            

    

     

    
      	
              (vi) 
       

            	
              payment
      by the Company of the premiums for the Executive’s and any covered
      beneficiary’s health insurance over the eighteen (18) month period
      immediately following the Date of
Termination;

            

    

     

    provided that the Executive
must execute and not revoke the Severance Agreement (with the conditions
contained in the proviso to Section 11(c)) to be eligible for the payments in
Sections 11(d)(iv) through (vii) herein.  The Company must provide
written notice to the Executive in 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    accordance
with Section 21 below upon a termination of the Executive’s employment without
Cause.

     

    (e)   Resignation for Good Reason
by the Executive due to a Change in Control.  The Executive may
terminate her employment for Good Reason in a manner consistent with the
definition of Good Reason within one (1) year after a Change in Control, in
which event the Executive shall be entitled to the payments in and subject to
the conditions of Section 11(d) and the provisions of Section 23.  The
Executive must provide written notice to the Company of a proposed resignation
for Good Reason in accordance with Section 21 below and must actually resign
under this provision no later than the six month anniversary of the date he or
she specifies as that of the adverse event or action.

     

    
      	
              12.  

            	
              Proprietary and
      Confidential Information
Agreement.

            

    

     

    The
Executive shall execute, simultaneously with the execution of this Agreement or
otherwise upon the Company’s request, the NDA (Exhibit B).

     

    
      	
              13.  

            	
              Assignability; Binding
      Nature.

            

    

     

    This
Agreement shall be binding upon and inure to the benefit of both parties and
their respective successors and assigns, including any corporation or entity
with which or into which the Company may be merged or that may succeed to its
assets or business; provided, however, that the
obligations of the Executive are personal and shall not be assigned by him or
her.

     

    
      	
              14.  

            	
              Representation.

            

    

     

    The
Company represents and warrants that it is fully authorized and empowered to
enter into this Agreement.  The Executive states and represents that
she has had an opportunity to fully discuss and review the terms of this
Agreement with an attorney.  The Executive further states and
represents that she has carefully read this Agreement, understands the contents
herein, freely and voluntarily assents to all of the terms and conditions
hereof, and signs her name of her own free act.

     

    In
addition, the Company agrees that, if a dispute arises that concerns this
Agreement, the Proprietary and Confidential Information Agreement, or the
Severance Agreement and the Executive is the prevailing party in the dispute,
she shall be entitled to recover all of her reasonable attorney’s fees and
expenses incurred in connection with the dispute. For this purpose, the
Executive will be the “prevailing
party” if she is successful on any significant substantive issue in the
action and achieves either a judgment in her favor or some other affirmative
recovery.

     

    
      
        
        

      

      
        9

        
          

        

      

       

    

    
      	
              15.  

            	
              Entire
      Agreement.

            

    

     

    This
Agreement contains the entire understanding and agreement between the parties
concerning the subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or
oral, with respect thereto,
including, without limitation.

     

    
      	
              16.  

            	
              Amendment or
      Waiver.

            

    

     

    No
provision in this Agreement may be amended unless such amendment is agreed to in
writing and signed by the Executive and an authorized officer of the
Company.  No waiver by either party of any breach by the other party
of any condition or provision contained in this Agreement to be performed by
such other party shall be deemed a waiver of a similar or dissimilar condition
or provision at the same or any prior or subsequent time.  Any waiver
must be in writing and signed by the Executive or an authorized officer of the
Company, as the case may be.

     

    
      	
              17.  

            	
              Withholding.

            

    

     

    The
Company may withhold from any amounts payable under this Agreement such federal,
state and local taxes as may be required to be withheld pursuant to any
applicable law or regulation.

     

    
      	
              18.  

            	
              Severability.

            

    

     

    In
the event that any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid or unenforceable for any reason, in whole
or in part, the remaining parts, terms or provisions of this Agreement shall be
unaffected thereby and shall remain in full force and effect to the fullest
extent permitted by law.

     

    
      	
              19.  

            	
              Survivorship.

            

    

     

    The
respective rights and obligations of the parties hereunder shall survive any
termination of the Executive’s employment to the extent necessary to preserve
such rights and obligations.

     

    
      	
              20.  

            	
              Governing Law;
      Jurisdiction; Dispute
Resolution.

            

    

     

    This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia (without reference to the conflict of laws provisions
thereof).  In case of any controversy or claim arising out of or
related to this Agreement or relating to the Executive’s employment (including
but not limited to claims relating to employment discrimination), except as
expressly excluded herein, each party to this Agreement agrees to give the other
party notice of non-compliance with this Agreement and ten (10) days to
cure.  Should resolution of any controversy or claim not be reached
following provision of notice and a reasonable opportunity to cure, then the
dispute shall be settled by arbitration, under the American Arbitration
Association’s National Rules for the Resolution of Employment Disputes (the
“National
Rules”).  A single arbitrator shall be selected in accordance
with the National 

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        
Rules,
and the costs of such arbitration shall be shared equally between the parties,
except to the extent expressly set forth in Section 14 above.  Any
claim or controversy not submitted to arbitration in accordance with this
Section 20 (other than as provided under the NDA) shall be waived, and
thereafter no arbitrator, arbitration panel, tribunal, or court shall have the
power to rule or make any award on any such claim or controversy.  In
determining a claim or controversy under this Agreement and in making an award,
the arbitrator must consider the terms and provisions of this Agreement, as well
as all applicable federal, state, or local laws.  The award rendered
in any arbitration proceeding held under this Section 20 shall be final and
binding and judgment upon the award may be entered in any court having
jurisdiction thereof.  Claims for workers’ compensation or
unemployment compensation benefits are not covered by this Section
20.  Without limiting the provisions of this Section 20, the Company
and the Executive agree that the decision as to whether a party is the
prevailing party in an arbitration, or a legal proceeding that is commenced in
connection therewith will be made in the sole discretion of the arbitrator or,
if applicable, the court and the arbitrator or court may award reasonable
attorneys’ fees, costs and expenses, except to the extent expressly to the
contrary in Section 14 above.  The Company and the Executive each
hereby irrevocably waive any right to a trial by jury in any action, suit or
other legal proceeding arising under or relating to any provision of this
Agreement.

    

     

    
      	
              21.  

            	
              Notices.

            

    

     

    All
notices shall be in writing, shall be sent to the following addresses listed
below using a reputable overnight express delivery service and shall be deemed
to be received one (1) calendar day after mailing.

     

    If
to the Company:      10780 Parkridge
Blvd.

                                       
4th
Floor

                                       
Reston,
Virginia 20191

    Attention:  Vice
President, Human Resources

     

    with
a copy to:  The Chief Executive Officer

     

    If
to the Executive:      At her current or last
known residential address

    

     

    Any
notice of termination must include a Date of Termination in accordance with the
relevant provisions of this Agreement.

     

    
      	
              22.  

            	
              Headings.

            

    

     

    The
headings of the sections contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.

     

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    

     

    
      	
              23.  

            	
              Compliance with Code
      Section 409A.

            

    

     

    To
the extent any payment, compensation or other benefit provided to the Executive
in connection with her employment termination is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code and the Executive is a specified employee as defined in Section
409A(a)(2)(B)(i) as determined by Tier in accordance with its procedures, by
which determination the Executive agrees that she is bound, such payment,
compensation or other benefit shall not be paid before the day that is six (6)
months plus one (1) day after the Executive’s separation from service as
determined under Section 409A (the “New Payment
Date’’).  The aggregate of any payments that otherwise would
have been paid to the Executive during the period between the separation from
service and the New Payment Date shall be paid to the Executive in a lump sum on
such New Payment Date.  Thereafter, any payments that remain
outstanding as of the day immediately following the New Payment Date shall be
paid without delay over the time period originally scheduled, in accordance with
the terms of this Agreement.   In any event, the Company makes no
representations or warranty and shall have no liability to the Executive or any
other person, other than with respect to payments made by Tier in violation of
the provisions of this Agreement, if any provisions of or payments under this
Agreement are determined to constitute deferred compensation subject to Code
Section 409A but not to satisfy the conditions of that section.

     

    
      	
              24.  

            	
              Counterparts.

            

    

     

    This
Agreement may be executed in two or more counterparts, and such counterparts
shall constitute one and the same instrument.  Signatures delivered by
facsimile shall be deemed effective for all purposes to the extent permitted
under applicable law.

     

    

     

    Signatures
on Page Following

     

    

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    

     

    

     

    

     

    

     

    

     

    

     

    

     

    

     

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

     

    

    
      	 
      	
              TIER
      TECHNOLOGIES, INC.

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              By: 
      /s/ Ronald L. Rossetti        

            
	 
      	
              Name:
      Ronald L. Rossetti

            
	 
      	
              Title:
      Chief Executive Officer

            
	 
      	 
      
	 
      	
              THE
      EXECUTIVE

            
	 
      	 
      
	 
      	 /s/
      Nina K. Vellayan            
	 
      	
              Nina
      K. Vellayan

            
	 
      	 
      

    

    

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    Exhibit
A

    Enterprise
Value Award Plan

    

    

    1.           Eligibility

    

    Executive
is entitled to participate in the Enterprise Value Award (“EVA”) Plan (the
“Plan”)
consistent with her position of Senior Vice President, Chief Operating
Officer or any other position as mutually agreed to between the Chief Executive
Officer, the Board and the Executive consistent with the terms and
conditions of the Executive’s Employment Agreement.

     

    2.           Incentive
Opportunity

    

    Executive
will be entitled to receive restricted share units (“RSUs”)
payable in cash, subject to conversion to shares on approval by shareholders of
a revised Equity incentive Plan,  under Enterprise Value Award Plan
subject to the following terms and conditions over the effective term of the
Employment Agreement (and as extended pursuant to Item 2.5 below):

    

    
      	
               
      

            	
              2.1.

            	
              The
      RSUs will be awarded as Tier’s share price achieves a “Share Price
      Performance Target” of $11, $13 and $15 per share. The RSUs will be
      paid in cash on the vesting date, subject to conversion to shares on
      approval by shareholders of a revised Equity incentive
    Plan;

            

    

    

    
      	
               
      

            	
              2.2

            	
              If
      the closing price of Company stock equals or exceeds a Share Price
      Performance Target for each trading day within any 60 consecutive calendar
      day period (a “Performance
      Period”), the Company will grant the applicable number of RSUs
      described in item 3 below as of the last day of the calendar quarter
      during which the Performance Period for which the target or targets were
      met ends, provided, that
      if more than one Share Price Performance Target is achieved in a
      Performance Period or in multiple Performance Periods ending during the
      same calendar quarter, the Executive shall be entitled to receive the
      awards for achieving all such targets on the last day of the applicable
      calendar quarter.  If the Company has a Change in Control during
      a calendar quarter and the value per share realized by the Company or its
      shareholders, as reasonably determined by the Board based on the
      transaction documents, equals or exceeds a Share Price Performance Target,
      that Change in Control value will determine the RSUs issued with respect
      to that quarter and, to the extent practicable, the Board shall issue
      the RSUs no later than immediately in advance of the effective time of the
      Change in Control, after taking into account the Change in Control, and
      any tranches that have not already been granted and that have lower
      targets will also be granted in connection with the Change in
      Control;

            

    

    

    
      	
               
      

            	
              2.3

            	
              For
      the Executive to be eligible for an award under Item 2.2, Tier shares must
      be actively traded on NASDAQ or another established securities exchange
      throughout the Performance Period;

            

    

    

    
      	
               
      

            	
              2.4

            	
              The
      measurement for the Performance Period will commence on the effective date
      of this Plan;

            

    

    

    
      	
               
      

            	
              2.5

            	
              All
      awards are subject to three (3) year cliff vesting from the effective date
      of the completion of the applicable Performance Period for which they were
      earned, except as provided in Item 7
below.

            

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    3.           Share
Price Targets

    

    RSUs
shall be awarded in the tranches below in accordance with the following Share
Price Performance Targets: 

    

    
      	
              Share
      Price Performance Target for 60 Consecutive Days or Change in
      Control

            	
              #
      of Units

            
	
              $11

            	
              50,000

            
	
              $13

            	
              50,000

            
	
              $15

            	
              50,000

            

    

     

    The
number of RSUs that will be earned in any tranche that is not yet issued or the
number of share equivalents underlying any RSUs that have been issued, as the
case may be, shall be subject to adjustment in the event of any stock split,
reverse stock split, stock dividend, recapitalization, combination or
reclassification of shares or any other change in capitalization.  In
no event shall the Executive be eligible for more than one tranche of the RSUs
at any Share Price Performance Target as determined by the trading price or
Change in Control value or combination of either.  (In other words, if
the Share Price Performance Target were met at $13, he or she would receive RSUs
equivalent to 50,000 units plus RSUs equivalent to 50,000 units (the $11 target)
but only if the $11 target had not previously been paid).

    

    4.           Grant
Date

    

    RSUs
will be granted under an appropriate grant agreement as of the date determined
under Item 2.2 above.

    

    
      	
              6.

            	
              Withholding

            

    

    

    All
payments hereunder are subject to withholding for taxes and other required
deductions in such manner as Tier determines appropriate.

    

    
      	
              7.

            	
              Acceleration
      of Vesting of RSUs Awarded

            

    

    

    The
three (3) year vesting period will be accelerated and all RSUs that have
previously been awarded shall immediately and fully vest in the event of
Executive’s termination of employment in connection with a Change in Control as
defined under Sections 1(d) and 11(d) of the Executive’s Employment Agreement,
or upon expiration of the Term of Employment.

    

    8.           Manner
of Payment

    

    The
Company intends to pay the RSUs in cash, subject to conversion to shares on
approval by shareholders of a revised Equity incentive Plan

    

    9.           Compliance
with Section 409A

    

    If and
to the extent any portion of any payment, compensation or other benefit provided
to the Executive in connection with her employment termination is determined to
constitute “nonqualified deferred compensation” within the meaning of Section
409A of the Internal Revenue Code of 1986 (the “Code”) and
the Executive is a specified employee as defined in Section 409A(a)(2)(B)(i), as
determined by the Company in accordance with its procedures, by which
determination the Executive has agreed, by participating in this Plan, that he
or she is bound, such portion of the payment, compensation or other benefit
shall not be paid before the day that is six months plus one day after the date
of “separation from service” (as determined under Section 409A) (the “New Payment
Date”), except as Section 409A may then permit.  The

     

    
      
        
        

      

      
        - 2 - 

        
          

        

      

      
        
        

      

    

    aggregate
of any payments that otherwise would have been paid to the Executive during the
period between the date of separation from service and the New Payment Date
shall be paid to the Executive in a lump sum on such New Payment Date, and any
remaining payments will be paid on their original schedule.  For
purposes of this Agreement, each amount to be paid or benefit to be provided
shall be construed as a separate identified payment for purposes of Section
409A, and any payments that are due within the “short term deferral period” as
defined in Section 409A shall not be treated as deferred compensation unless
applicable law requires otherwise.  Neither the Company nor the
Executive shall have the right to accelerate or defer the delivery of any such
payments or benefits except to the extent specifically permitted or required by
Section 409A.  This Plan is intended to comply with the provisions of
Section 409A and the Agreement shall, to the extent practicable, be construed in
accordance therewith.  Terms defined in the Plan shall have the
meanings given such terms under Section 409A if and to the extent required to
comply with Section 409A.  In any event, the Company makes no
representations or warranty and shall have no liability to the Executive or any
other person, other than with respect to payments made by Tier in violation of
the provisions of this Plan, if any provisions of or payments under this Plan
are determined to constitute deferred compensation subject to Code Section 409A
but not to satisfy the conditions of that section.

    

    

    

    

    

    

    

    

    
      
        
           

        

         

      

      
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          EXHIBIT
B

           

          

          

          

          PROPRIETARY AND CONFIDENTIAL
INFORMATION, DEVELOPMENTS, NONCOMPETITION AND NONSOLICITATION
AGREEMENT

           

          

           

          This
Proprietary and Confidential Information, Developments, Noncompetition and
Nonsolicitation Agreement (the “Agreement”)
is made by and between Tier Technologies, Inc. (the “Company”),
and Nina Vellayan (the “Employee”).

          IN
CONSIDERATION of the Employee’s employment and/or continued employment with the
Company and for other valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Employee agrees as follows:

          1.   Condition of
Employment.

          The
Employee acknowledges that the Employee’s employment and/or the continuance of
that employment with the Company is contingent upon the Employee’s agreement to
sign and adhere to the provisions of this Agreement.  Employee is
receiving enhanced severance protection and additional benefits in connection
with executing an employment agreement and this Agreement. The Employee further
acknowledges that the nature of the Company’s business is such that protection
of its proprietary and confidential information is critical to its business’s
survival and success.  For purposes of Sections 2, 3 and 4, the “Company”
shall include Tier Technologies, Inc. and any of its subsidiaries, corporate
affiliates, and/or associated companies.

          2.   Proprietary and Confidential
Information.

          (a)     The
Employee agrees that all information and know-how, whether or not in writing, of
a private, secret, or confidential nature concerning the Company’s business or
financial affairs (collectively, “Proprietary
Information”) is and shall be the exclusive property

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

             

            of
the Company.  By way of illustration, but not limitation, Proprietary
Information may include systems, software and codes, whether existing, in the
course of development, or being planned or proposed; customer and prospect
lists; contacts at or knowledge of customers or prospective customers, customer
accounts and other customer financial information; price lists and all other
pricing, marketing and sales information relating to the Company or any customer
or supplier of the Company; databases, modules, products, product improvements,
product enhancements, processes, methods, and techniques; patent and patent
applications; negotiation strategies and positions; operations, projects,
developments, and plans; research data and techniques; financial data; and
personnel data.  The Employee will not disclose any Proprietary
Information to others outside the Company or use the same for any unauthorized
purposes without written approval by an officer of the Company, either during or
at any time after the Employee’s employment with the Company, unless and until
such Proprietary Information has become public knowledge without fault by the
Employee.  While employed by the Company, the Employee will use the
Employee’s best efforts to prevent publication or disclosure of any confidential
or Proprietary Information concerning the business, products, processes, or
affairs of the Company.

          

          (b)     The
Employee agrees that all disks, files, documents, letters, memoranda, reports,
records, data, drawings, notebooks, program listings, or any other written,
photographic or other record containing Proprietary Information, whether created
by the Employee or others, that come into the Employee’s custody or possession,
shall be and are the exclusive property of the Company to be used only in the
performance of the Employee’s duties for the Company.  Upon
termination or cessation of the Employee’s employment with the Company for any
reason or at the Company’s request, the Employee agrees to return to the Company
any and all materials and 

           

          
            
              
              

            

            
              - 2
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            copies
thereof in the Employee’s custody, possession or control containing Proprietary
Information.

          

          (c)     The
Employee acknowledges that the Employee’s obligations with regard to Proprietary
Information set out in subsections 2(a) and 2(b) above extend to all
information, know-how, records and tangible property of customers of the Company
or suppliers to the Company or of any third party who may have disclosed or
entrusted the same to the Company or to the Employee in the course of the
Company’s business.

          3.   Developments.

          (a)     The
Employee will make full and prompt disclosure to the Company of all inventions,
creations, improvements, discoveries, methods, developments, software and works
of authorship, whether patentable or not, that are created, made, conceived or
reduced to practice by the Employee or under the Employee’s direction or jointly
with others during the Employee’s employment by the Company, whether or not
during normal working hours or on the premises of the Company (all of which are
collectively referred to in this Agreement as “Developments”).

          (b)     The
Employee agrees to assign and does hereby assign to the Company (or any person
or entity designated by the Company) all of the Employee’s right, title and
interest in and to all Developments and all related patents, patent
applications, copyrights and copyright applications.   However,
this subsection 3(b) shall not apply to Developments that do not relate to the
present or planned business or research and development of the Company and that
are made and conceived by the Employee not during normal working hours, not on
the Company’s premises and not using the Company’s tools, devices, equipment or
Proprietary Information.  The Employee understands that, to the extent
this Agreement shall be construed in accordance with the laws of any state that
precludes a requirement in an employee agreement to assign 

           

          
            
              
              

            

            
              - 3
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            certain
classes of inventions made by an employee, this subsection 3(b) shall be
interpreted not to apply to any invention that a court rules and/or the Company
agrees falls within such classes.  The Employee hereby also waives all
claims to moral rights in any Developments.

          

          (c)     The
Employee agrees to cooperate fully with the Company, both during and after the
Employee’s employment with the Company, with respect to the procurement,
maintenance and enforcement of copyrights, patents and other intellectual
property rights (both in the United States and foreign countries) relating to
Developments.  The Employee shall sign all papers, including, but not
limited to, copyright applications, patent applications, declarations, oaths,
formal assignments, assignments of priority rights and powers of attorney, that
the Company may deem necessary or desirable to protect its rights and interests
in any Development.  The Employee further agrees that if the Company
is unable, after reasonable effort, to secure the Employee’s signature on any
such papers, any executive officer of the Company shall be entitled to execute
any such papers as the Employee’s agent and attorney-in-fact, and the Employee
hereby irrevocably designates and appoints each executive officer of the Company
as the Employee’s agent and attorney-in-fact to execute any such papers on the
Employee’s behalf, and to take any and all actions as the Company may deem
necessary or desirable to protect its rights and interests in any Development
under the conditions described in this sentence.

          4. Noncompetition and
Nonsolicitation.

          (a)   While the Employee is employed
by the Company and for a period of twelve (12) months following the termination
or cessation of such employment for any reason (the “Restricted Period”), the
Employee will not directly or indirectly:

          
            
              	
                      (1)
          

                    	
                      In
      the geographical area where the Company does business or has done business
      at the time of the termination or cessation of the Employee’s
    

                    

            

             

            
              
                 

              

              
                - 4
-

                
                  

                

              

               

            

          

          
            	
                     

                  	
                    employment,
      engage in any business or enterprise (whether as an owner, partner,
      officer, employee, director, investor, lender, consultant, independent
      contractor or otherwise, except as the holder of not more than one percent
      (1%) of the combined voting power of the outstanding stock of a
      publicly-held company) that is competitive with the Company’s business,
      including, but not limited to, any business or enterprise that develops,
      designs, produces, markets, licenses, sells or renders any technology,
      product or service competitive with any technology, product or service,
      developed, designed, produced, marketed, licensed, sold or rendered, or
      planned to be developed, designed, produced, marketed, licensed, sold or
      rendered, by the Company while the Employee was employed by the
      Company;

                  

          

           

          
            	
                    (2)  
       

                  	
                    Either
      alone or in association with others (including any organization directly
      or indirectly controlled by the Employee), (i) solicit, recruit, or
      induce, or attempt to solicit, recruit, or induce, any employee of the
      Company to leave the employ of the Company, or (ii) recruit, solicit or
      hire as an employee or engage as an independent contractor, or attempt to
      recruit, solicit or hire as an employee or engage as an independent
      contractor, any person who was employed by the Company at any time during
      the period of the Employee’s employment with the Company, except for an
      individual whose employment with the Company ceased at least six (6)
      months earlier; or

                  

          

           

          
            
              
              

            

            
              - 5
-

              
                

              

            

             

          

          
            	
                    (3)  
       

                  	
                    Either
      alone or in association with others (including any organization directly
      or indirectly controlled by the Employee), solicit, divert, interfere
      with, disrupt or take away, or attempt to solicit, divert, interfere with,
      disrupt or take away, the business or patronage of any of the clients,
      customers or accounts, or prospective clients, customers or accounts, of
      the Company that the Employee contacted, solicited or served while the
      Company employed the Employee.  The terms “client” and
      “customer” include any person, firm, corporation, governmental department
      or agency, or other entity or any parent, subsidiary, or affiliate thereof
      but excludes clients and customers who have had no business relationship
      with the Company within the twelve (12) months preceding the Employee’s
      proposed activity with respect to such client or customer.  To
      the extent that any customers or clients, as defined herein, are
      governmental entities, the prohibition stated herein shall apply only to
      the specific branch, division, office, group, or other subentity of the
      government with which the Company had the
  contract.

                  

          

           

          (b)     If
any court of competent jurisdiction finds any restriction set forth in this
Section 4 to be unenforceable because the restriction extends for too long
a period of time or over too great a range of activities or in too broad a
geographic area, it shall be interpreted to extend only over the maximum period
of time, range of activities or geographic area as to which it may be
enforceable.

          
            
              
              

            

            
              - 6
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          (c)     The
Employee agrees to provide a copy of this Agreement to all persons and entities
with whom the Employee seeks to be hired or do business before accepting
employment or engagement with any of them.

          (d)     If
the Employee violates the provisions of this Section 4, the Employee shall
continue to be held by the restrictions set forth in this Section 4 until a
period equal to the period of restriction has expired without any
violation.

          5.   Other
Agreements.

          The
Employee hereby represents that, except as the Employee has disclosed in writing
to the Company, the Employee is not bound by the terms of any agreement with any
previous employer or other party to refrain from using or disclosing any trade
secret or confidential or proprietary information in the course of the
Employee’s employment with the Company, to refrain from competing, directly or
indirectly, with the business of such previous employer or other party, or to
refrain from soliciting employees, customers or suppliers of such previous
employer or other party.  The Employee further represents that the
Employee’s performance of all of the terms of this Agreement and the performance
of the Employee’s duties as an employee of the Company do not and will not
breach any agreement to keep in confidence proprietary information, knowledge or
data acquired by the Employee in confidence or in trust prior to the Employee’s
employment with the Company.  The Employee also represents that the
Employee will not disclose to the Company or induce the Company to use any
confidential or proprietary information or material belonging to any previous
employer or others.

          6.   United States Government
Obligations.

          The
Employee acknowledges that the Company from time to time may have agreements
with other persons or with the United States Government, or agencies thereof,
that impose 

          
            
              
              

            

            
              - 7
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            obligations
or restrictions on the Company regarding inventions made during the course of
work under such agreements or regarding the confidential nature of such
work.  The Employee agrees to be bound by all such obligations and
restrictions that are made known to the Employee and to take all action
necessary to discharge the obligations of the Company under such
agreements.

          

          7.   Not An Employment
Contract.

          The
Employee acknowledges that this Agreement does not constitute a contract of
employment and does not imply that the Company will continue the Employee’s
employment for any period of time.

          8.   General
Provisions.

          (a)     No
Conflict.  The Employee represents that the execution and
performance by him/her of this Agreement does not and will not conflict with or
breach the terms of any other agreement by which the Employee is
bound.

          (b)     Acknowledgements and
Equitable Remedies.  The Employee acknowledges that the
restrictions contained in this Agreement are necessary for the protection of the
business and goodwill of the Company and considers the restrictions to be
reasonable for such purpose.  The Employee agrees that any breach or
threatened breach of this Agreement will cause the Company substantial and
irrevocable damage that is difficult to measure.  Therefore, in the
event of any such breach or threatened breach, the Employee agrees that the
Company, in addition to such other remedies that may be available, shall have
the right to seek specific performance and injunctive relief without posting a
bond.  The Employee hereby waives the adequacy of a remedy at law as a
defense to such relief.

          (c)     Entire
Agreement.  This Agreement supersedes all prior agreements,
written or oral, between the Company and the Employee relating to the subject
matter of this Agreement.  

           

          
            
              
              

            

            
              - 8
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          This
Agreement may not be modified, changed or discharged in whole or in part, except
by an agreement in writing signed by an executive officer of the Company and the
Employee.  The Employee agrees that any change or changes in the
Employee’s employment duties or compensation after the signing of this Agreement
shall not affect the validity or scope of this Agreement.

          (d)     Severability.  The
invalidity or unenforceability of any provision of this Agreement shall not
affect or impair the validity or enforceability of any other provision of this
Agreement.

          (e)     Waiver.  No
delay or omission by the Company in exercising any right under this Agreement
will operate as a waiver of that or any other right.  A waiver or
consent given by the Company on any one occasion is effective only in that
instance and will not be construed as a bar to or waiver of any right on any
other occasion.

          (f)     Successors and
Assigns.  This Agreement shall be binding upon and inure to the
benefit of both parties and their respective successors and assigns, including
any corporation or entity with which or into which the Company may be merged or
that may succeed to all or substantially all of its assets or business; provided, however, that the
obligations of the Employee are personal and shall not be assigned by the
Employee.

          (g)     Governing Law, Forum and
Jurisdiction.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Virginia without
regard to conflicts of law provisions.  The dispute resolution
provisions of Section 20 of the Employee’s employment agreement with the
Company dated as of October 1, 2008 (the “Employment Agreement”) apply to this
Agreement, except to the extent that either party seeks injunctive relief to
enforce any provision of this Agreement, in which case that party may bring an
action, 

           

          
            
              
              

            

            
              - 9
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            suit,
or other legal proceeding in a court of competent jurisdiction. Any such action,
suit or other legal proceeding that is commenced to resolve any matter arising
under or relating to such injunctive relief shall be commenced only in a court
of the Commonwealth of Virginia (or, if appropriate, a federal court located
within the Commonwealth of Virginia), and the Company and the Employee each
consents to the jurisdiction of such a court.  Section 14
(“Representation”) of the Employment Agreement applies in accordance with its
terms to disputes under this Agreement.  The Company and the Employee each
hereby irrevocably waive any right to a trial by jury in any action, suit or
other legal proceeding arising under or relating to any provision of this
Agreement.

          

          (h)     Captions.  The
captions of the sections of this Agreement are for convenience of reference only
and in no way define, limit or affect the scope or substance of any section of
this Agreement.

          THE
EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.

           

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rest of this page left intentionally blank.]

           

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            	 	 TIER TECHNOLOGIES,
      INC.
	 	 
	 Date: September
      30, 2008 	 By: 
      /s/Ronald
      L. Rossetti
	 	 Ron Rossetti,
      Chief Executive Officer
	 	 
	 	 By: Nina
      Vellayan
	 	/s/Nina
      Vellayan
	 Date: 
      September
      22, 2008	 (signature)

          

           

          
          

          

          
            
              
              

            

            
              - 11
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  Exhibit 4.18    
    

 
 

  INOVIO BIOMEDICAL CORPORATION
  
    VOTING TRUST AGREEMENT    
    

        This Agreement dated as
of                                    , 2009 is by and among Inovio
Biomedical Corporation, a Delaware corporation, the
stockholders listed on Schedule I hereto (the "Stockholders"),
and                                    ,
                                    and     
                               as voting trustees hereunder (the "Trustees"). 

        Effective
as of the date hereof, VGX Pharmaceuticals, Inc. ("Old VGX") merged with and into an acquisition subsidiary of Inovio Biomedical Corporation (the "Company") and the
shares of Old VGX were converted into the right to receive shares of the Company as merger consideration in accordance with the terms and provisions of the Agreement and Plan of Merger dated as of
July 7, 2008, as amended on December 5, 2008 (the "Merger Agreement"). As a result of the merger, Old VGX became a wholly owned subsidiary of the Company. 

        The
purpose of this Agreement is to enable the Voting Trustees to vote the Shares (as defined herein) with respect to all matters submitted to a vote of the stockholders of the Company
in accordance with the terms hereof. 

        In
consideration of the mutual covenants and agreements contained herein, the parties hereto agree as follows: 

        1.     The
parties to this Agreement intend to create a voting trust within the meaning of Section 218(a) of the General Corporation Law of the State of Delaware, and as
such shall promptly file a copy of this Agreement in the registered office of the Company located in the State of Delaware, including all counterparts as executed, all supplements and
amendments thereto and shall hold the Agreement, as executed, supplemented and amended, for inspection by the Stockholders upon request. 

        2.     Each
Stockholder hereby assigns and transfers to the Trustees all shares of the Company's Common Stock listed opposite such Stockholder's respective name on
Schedule I hereto (the "Shares"), and shall immediately deposit the certificates representing the Shares with the Trustees and receive in exchange therefor one or more voting trust
certificates, substantially in the form of Exhibit A hereto, representing the Shares deposited with the Trustees (the "Voting Trust Certificates"), to be held subject to all terms of this
Agreement. The Trustees shall deliver the stock certificates so deposited to the Company for cancellation and for new share certificates, fully paid, non-assessable and representing the
Shares, registered in the name of the Trustees, including a legend to the effect that such certificates have been issued pursuant to this Agreement, and the Company shall transfer the Shares on the
books of the Company to the name of the Trustees, with a similar notation as to the effect of this Agreement. 

        3.     While
this Agreement is in effect, the Trustees shall have the legal title to the Shares and be entitled to exercise, in person or by their nominee or proxy, all rights
and powers in respect to any or all such Shares, including the right to vote thereon and to take part in or consent to any corporate or stockholders' action of any kind whatsoever, whether ordinary or
extraordinary, in accordance with all of the terms and conditions set forth in this Agreement. The right to vote shall include the right to vote for the election of directors and in favor of or
against any resolution or proposed action of any character whatsoever, which may be presented at any meeting or require the consent of stockholders of the Company, including, but not limited to any
proposed Change of Control (as defined elsewhere herein). It is expressly understood and agreed that the holders of Voting Trust Certificates shall not have any right, either under said Voting Trust
Certificates or under this Agreement, or under any agreement express or implied, or otherwise, with respect to any Shares held by the Trustees hereunder to vote such Shares or to take part in or
consent to any corporate action, or to do or perform any other act or thing which the holders of the Company's Common Stock are now or may hereafter become entitled to do or perform. The Trustees
shall have the right to waive any notice of meeting or other notices due in respect of the Shares. Except as provided in Section 11 hereof, the Trustees shall 

 

have
no authority to sell, transfer or otherwise dispose of, convey any interest in or encumber any of the Shares deposited under this Agreement. 

        4.     On
any matter, including the election of directors, presented to the stockholders of the Company for a vote, the Trustees shall vote the Shares in the same proportion as
the shares voted on the matter by the other stockholders of the Company. For purposes of this section, a "vote" shall include, with respect to the election of directors, a vote "for" and a vote to
"withhold authority," and with respect to any other matter, a vote "for", "against" or "abstain." With respect to a consent solicitation, the Trustees shall provide a consent with respect to the
percentage of Shares deposited hereunder in the same proportion as the consents received with respect to all outstanding shares of the Company. 

        5.     During
the term hereof, the holders of the Voting Trust Certificates shall not have legal title to any part of the Shares and, except pursuant to Section 11
hereof, shall not be entitled to transfer or convey any interest in, including, without limitation, any encumbrance on, the Shares or the Voting Trust Certificates. No creditor of any holder of a
Voting Trust Certificate shall be able to obtain legal title to or exercise legal or equitable remedies with respect to the Shares or the Voting Trust Certificates. 

        6.     Except
as otherwise provided herein, upon the declaration of any dividends by the Company with respect to the Shares deposited with the Trustees hereunder the Trustees
shall cause all such dividends to be distributed by the Company pro rata among the Stockholders as if such holders themselves held the Shares represented by their Voting Trust Certificates. 

        7.     Except
as otherwise provided herein, upon declaration of any pro rata distributions of additional shares of capital stock of the Company declared by the Company with
respect to the Shares deposited with the Trustees hereunder, each Stockholder agrees that such pro rata stock distributions shall be issued in the name of the Trustees as additional deposits hereunder
and the Trustees shall issue additional Voting Trust Certificates therefor. 

        8.     In
the event of dissolution or liquidation of the Company during the term of this Agreement in such manner as to entitle the holders of Voting Trust Certificates to
liquidating dividends, the Trustees shall cause all such liquidating dividends to be distributed by the Company pro rata among the Stockholders as if such holders themselves held the Shares
represented by their Voting Trust Certificates. 

        9.     In
the event that the Company presents evidence satisfactory to the Trustees that it has acquired the beneficial ownership of any Shares represented by a Voting Trust
Certificate, the Trustees shall immediately refrain from exercising any voting rights with respect to such Shares and, upon surrender of the Voting Trust Certificate in question to the Trustees with
evidence satisfactory to the Trustees of its transfer to the Company, the Trustees shall take all steps necessary to transfer legal title to such Shares to the Company and the Company shall cancel
such Shares and restore them to the status of authorized but unissued shares. 

        10.   This
Agreement shall expire upon the earlier of: (i) with respect to all Stockholders, the date which is ten years from the date of this Agreement;
(ii) with respect to all Stockholders, upon a Change of Control, as defined herein; (iii) with respect to a Stockholder, the death of the Stockholder; (iv) with respect to a
Stockholder, termination of the Stockholder's employment with the Company for any reason other than for Cause, as defined in the Stockholder's then existing employment agreement with the Company, or
if the Stockholder does not have such an employment agreement with the Company, as defined herein; provided, however, that if such Stockholder is Joseph Kim, this Agreement shall terminate with
respect to all Stockholders; or (v) with respect to all Stockholders, the acquisition by the Company of the beneficial ownership of all Shares represented by Voting Trust Certificates pursuant
to this Agreement. 

2

 

        11.   Notwithstanding
anything to the contrary set forth in this Agreement, and subject to the further restrictions of any applicable lock-up agreements or other
restrictive covenants as reflected on the certificates representing the Shares, each Stockholder shall have the right to cause the Trustees to sell Shares deposited by that Stockholder, or to tender
Shares in the event of a tender offer or exchange offer, for the benefit of the Stockholder, if the following conditions are satisfied: 

        (a)   In
the case of a sale of the Shares, the Shares are sold in open market transactions in accordance with the provisions of Rule 144 under the Securities Act of
1933 (the "Securities Act"), or any successor provision, or pursuant to an effective registration statement under the Securities Act; 

        (b)   In
the case of a tender offer or exchange offer, the Shares are tendered in accordance with the terms of the tender offer or exchange offer; and 

        (c)   In
either case, such Shares are not being transferred (i) if the Stockholder is an entity, to an affiliate, subsidiary, director, officer, employee, agent or
representative of the Stockholders, (ii) if the Stockholders is an individual, to an immediate family member, including such Stockholder's spouse, parents, children, siblings,
mother-in-law, father-in-law, brother-in-law, sister-in-law, son-in-law,
daughter-in-law, and anyone who resides in such person's home (other than domestic employees), (iii) to any person or party whose ownership of the Shares would provide
continued beneficial ownership of the Shares by the selling Stockholder pursuant to Rule 13d-3 promulgated under the Securities Exchange Act of 1934 (as now or hereafter amended,
the "Exchange Act"). 

        If
the foregoing conditions are satisfied, the respective Stockholder may provide written notice to the Trustees directing them to (i) sell the number of Shares or
(ii) tender the Shares, in each case in accordance with the written instructions of the Stockholder contained in the notice. The Trustees shall use reasonable good faith efforts to cause the
sale or tender, as the case may be, of such Shares in accordance with such instructions. Upon completion of the sale or tender of such Shares, (i) the Trustees shall pay promptly the net
proceeds from the sale or tender of such Shares to the respective Stockholder, (ii) the Trustees shall promptly notify the Company of such sale or tender, if not previously notified,
(iii) such Shares shall no longer be subject to the terms and conditions of this Agreement or the voting trust. 

        12.   For
purposes of this Agreement, a "Change of Control" shall mean (A) the acquisition of shares of the Company by any "person" or "group" (as such terms are used
in Rule 13d-3 under the Exchange Act) in a transaction or series of transactions that result in such person or group directly or indirectly becoming the beneficial owner of 40% or
more of the Company's voting capital stock after the date of this Agreement, (B) the consummation of a merger or other business combination after which the holders of voting capital stock of
the Company do not collectively own 60% or more of the voting capital stock of the entity surviving such merger or other business combination, (C) the sale, lease, exchange or other transfer in
a transaction or series of transactions of all or substantially all of the assets of the Company or (D) as the result of or in connection with any cash tender offer or exchange offer, merger or
other business combination, sale of assets or contested election of directors or any combination of the foregoing transactions (a "Transaction"), the persons who constituted a majority of the members
of the Board of Directors of the Company (the "Board") on the date of this Agreement and persons whose election as members of the Board was approved by such members then still in office or whose
election was previously so approved after the date of this Agreement, but before the event that constitutes a Change of Control, no longer constitute such a majority of the members of the Board then
in office. A Transaction constituting a Change of Control shall only be deemed to have occurred upon the closing of the Transaction. The term "Change of Control" shall not include the merger under the
Merger Agreement. 

3

 

        13.   For
purposes of this Agreement, the term "Cause" shall mean (1) conviction of the Stockholder of any felony; (2) participation by the Stockholder in any
fraud or act of dishonesty against the Company; (3) material violation by the Stockholder of (i) any contract between the Company and the Stockholder, or (ii) any statutory duty
of Stockholder to the Company; (4) conduct of the Stockholder that, based upon a good faith and reasonable factual investigation and determination by the Board, demonstrates the Stockholder's
gross unfitness to serve; or (5) the continued, willful refusal or failure by the Stockholder to perform any material duties reasonably requested by the Board; provided, however, that in the
case of conduct described in clauses (3), (4) and (5) hereof, such conduct shall not constitute "Cause" unless (a) the Board shall have given the Stockholder written notice
setting forth with specificity (i) the conduct deemed to constitute "Cause," (ii) reasonable action that would remedy the objectionable conduct and (iii) a reasonable time (not
less than ten days) within which the Stockholder may take such remedial action, and (b) the Stockholder shall not have taken such specified remedial action within such specified reasonable
time. 

        14.   If
any mutilated Voting Trust Certificate is surrendered to the Trustees, or the Trustees receive evidence to their satisfaction that any Voting Trust Certificate has
been destroyed, lost or stolen, and upon proof of ownership satisfactory to the Trustees together with such security or indemnity, in the case of a destroyed, lost or stolen Voting Trust Certificate,
as may be requested by the Trustees to be held harmless, the Trustees shall execute and deliver a new Voting Trust Certificate representing the same number of Shares as the Voting Trust Certificate so
mutilated, destroyed lost or stolen, with such notations, if any, as the Trustees shall determine. 

        15.   Upon
the termination of this Agreement, the Trustees shall request that the Company issue certificates representing the Shares deposited hereunder in the names of the
holders of record of the Voting Trust Certificates and shall deliver such certificates to the holders of Voting Trust Certificates in the proportion of their respective holdings, upon presentation and
surrender to the Trustees of the Voting Trust Certificates therefor. If the Trustees for any reason shall be unable to complete such deliveries within 30 days after the termination of this
Agreement, the Trustees may then deposit with the Company such stock certificates, along with written authority to the Company to deliver them in exchange for the Voting Trust Certificates; and upon
such deposit, all further liability of the Trustees for the delivery of such stock certificates and the delivery or payment of dividends upon surrender of the Voting Trust Certificates, shall cease,
and the Trustees shall not be required to take any further action hereunder. 

        16.   The
Trustees may serve as directors, officers, employees or consultants of the Company and be compensated therefor, and may hold stock in the Company or become a
creditor of the Company or otherwise deal with it in good faith. The Trustees may hold or dispose of Voting Trust Certificates issued to them or otherwise acquire additional Voting Trust Certificates
to the same extent as any other Stockholder. 

        17.   The
Trustees shall serve hereunder without compensation. The Trustees shall have the right to incur and pay such reasonable expenses and charges and to employ and pay
such agents, attorneys and counsel as they may deem necessary and proper. The Company shall reimburse any such expenses or charges incurred by and due to the Trustees. 

        18.   In
the event of the death, resignation or legal incompetence of a Trustee, a designee successor Trustee or Trustees shall be appointed by the remaining Trustees from the
other independent members of the Board (as determined pursuant to any national securities exchange rules and regulations then applicable to the Company). The term "Trustee" as used in his Agreement
shall apply equally to the Trustees named herein and to their successors hereunder. 

        19.   Each
of the Trustees, by signing a counterpart of this Agreement, accepts the voting trust herein created and his or her role as a Trustee therefor, including the duties
and responsibilities of 

4

 

each
Trustee to the other Trustees and to the beneficiaries of this voting trust as set forth in this Agreement, and shall act solely as a Trustee hereunder and not in any individual capacity. 

        20.   The
Trustees shall not be liable for any act or omission as Trustees hereunder taken or omitted in good faith and without gross negligence, including acting upon any
signature, instrument, notice, resolution, request, consent, order or certificate or other written documentation reasonably and in good faith believed by the Trustees to be genuine and signed by the
proper party or parties thereto. No Trustee shall be responsible for any act or omission by any predecessor or successor Trustee. The Company shall indemnify each Trustee against all costs, charges,
expenses, losses, liabilities, actions, suits and damages incurred by any or all of them in the or arising from the administration of this voting trust or the exercise of any power conferred upon the
Trustee by this Agreement, except to the extent such cost, charge, expense, loss, liability, action, suit or damage is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from the Trustee's gross negligence or willful misconduct. 

        21.   The
Company by executing this Agreement consents to all the terms and conditions hereof, and agrees that it will take all action necessary or appropriate for carrying
out the terms hereof. 

        22.   This
Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators and permitted successors and
assigns. 

        23.   This
Agreement constitutes the entire understanding among the parties hereto with respect to the subject matter hereof. The invalidity or unenforceability, in part or in
whole, or any provision hereof shall not affect the validity or enforceability of the remainder of such provision or any other provision hereof. A court of competent jurisdiction may reduce or limit
the scope of any provision hereof in order to make such provision enforceable. 

        24.   This
Agreement may be executed in several counterparts each of which shall be deemed an original, but all of which together shall constitute one and the same document. 

        25.   Any
notice that may be given under this Agreement shall be in writing and be deemed given when delivered by hand, confirmed facsimile transmission, or nationally
recognized overnight courier or, if mailed, one day after mailing by registered or certified mail, return receipt requested, to the Company at its principal executive office address, or to the
Trustees or the Stockholders at their respective addresses stated on the signature pages or Schedule I to this Agreement, or at such other address as any of them may by similar notice
designate. 

        26.   This
Agreement may be amended, and additional parties may be added, by written agreement signed by the Company, the holders of a majority in interest of the Stockholders
and the Trustees; provided, however, that the Trustees shall give each Stockholder notice of any such amendment, and a Stockholder who did not approve the amendment may opt out of the amendment, so
that the amendment shall not be applicable to such Stockholder, by providing written notice to the Trustees no later than ten business days after the date that the Trustees shall have been deemed to
have given the notice of amendment to the Stockholder. 

        27.   This
Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of Delaware without giving effect to conflicts of
laws. 

5

 

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

							
	 	 	 INOVIO BIOMEDICAL CORPORATION
	

 	
 	
By:	
 	
  

 
	

 	
 	
 	
 	
Title:	
 	
  

 

					
	

 	
 	

  [Name], Trustee
	 	 	Address:	 	 

 
	 	 	 	 	  

 

					
	 	 	Fax Number:	 	  

 

					
	

 	
 	

  [Name], Trustee
	 	 	Address:	 	 

 
	 	 	 	 	  

 

					
	 	 	Fax Number:	 	  

 

					
	

 	
 	

  [Name], Trustee
	 	 	Address:	 	 

 
	 	 	 	 	  

 

					
	 	 	Fax Number:	 	  

 

 

					
	
 Signatures of Stockholders	
 	

 	
 	

 
	

  [Name], Stockholder	
 	

 	
 	

 
	

  [Name], Stockholder	
 	

 	
 	

 
	

  [Name], Stockholder	
 	

 	
 	

 

6

 
 

  SCHEDULE I    
    

					
	Name and Address of Stockholder

 
	 	Number of Shares Deposited 	 
	 J. Joseph Kim
	 	 	

3,450,000	 
	 Young Park
	 	 	

1,000,000	 
	 David Weiner
	 	 	

2,700,000	 
	 Michael Kaufman
	 	 	

300,000	 
	 Bryan Chung
	 	 	

550,000	 
	 	 	 	 
	 
	 	 	

8,000,000	 

 

 
 

  EXHIBIT A    
    

THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE ENCUMBERED OR
TRANSFERRED UNLESS (1)(A) COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) EFFECTED IN ACCORDANCE WITH AN APPLICABLE EXEMPTION FROM
SUCH REGISTRATION AND (2) CONSISTENT WITH THE TERMS AND CONDITIONS ON TRANSFER SET FORTH IN THE VOTING TRUST AGREEMENT AS DEFINED HEREIN.

 INOVIO BIOMEDICAL CORPORATION

Voting Trust Certificate  

			
	No.
                                    	 	Shares
                                    

        This
certifies that                                    has
deposited                        shares of common stock, par value
$            per share, of Inovio Biomedical Corporation (the "Company"), a
Delaware corporation, with the undersigned Trustees, under the Inovio Biomedical Corporation Voting Trust Agreement dated as
of                                    , 2009, as may be amended from
time to time (the "Voting
Trust Agreement") among the Company, the Trustees and the Stockholders named therein, a copy of which will be furnished to the holder hereof without charge upon written request therefor to the
Trustees, and shall be entitled to a certificate or certificates representing such shares upon termination of the Voting Trust Agreement in accordance with its terms. Prior to the delivery of such
certificates upon such termination, the undersigned Trustees shall possess and be entitled to exercise, in the manner and to the extent provided in the Voting Trust Agreement, all of the rights of
every kind of the holder of this certificate with respect to the shares so deposited. 

        The
holder of this Certificate has acquired it to hold as evidence of an investment and without a view towards distribution. This Certificate, including the interest represented hereby,
is transferable only on the books of the Trustees upon presentation and surrender hereof in accordance with the terms of the Voting Trust Agreement. 

        The
holder of this Certificate takes the same subject to all terms and conditions of the Voting Trust Agreement and is bound by and entitled to the benefit of such Voting Trust
Agreement. 

        IN
WITNESS WHEREOF, the Trustees have caused this Certificate to be signed as of this                        day
of                                    , 2009.
 

			
	

 	
 	

  Trustee
	

 	
 	

  Trustee
	

 	
 	

  Trustee

A-1

QuickLinks

Exhibit 4.18

INOVIO BIOMEDICAL CORPORATION VOTING TRUST AGREEMENT

SCHEDULE I

EXHIBIT A

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