EMPLOYMENT AGREEMENT
Exhibit
10.1
This
Employment Agreement (the “Agreement”)
is made and entered into as of July 1, 2008, by and between
Tier Technologies, Inc., a Delaware corporation (together
with its successors and assigns, the “Company”),
and Xxxxxx X. Xxxxxxxx (the “Executive”).
W
I T N E S S E T H
WHEREAS,
the Company desires to employ the Executive as Senior Vice President, Chief
Financial Officer effective July 1, 2008 and to enter into an employment
agreement embodying the terms of such employment; and
WHEREAS,
the Executive desires to enter into this Agreement and to accept such
continued employment, subject to
the terms and provisions of this Agreement;
WHEREAS,
the parties also wish to enter into this Agreement and to terminate and
supersede all prior agreements including but not limited to the Executive
Services Agreement between the Company and Xxxxx LLC of March 31,
2008;
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:
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1.
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Definitions.
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(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:
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(i)
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a
conviction of the Executive of, or a plea of guilty or nolo contendere by the
Executive to, any felony;
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(ii)
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an
intentional violation by the Executive of federal or state securities
laws;
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(iii)
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willful
misconduct or gross negligence by the Executive that has or is reasonably
likely to have a material adverse effect on the
Company;
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(iv)
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a
failure of the Executive to perform his or her reasonably assigned duties
for the Company that has or is reasonably likely to have a material
adverse effect on the Company;
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(v)
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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;
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(vi)
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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
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(vii)
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fraud,
embezzlement, theft or dishonesty by the Executive against the
Company,
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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:
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(i)
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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”);
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(ii)
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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;
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(iii)
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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;
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(iv)
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the
dissolution or liquidation of the Company;
or
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(v)
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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.
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(e) “Code”
shall mean the Internal Revenue Code of 1986, as amended from time to
time.
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(f) “Compensation
Committee” shall mean the Compensation Committee of the Board or another
committee of the Board that performs the functions typically associated with a
compensation committee.
(g) “Date of
Termination” shall mean (i) if the Executive’s employment is
terminated by reason of his or her death, the date of his or her death, or
(ii) if the Executive’s employment is terminated pursuant to any other
section, the prospective date specified in the written notice provided in
accordance with Section 21 below.
(h) “Disability”
shall mean, for purposes of this Agreement, the Executive’s inability to
substantially perform his or her duties and responsibilities under this
Agreement for a period of six (6) consecutive months due to a physical or
mental disability, as the term “physical or
mental disability” is defined in the Company’s long-term disability
insurance plan then in effect (or would be so found if the Executive applied for
coverage or benefits under such plan).
(i) “Effective
Date” shall mean July 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), (iii) or (iv) hereof
unless the Executive has provided the Company with written notice in accordance
with Section 21 below within ninety (90) days after the occurrence of such event
or action stating with specificity the facts and circumstances underlying the
allegations of Good Reason and the Company has failed to cure such violation
within thirty (30) calendar days of receipt thereof:
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(i)
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any
reduction in the Executive’s Base
Salary;
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(ii)
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any
material diminution of the Executive’s duties, responsibilities, powers or
authorities;
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(iii)
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a
material breach by the Company of any material provision of this
Agreement.
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(k) “Term of
Employment” shall mean the period specified in Section 2 below, as such
period may be extended.
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2.
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Term of
Employment.
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The
Company hereby continues to employ the Executive, and the Executive hereby
accepts such continued employment, for the period commencing on the Effective
Date and ending on the third anniversary of the Effective Date, subject to
earlier termination of the Term of Employment in accordance with the terms
of this Agreement. The expiration of the Term of Employment will not
constitute either a termination without Cause or a resignation for Good Reason
and no severance will be payable upon or after such expiration, except as
provided in a generally applicable Company plan.
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3.
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Position, Duties and
Responsibilities.
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As of the
Effective Date, the Executive shall be employed as Senior Vice President, Chief
Financial Officer of the Company effective July 1, 2008 or in such other
reasonably comparable position as the Chief
Executive Officer of the Company (the “Chief Executive
Officer”) or the Board may determine from time to time. In
this capacity, the Executive shall be assigned such duties and responsibilities
inherent in such position and such other duties and responsibilities as the Chief Executive Officer
or the Board shall
from time to time reasonably assign to him or her. The Executive
shall serve the Company faithfully, conscientiously, and to the best of the
Executive’s ability and shall promote the interests and reputation of the
Company. The Executive shall devote all of the Executive’s time,
attention, knowledge, energy and skills during normal working hours, and at such
other times as the Executive’s duties may reasonably require, to the duties of
the Executive’s employment; provided, however, that the
Executive may (a) serve on civic or charitable boards or committees; or (b) with
the approval of the Chief Executive Officer or the Board, serve on corporate
boards or committees. The Executive shall report to the Chief
Executive Officer in carrying out his or her duties and responsibilities under
this Agreement. The Executive agrees to abide by the rules,
regulations, instructions, personnel practices and policies of the Company and
any changes therein that may be adopted from time to time.
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4.
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Base
Salary.
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As of
July 1, 2008, the Executive shall be paid an annualized Base Salary of two
hundred seventy five thousand dollars ($275,000) payable in accordance
with the regular payroll practices of the Company. The Base Salary
shall be subject to increase but not decrease thereafter. Any
increase to the Base Salary is to be determined by the Compensation Committee,
in consultation with the Chief Executive Officer. The Executive shall be
eligible to participate in the annual salary and performance review process
scheduled for October/November 2008, with any approved compensation adjustment
applied effective December, 2008 in accordance with standard payroll procedures
and the annual performance review schedule.
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5.
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Incentive Compensation
Arrangements.
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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
addition, the Executive shall be entitled to receive a one-time incentive
payment of fifty percent (50%) of base compensation pro-rated for the current
fiscal year for the period April 1, 2008 through September 30, 2008, to be paid
within ninety (90) days of the end of the fiscal year, i.e., September 30, 2008.
In no event shall the annual incentive opportunity effective as of October 1,
2008 for the Executive be less than fifty percent (50%) or more than
seventy-five percent (75%) of the Executive’s Base Salary, assuming satisfaction
of applicable performance goals.
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6.
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Equity Compensation
Programs.
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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.
In
addition, 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 will
be issued 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 three years with 33.33 % of the total grant
vesting after completion of each 12-month period from the original date of
issuance, with all options vested in accordance with the above schedule no later
than June 30, 2011. The option grant agreement and related documentation will be
sent to the Executive within 30 days following the grant date.
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7.
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Employee Benefit
Programs.
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During
the Term of Employment, the Executive shall be entitled to participate in all
employee welfare and pension benefit plans, programs and/or arrangements
applicable to senior-level executives, to the extent that the Executive is
eligible under (and subject to the provisions of) the plan documents governing
those programs.
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8.
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Reimbursement of
Business Expenses.
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The
Company shall reimburse the Executive for all reasonable travel, entertainment
and other expenses incurred or paid by the Executive in connection with, or
related to, the performance of his or her duties, responsibilities or services
under this Agreement, upon presentation by the Executive of documentation,
expense statements, vouchers and/or such other supporting information as the
Company may request; provided, however, that the
amount available for such travel, entertainment and other expenses may be fixed
in advance by the Chief Executive Officer or the Board.
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9.
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Perquisites.
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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.
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10.
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Paid Time
Off.
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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.
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11.
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Termination of
Employment.
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(a) Termination of Employment by
the Company for Disability or Termination of Employment by
Death. Upon a termination of the Executive’s employment by the
Company for Disability or a termination of the Executive’s employment by reason
of the Executive’s death, the Executive or his or her estate and/or
beneficiaries, as the case may be, shall be entitled to the following amounts,
payable on the business day coinciding with or next following the thirtieth
(30th) calendar day following such termination, subject to the provisions of
Section 23 below and excluding the payments under clause
(iv) below (which will be paid as premiums are due):
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(i)
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Base
Salary earned but not paid prior to the Date of Termination and any
accrued prior year bonus not paid prior to such
date;
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(ii)
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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;
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(iii) one (1) times the Base Salary in effect on the Date of
Termination;
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(iv)
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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
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(v)
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such
other or additional benefits, if any, as may be provided under applicable
plans, programs and/or arrangements of the
Company.
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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
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(i)
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Base
Salary earned but not paid prior to the Date of Termination and any
accrued prior year bonus not paid prior to such
date;
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(ii)
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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
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(iii)
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such
other or additional benefits, if any, as may be provided under applicable
plans, programs and/or arrangements of the
Company.
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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):
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(i)
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Base
Salary earned but not paid prior to the Date of Termination and any
accrued prior year bonus not paid prior to such
date;
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(ii)
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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;
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(iii)
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such
other or additional benefits, if any, as may be provided under applicable
plans, programs and/or arrangements of the
Company;
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(iv)
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one
(1) times the Base Salary in effect on the Date of Termination;
and
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(v)
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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;
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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.
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(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):
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(i)
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Base
Salary earned but not paid prior to the Date of Termination and any
accrued prior year bonus not paid prior to such
date;
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(ii)
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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;
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(iii)
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such
other or additional benefits, if any, as may be provided under applicable
plans, programs and/or arrangements of the
Company;
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(iv)
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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;
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(v)
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for
all options granted to the Executive immediate vesting of all unvested
options as of the date of termination;
and
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(vi)
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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;
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provided that the Executive
must execute and not revoke the Severance Agreement (with the conditions
contained in the proviso to Section 11(c)) to be eligible for the payments in
Sections 11(d)(iv) through (vii) herein. The Company must provide
written notice to the Executive in accordance with Section 21 below upon a
termination of the Executive’s employment without Cause.
(e) Resignation for Good Reason
by the Executive due to a Change in Control. The Executive may
terminate his or her employment for Good Reason in a manner consistent with the
definition of Good Reason within one (1) year after a Change in Control, in
which event the Executive shall be entitled to the payments in and subject to
the conditions of Section 11(d) and the provisions of Section 23. The
Executive must provide written notice to the Company of a proposed resignation
for Good Reason in accordance with Section 21 below and must actually resign
under this provision no later than the six month anniversary of the date he or
she specifies as that of the adverse event or action.
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12.
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Proprietary and
Confidential Information
Agreement.
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The
Executive shall execute, simultaneously with the execution of this Agreement or
otherwise upon the Company’s request, the NDA.
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13.
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Assignability: Binding
Nature.
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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.
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14.
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Representation.
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The
Company represents and warrants that it is fully authorized and empowered to
enter into this Agreement. The Executive states and represents that
he or she has had an opportunity to fully discuss and review the terms of this
Agreement with an attorney. The Executive further states and
represents that he or she has carefully read this Agreement, understands the
contents herein, freely and voluntarily assents to all of the terms and
conditions hereof, and signs his or her name of his or her own free
act.
In
addition, the Company agrees that, if a dispute arises that concerns this
Agreement, the Proprietary and Confidential Information Agreement, or the
Severance Agreement and the Executive is the prevailing party in the dispute, he
or she shall be entitled to recover all of his or her reasonable attorney’s fees
and expenses incurred in connection with the dispute. For this purpose, the
Executive will be the “prevailing
party” if he or she is successful on any significant substantive issue in
the action and achieves either a judgment in his or her favor or some other
affirmative recovery.
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15.
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Entire
Agreement.
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This
Agreement contains the entire understanding and agreement between the parties
concerning the subject matter hereof and supersedes all prior agreements,
understandings, discussions, negotiations and undertakings, whether written or
oral, with respect thereto,
including, without limitation, the Executive Services Agreement entered
into as of March 31, 2008.
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16.
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Amendment or
Waiver.
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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.
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17.
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Withholding.
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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.
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18.
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Severability.
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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.
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19.
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Survivorship.
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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.
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20.
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Governing Law;
Jurisdiction; Dispute
Resolution.
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This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia (without reference to the conflict of laws provisions
thereof). In case of any controversy or claim arising out of or
related to this Agreement or relating to the Executive’s employment (including
but not limited to claims relating to employment discrimination), except as
expressly excluded herein, each party to this Agreement agrees to give the other
party notice of non-compliance with this Agreement and ten (10) days to
cure. Should resolution of any controversy or claim not be reached
following provision of notice and a reasonable opportunity to cure, then the
dispute shall be settled by arbitration, under the American Arbitration
Association’s National Rules for the Resolution of Employment Disputes (the
“National
Rules”). A single arbitrator shall be selected in accordance
with the National Rules, and the costs of such arbitration shall be shared
equally between the parties, except to the extent expressly set forth in Section
14 above. Any claim or controversy not submitted to arbitration in
accordance with this Section 20 (other than as provided under the NDA) shall be
waived, and thereafter no arbitrator, arbitration panel, tribunal, or court
shall have the power to rule or make any award on any such claim or
controversy. In determining a claim or controversy under this
Agreement and in making an award, the arbitrator must consider the terms and
provisions of this Agreement, as well as all applicable federal, state, or local
laws. The award rendered in any arbitration proceeding held under
this Section 20 shall be final and binding and judgment upon the award may be
entered in any court having jurisdiction thereof. Claims for workers’
compensation or unemployment compensation benefits are not covered by this
Section 20. Without limiting the provisions of this Section 20, the
Company and the Executive agree that the decision as to whether a party is the
prevailing party in an arbitration, or a legal proceeding that is commenced in
connection therewith will be made in the sole discretion of the arbitrator or,
if applicable, the court and the arbitrator or court may award reasonable
attorneys’ fees, costs and expenses, except to the extent expressly to the
contrary in Section 14 above. The Company and the Executive each
hereby irrevocably waive any right to a trial by jury in any
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21.
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Notices.
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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: 00000
Xxxxxxxxx Xxxx.
0xx Xxxxx
Xxxxxx,
Xxxxxxxx 00000
Attention: Vice President, Human Resources
with a copy to: The Chief Executive Officer
If to the
Executive:
At his or her current or last known residential address
Any
notice of termination must include a Date of Termination in accordance with the
relevant provisions of this Agreement.
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22.
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Headings.
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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.
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23.
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Compliance with Code
Section 409A.
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To the
extent any payment, compensation or other benefit provided to the Executive in
connection with his or her employment termination is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code and the Executive is a specified employee as defined in Section
409A(a)(2)(B)(i) as determined by Tier in accordance with its procedures, by
which determination the Executive agrees that he or she is bound, such payment,
compensation or other benefit shall not be paid before the day that is six (6)
months plus one (1) day after the Executive’s separation from service as
determined under Section 409A (the “New Payment
Date’’). The aggregate of any payments that otherwise would
have been paid to the Executive during the period between the separation from
service and the New Payment Date shall be paid to the Executive in a lump sum on
such New Payment Date. Thereafter, any payments that remain
outstanding as of the day immediately following the New Payment Date shall be
paid without delay over the time period originally scheduled, in accordance with
the terms of this Agreement. In any event, the Company makes no
representations or warranty and shall have no liability to the Executive or any
other person, other than with respect to payments made by Tier in violation of
the provisions of this Agreement, if any provisions of or payments under this
Agreement are determined to constitute deferred compensation subject to Code
Section 409A but not to satisfy the conditions of that section.
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24.
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Counterparts.
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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
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IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
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TIER
TECHNOLOGIES, INC.
By:
/s/ Xxxxxx X.
Xxxxxxxx
Name: Xxxxxx X.
Xxxxxxxx
Title: Chief Executive
Officer
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THE
EXECUTIVE
/s/ Xxxxxx X.
Xxxxxxxx
Xxxxxx
X. Xxxxxxxx
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EXHIBIT
A
PROPRIETARY AND CONFIDENTIAL
INFORMATION, DEVELOPMENTS, NONCOMPETITION AND NONSOLICITATION
AGREEMENT
This Proprietary and Confidential Information, Developments, Noncompetition and Nonsolicitation Agreement (the “Agreement”) is made by and between Tier Technologies, Inc. (the “Company”), and Xxxxxx X. Xxxxxxxx (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
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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
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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:
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(1)
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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
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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;
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(2)
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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
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(3)
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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.
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(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.
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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-
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-
including,
but not limited, to the Nondisclosure and Proprietary/Confidential
Information/Non-Solicitation Agreement between the Company and the Xxxxx LLC
dated March 31, 2008. 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 July 1, 2008 (the “Employment
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Agreement”)
apply to this Agreement, except to the extent that either party seeks injunctive
relief to enforce any provision of this Agreement, in which case that party may
bring an action, suit, or other legal proceeding in a court of competent
jurisdiction. Any such action, suit or other legal proceeding that is commenced
to resolve any matter arising under or relating to such injunctive relief shall
be commenced only in a court of the Commonwealth of Virginia (or, if
appropriate, a federal court located within the Commonwealth of Virginia), and
the Company and the Employee each consents to the jurisdiction of such a
court. Section 14 (“Representation”) of the Employment Agreement
applies in accordance with its terms to disputes under this
Agreement. The
Company and the Employee each hereby irrevocably waive any right to a trial by
jury in any action, suit or other legal proceeding arising under or relating to
any provision of this Agreement.
(h) Captions. The
captions of the sections of this Agreement are for convenience of reference only
and in no way define, limit or affect the scope or substance of any section of
this Agreement.
THE
EMPLOYEE ACKNOWLEDGES THAT HE/SHE HAS CAREFULLY READ THIS AGREEMENT AND
UNDERSTANDS AND AGREES TO ALL OF THE PROVISIONS IN THIS AGREEMENT.
[The
rest of this page left intentionally blank.]
[Signature
Page Follows]
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TIER
TECHNOLOGIES, INC.
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Date: July
1, 2008
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By: /s/Xxxxxx X.
Xxxxxxxx
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Xxxxxx
X. Xxxxxxxx
Chief Executive Officer
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By: Xxxxxx X.
Xxxxxxxx
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Date: July
1, 2008
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/s/Xxxxxx X.
Xxxxxxxx
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