EMPLOYMENT AGREEMENT
Exhibit 10.34
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 Xxxx X. Xxxxxxxx (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
|
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
|
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: 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 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/ Xxxxxx X. Xxxxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxxxx
|
|
|
Title:
Chief Executive Officer
|
|
|
THE
EXECUTIVE
|
|
| /s/ Xxxx X. Xxxxxxxx | |
|
Xxxx
X. Xxxxxxxx
|
|
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.
- 3 -
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 Xxxx 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
- 2
-
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
-
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
-
(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
-
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
-
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]
- 10
-
| TIER TECHNOLOGIES, INC. | |
| Date: September 30, 2008 | By: /s/Xxxxxx X. Xxxxxxxx |
| Xxx Xxxxxxxx, Chief Executive Officer | |
| By: Xxxx Xxxxxxxx | |
| /s/Xxxx Xxxxxxxx | |
| Date: September 22, 2008 | (signature) |
- 11
-
