EXHIBIT 10.4
FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") dated
as of December 31, 1996, by and between TIER TECHNOLOGIES, INC., a California
corporation (the "Company") and XXXXXXX X. XXXXXX ("Xxxxxx").
In consideration of the mutual benefits derived from this Agreement and
of the agreements, covenants and provisions hereof, the parties hereto agree as
follows:
1. EMPLOYMENT
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1.1. Position. During the Term (as hereinafter defined) of this
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Agreement and subject to the terms and conditions set forth herein, the Company
agrees to employ Xxxxxx as its President and Chief Operating Officer, reporting
to the Chief Executive Officer and the Board of Directors of the Company.
1.2. Election to Office. During the Term of this Agreement, the
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Company shall use its best efforts to sustain and continue Xxxxxx'x position and
designation as President and Chief Operating Officer.
1.3. Fulfillment of Duties. As long as the Company sustains and
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continues Xxxxxx'x position and designation as President and Chief Operating
Officer of the Company, Xxxxxx shall (i) devote his full-time efforts during
normal business hours to the performance of his services hereunder, except
during vacation periods and periods of illness or incapacity and except that
nothing in this Agreement shall preclude Xxxxxx from devoting reasonable periods
required for serving as a director, or member of a committee of, or holding
other positions, in any organization involving no conflict of interest with the
interests of the Company and (ii) perform his services hereunder faithfully,
diligently and to the best of his skill and ability.
1.4. Location. During the Term of this Agreement, Xxxxxx will perform
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his duties and services at the Company's principal executive offices in Walnut
Creek, California, except that Xxxxxx agrees to make such business trips to
other locations as may be reasonable and necessary in the performance of his
services hereunder.
2. COMPENSATION AND BENEFITS
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2.1. Salary. In consideration of and as compensation for the services
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agreed to be performed by Xxxxxx hereunder, the Company agrees to pay Xxxxxx
during the Term of this Agreement a base salary (the "Base Salary") of not less
than $225,000 per year, payable semi-monthly in accordance with the Company's
regular payroll practices. The Company may review Xxxxxx'x Base Salary and other
compensation (including bonuses) from time to time during the Term of this
Agreement and, at the discretion of the Board of Directors of the Company, may
increase his Base Salary or other compensation (including bonuses) from time to
time. Any increase in Base Salary or other compensation (including bonuses)
shall in no way limit or reduce any other obligation of
the Company hereunder and, once established at an increased rate, Xxxxxx'x Base
Salary hereunder shall not be reduced.
2.2. Incentive Compensation. During the term of this Agreement, in
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addition to the base salary provided in Section 2.1 above, Xxxxxx shall be
eligible to receive additional incentive compensation upon achievement of the
targeted levels of earnings before interest, taxes, depreciation and
amortization ("EBITDA") of the Company as set forth in Exhibit A.
2.3. Stock Option. Xxxxxx shall receive, within forty-five (45) days
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following execution of this Agreement, an option (the "Option") to purchase
3,000 shares of Company common stock at an exercise price which shall be at
least the minimum exercise price required by law, pursuant to an option
agreement on the Company's standard form. Subject to the terms of the Option,
one-third of the Option (i.e., 1,000 shares) shall vest on each of the first,
second and third anniversary dates of this Agreement; provided, however, that
one-third of the Option (i.e., 1,000 shares) shall vest as provided in Section
4.2 or upon the last day of the month of the closing of an underwritten public
offering of the Company's securities and as otherwise set forth in the option
agreement, with the remaining unvested Option vesting ratably over the remaining
anniversary dates of this Agreement.
2.4. Participation in Benefit Plans. During the Term of this
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Agreement, Xxxxxx shall be entitled to participate in any pension plans, profit-
sharing plans and group insurance, medical, hospitalization, disability and
other benefit plans presently in effect (a partial list of which is attached
hereto as Exhibit B) or hereinafter adopted, which plans are generally
applicable to the most senior executives of the Company and to the extent he is
eligible under the general provisions thereof.
2.5. Reimbursement of Expenses. The Company will reimburse Xxxxxx for
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all business expenses, including, without limitation, traveling, entertainment
and similar expenses, incurred by Xxxxxx on behalf of the Company during the
Term of this Agreement if such expenses are ordinary and necessary business
expenses incurred on behalf of the Company pursuant to the Company's standard
expense reimbursement policy, provided that Xxxxxx shall provide the Company
with such itemized accounts, receipts or documentation for such expenses as are
required under the Company's policy regarding the reimbursement of such
expenses.
2.6. Vacation and Sick Leave. During the Term of this Agreement,
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Xxxxxx will be entitled to three weeks of paid vacation per year. Xxxxxx shall
also be entitled to paid sick leave in accordance with the policy applicable to
the other senior executives of the Company.
2.7. MBA Loan Reimbursement. Following the execution of this
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Agreement, the Company shall offer an unsecured loan to Xxxxxx in the principal
amount not to exceed $50,000 bearing simple interest at 5.75% per annum, which
amount may be taken all at once or in installments (the "MBA Loan"). Repayment
of the principal amount of the MBA Loan and any interest payable thereon shall
be forgiven, as follows: (i) on a pro rata basis, during Xxxxxx'x employment
with the Company, upon the close of business on the last business day of each
month commencing with the earlier of sixty days after the first full month when
the principal balance first
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exceeds five thousand dollars ($5,000) or October 30, 1997 and ending December
31, 1999 and (ii) in its entirety under the circumstances set forth in Section
4.2 hereof. In the event that Xxxxxx'x employment under this Agreement is
terminated by Xxxxxx without Good Reason (as defined herein) or for Cause as
defined in Section 4.1(iii)(C), Xxxxxx shall pay the total of unforgiven
principal and interest due under the MBA Loan within ninety (90) days of the
occurrence of such event. The MBA Loan shall be evidenced by a promissory note
in form acceptable to Xxxxxx and the Company consistent with the terms of this
Agreement.
3. TERM
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3.1. Term. The "Term" of employment under this Agreement means the
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period commencing on the date hereof and expiring on December 31, 1999 or the
earlier termination hereof pursuant to Section 4.1.
4. TERMINATION OF EMPLOYMENT
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4.1. Events of Termination. Upon the occurrence of any of the
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events described in this Section 4.1 during the Term of this Agreement, Xxxxxx'x
employment hereunder shall terminate and Xxxxxx shall be entitled to the
benefits provided in Section 4.2 hereof.
(i) Termination of Xxxxxx'x employment with the Company
due to Xxxxxx'x death.
(ii) If, as a result of Xxxxxx'x incapacity due to physical
or mental illness, injury or disability, Xxxxxx shall have been absent from his
duties with the Company on a full-time basis for three consecutive months, and
within thirty days after the receipt of written Notice of Termination (as
hereinafter defined) he shall not have returned to the full-time performance of
his duties, the Company may terminate Xxxxxx'x employment for "Disability."
"Absent from his duties" means, for the purposes of this Section 4.1( ii ), that
Xxxxxx is devoting less than 40 hours per week to his duties under this
Agreement.
(iii) The Company shall be entitled to terminate Xxxxxx'x
employment for Cause. For purposes of this Agreement, "Cause" shall mean:
(A) the willful and continued failure by Xxxxxx to
substantially perform his duties with the Company in good faith
(other than any such failure resulting from his incapacity due to
physical or mental illness, injury or disability or any such
actual or anticipated failure resulting from his termination for
Good Reason (as hereinafter defined)), after a demand for
substantial performance is delivered to him by the Board of
Directors of the Company which identifies, in reasonable detail,
the manner in which the Board of Directors believes that Xxxxxx
has not substantially performed his duties in good faith;
(B) the willful engaging by Xxxxxx in conduct which causes
material harm to the Company, monetarily or otherwise; or
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(C) Xxxxxx'x conviction of a felony arising from conduct
during the Term of this Agreement.
For purposes of this Subsection 4.1(iii), no act, or failure to
act, on Xxxxxx'x part shall be considered "willful" unless done, or omitted to
be done, by him not in good faith and without reasonable belief that his action
or omission was in the best interest of the Company or its shareholders.
Notwithstanding the foregoing, Xxxxxx shall not be deemed to have been
terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than two-
thirds of the entire membership of the Board of Directors at a meeting of the
Board of Directors called and held for such purpose (after ten days notice to
him and an opportunity for him, together with his counsel, to appear before the
Board of Directors), finding that Xxxxxx was guilty of conduct set forth above
in clauses (A), (B) or (C) of this Subsection 4.1(iii) and setting forth, in
reasonable detail, the basis for such finding.
(iv) Xxxxxx shall be entitled to terminate his employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall, without
Xxxxxx'x express written consent, mean:
(A) the assignment to Xxxxxx of any duties substantially
inconsistent with his status as President and Chief Operating
Officer of the Company;
(B) a reduction by the Company in Xxxxxx'x Base Salary as
in effect on the date hereof or as the same may be increased from
time to time;
(C) the relocation of the Company's principal executive
offices to a location outside of California;
(D) the failure by the Company to continue in effect any
pension, health, compensation or other benefit plan in which
Xxxxxx participates (including those listed on Exhibit B), or any
similar plans hereafter adopted, unless an equitable arrangement
(as determined by an employee benefit consultant of national
standing selected by the Company and reasonably satisfactory to
Xxxxxx), embodied in an ongoing substitute or alternative plan,
has been made with respect to such plan, or the failure by the
Company to continue his participation therein, or the taking of
any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive Xxxxxx of any
material fringe benefit presently enjoyed by him;
(E) the failure of the Company to obtain a satisfactory
agreement from any successor (by means of merger, consolidation,
sale of assets or otherwise) to assume and agree to perform this
Agreement as contemplated by Section 5 hereof; or
(F) any purported termination of Xxxxxx'x employment which
is not effected pursuant to a Notice of Termination satisfying
the requirements of
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Subsection (v) of this Section 4.1 (and, if applicable,
Subsection (iii) of this Section 4.1); and for purposes of this
Agreement, no such purported termination shall be effective.
Xxxxxx'x right to terminate his employment pursuant to this
Subsection 4.1(iv) shall not be affected by his incapacity due to
physical or mental illness, injury or disability. The Company
may, solely during the period of such incapacity, make
arrangements for the discharge of any of Xxxxxx'x duties
hereunder by another officer of the Company, but any such
arrangement shall not affect or in any way diminish Xxxxxx'x
rights hereunder.
(v) Any purported termination by the Company or by Xxxxxx shall
be communicated by written Notice of Termination to the other party hereto in
accordance with Sections 4.3 and 8.1 hereof.
(vi) Notwithstanding the pendency of a Notice of Dispute (as
hereinafter defined), the Company will continue to pay Xxxxxx his full
compensation in effect when the notice giving rise to the dispute was given
(including, but not limited to, Base Salary) and continue his participation in
all compensation, bonus, benefit and insurance plans in which he was
participating when the notice giving rise to the dispute was given (or provide
Xxxxxx with benefits substantially similar, as determined by an employee benefit
consultant of national standing selected by the Company and reasonably
satisfactory to Xxxxxx, to those under such plans), until the dispute is finally
resolved. Amounts paid under this Section 4.1 (vi) are in addition to all other
amounts due under this Agreement and shall not be offset against or reduce any
other amounts due under this Agreement or otherwise. If it is finally determined
that Xxxxxx terminated his employment for other than Good Reason or the Company
rightfully terminated Xxxxxx'x employment for Cause, Xxxxxx shall reimburse the
Company for all amounts paid to him under this Section 4.1(vi) (less any amounts
determined to be owing to Xxxxxx under any other provision of this Agreement),
with interest thereon calculated at a rate of six percent per annum.
4.2. Effect of Termination.
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(i) Upon the termination of Xxxxxx'x employment as a result of
his Disability, Xxxxxx shall be entitled to receive:
(A) for an additional twenty-four months after the date of
such termination, his Base Salary and any and all benefits to
which he is entitled on the date of such termination under the
Company's pension, life, disability, accident and health and
other benefit plans in accordance with the provisions of such
plans; and (B) one hundred percent (100%) of the maximum amount
of incentive compensation for which Xxxxxx could have become
eligible during the year in which such termination occurs.
(B) the Option, together with any other options to purchase
stock (common or otherwise) in the Company granted pursuant to
any plan or otherwise,
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or any equivalent or similar rights which appreciate or tend to
appreciate as the value of the Company's stock appreciates, shall
become immediately accelerated and fully vested and any
restrictions on such options or equivalent or similar rights
shall, to the extent permissible under applicable securities
laws, fully lapse; and the Company shall endeavor to cause any
restrictions on such options or equivalent or similar rights not
lapsed by operation of this clause to so lapse.
(C) forgiveness of the entire MBA Loan balance then
outstanding.
(D) the indemnity described in Section 4.2(vi) hereto.
(ii) Upon the termination of Xxxxxx'x employment as a result
of his death, Xxxxxx'x heirs, devisees, executors or other legal representatives
shall receive:
(A) for an additional twenty-four months from the date of
such termination, his Base Salary and any and all benefits to
which he is entitled on the date of such termination under the
Company's pension, life, disability, accident and health and
other benefit plans in accordance with the provisions of such
plans; and (B) one hundred percent (100%) of the maximum amount
of incentive compensation for which Xxxxxx could have become
eligible during the year in which such termination occurs.
(B) the Option, together with any other options to
purchase stock (common or otherwise) in the Company granted
pursuant to any plan or otherwise, or any equivalent or similar
rights which appreciate or tend to appreciate as the value of the
Company's stock appreciates, shall become immediately accelerated
and fully vested and any restrictions on such options or
equivalent or similar rights shall, to the extent permissible
under applicable securities laws, fully lapse; and the Company
shall endeavor to cause any restrictions on such options or
equivalent or similar rights not lapsed by operation of this
clause to so lapse.
(C) forgiveness of the entire MBA Loan balance then
outstanding.
(D) the indemnity described in Section 4.2(vi) hereto.
(iii) Subject to Section 4.l (vi) hereof: (a) if Xxxxxx'x
employment shall be terminated for Cause as described in Section 4.1(iii)(A) or
(B) hereto, the Company shall pay Xxxxxx his full Base Salary and other benefits
to which he is entitled for a period of twenty-four months, and shall continue
to provide the indemnity described in Section 4.2(vi) hereto; and (b) if
Xxxxxx'x employment shall be terminated for Cause as described in Section
4.1(iii)(C) hereto, the Company shall pay Xxxxxx his full Base Salary and other
benefits to which he is entitled, through the Date of Termination at the rate in
effect at the time the Notice of Termination is given, and the Company shall
have no further obligations to him under this Agreement, with the exception of
the indemnity described in Section 4.2(vi) hereto.
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(iv) If Xxxxxx'x employment by the Company shall be terminated
(a) by the Company other than for Cause, Death or Disability or (b) by Xxxxxx
for Good Reason, then Xxxxxx shall be entitled to the benefits provided below:
(A) the Company shall pay Xxxxxx, not later than the fifth
day following the Date of Termination, a lump sum in cash equal
to the sum of (i) twenty-four months of Base Salary, at the rate
of Xxxxxx'x Base Salary on the Date of Termination, discounted to
the then present value at a discount rate of ten percent per
annum applied to each future payment from the time it would have
become payable; and (ii) one hundred percent (100%) of the
maximum amount of incentive compensation for which Xxxxxx could
have become eligible during the year in which such termination
occurs;
(B) the Option, together with any other options to
purchase stock (common or otherwise) in the Company granted
pursuant to any plan or otherwise, or any equivalent or similar
rights which appreciate or tend to appreciate as the value of the
Company's stock appreciates, shall become immediately accelerated
and fully vested and any restrictions on such options or
equivalent or similar rights shall, to the extent permissible
under applicable securities laws, fully lapse; and the Company
shall endeavor to cause any restrictions on such options or
equivalent or similar rights not lapsed by operation of this
clause to so lapse; and
(C) forgiveness of the entire MBA Loan balance then
outstanding.
(D) the indemnity described in Section 4.2(vi) hereto.
(v) Xxxxxx shall not be required to mitigate the amount of any
payment provided for in this Section 4.2 by seeking other employment or
otherwise, nor shall the amount of any payment or benefit provided for in this
Section 4.2 be subject to set-off or reduced by any compensation earned by him
as the result of employment by another employer or by benefits after the Date of
Termination, or otherwise.
(vi) In connection with the termination of Xxxxxx'x employment
for any reason, the Company will take all necessary action to release Xxxxxx
from any obligations under any guarantee by Xxxxxx of the Company's corporate
debt. Xxxxxx'x employment shall not be terminated until such time as he is
removed or replaced with respect to any such guarantee. In addition, after the
Date of Termination, the Company will indemnify Xxxxxx for any claims, including
all legal fees and expenses associated therewith, made by any lender with
respect to any such guarantee.
4.3. Certain Definitions. For the purposes of this Section 4, the
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following terms shall have the meanings set forth in this Section 4.3:
(i) "Notice of Termination" means a written notice which shall
indicate the specific termination provision in this Agreement relied upon and
shall set forth in reasonable detail
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the facts and circumstances claimed to provide a basis for termination of
employment under the provision so indicated.
(ii) "Date of Termination" means (i) if employment is terminated
for Disability, thirty days after Notice of Termination is given (provided that
Xxxxxx shall not have returned to the performance of his duties on a full-time
basis during such thirty-day period), and (ii) if employment is terminated
pursuant to Subsection (iii) or (iv) of Section 4.1 or for any other reason, the
date specified in the Notice of Termination (which, in the case of a termination
pursuant to Subsection (iii) of Section 4.1, shall not be less than ten days
and, in the case of a termination pursuant to Subsection (iv) of Section 4.1,
shall not be more than sixty days, respectively, from the date such Notice of
Termination is given); provided that if within thirty days after any Notice of
Termination is given, the party receiving such Notice of Termination notifies
the other party that a dispute exists concerning the termination (a "Notice of
Dispute"), the Date of Termination shall be the date on which the dispute is
finally determined, either by mutual written agreement of the parties, by a
binding arbitration award, or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected); and provided further that the Date of Termination
shall be extended by a Notice of Dispute only if such notice is given in good
faith and the party giving such notice pursues the resolution of such dispute
with reasonable diligence.
5. SUCCESSORS
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5.1. Assumption by Successors. The Company shall require any successor
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(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle Xxxxxx to compensation from the Company in the same
amount and on the same terms as he would be entitled hereunder if he terminates
his employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as hereinbefore defined and any successor to its business or assets
as aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
6. NON-COMPETITION AND CONFIDENTIALITY
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6.1. Non-Competition. During Xxxxxx'x employment by the Company
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hereunder and during the period of one year after the termination of Xxxxxx'x
employment hereunder by the Company for Cause or by Xxxxxx for other than Good
Reason:
(i) Xxxxxx will not directly compete with the business of the
Company so as to cause the Company to lose material revenue from any client
account which is in existence on the Date of Termination.
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(ii) Xxxxxx will not directly or indirectly employ or solicit
for employment any person whom he knows to be an employee of the Company or any
subsidiary of the Company.
6.2. Confidential Information.
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(a) Xxxxxx agrees and acknowledges that the Confidential
Information of the Company (as hereinafter defined) is valuable, special and
unique to its business; that such business depends on such Confidential
Information; and that the Company wishes to protect such Confidential
Information by keeping it confidential for the use and benefit of the Company.
Based on the foregoing, Xxxxxx agrees to undertake the following obligations
with respect to such Confidential Information:
(i) Xxxxxx agrees to keep any and all Confidential
Information in trust for the use and benefit of the Company;
(ii) Xxxxxx agrees that, except as required by Xxxxxx'x
duties hereunder or authorized in writing by the Company, he will
not at any time during and for five years after the termination
of his employment with the Company, disclose or use, directly or
indirectly, any Confidential Information of the Company;
(iii) Xxxxxx agrees to take all reasonable steps necessary,
or reasonably requested by the Company, to ensure that all
Confidential Information of the Company is kept confidential for
the use and benefit of the Company; and
(iv) Xxxxxx agrees that, upon termination of his employment
by the Company or at any other time the Company may in writing so
request, he will promptly deliver to the Company all materials
constituting Confidential Information (including all copies
thereof) that are in the possession of or under the control of
Xxxxxx. Xxxxxx further agrees that, if requested by the Company
to return any Confidential Information pursuant to this
Subsection 6.2(a) (iv), he will not make or retain any copy of or
extract from such materials.
(b) For purposes of this Section 6.2, Confidential Information
means any and all information developed by or for the Company of which Xxxxxx
gained knowledge by reason of his employment by the Company prior the date
hereof or his employment under this Agreement that is not generally known in any
industry in which the Company is or may become engaged. Confidential Information
includes, but is not limited to, any and all information developed by or for the
Company concerning plans, marketing and sales methods, materials, processes,
business forms, procedures, devices used by the Company, contractors and
customers with which the Company has dealt prior to Xxxxxx'x termination of
employment with the Company, plans for development of new products, services and
expansion into new areas or markets, internal operations, and any trade secrets
and proprietary information of any type owned by the Company together with all
written, graphic and other materials relating to all or any part of the same.
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In the event that Xxxxxx is, in the opinion of his legal counsel
(which counsel shall be acceptable to the Company in its reasonable discretion),
required to disclose any Confidential Information to any federal, state, local
or foreign judicial, legislative, administrative or other authority, agency or
instrumentality or is required to disclose such Confidential Information by
reason of his fiduciary duties to the Company or its shareholders or by any
federal, state, local or foreign securities, blue-sky or other similar laws,
rules, regulations or ordinances, then, notwithstanding anything in this Section
6.2 to the contrary, Xxxxxx may disclose such Confidential Information to the
extent, and to the persons and entities, so required without any liability
hereunder, without constituting a breach hereunder and without giving rise to a
right of the Company to terminate Xxxxxx'x employment (for Cause or otherwise)
hereunder. Xxxxxx shall notify the Company of any disclosure required to be made
in connection with the preceding sentence as soon as practicable after Xxxxxx
becomes aware of such required disclosure.
7. REMEDIES
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7.1. Injunctive Relief. Xxxxxx acknowledges and agrees that the
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covenants and obligations contained in Sections 6.1 and 6.2 relate to special,
unique and extraordinary matters and that a violation of any of the terms of
such sections will cause the Company irreparable injury for which adequate
remedy at law is not available. Therefore, Xxxxxx agrees that the Company shall
be entitled to an injunction, restraining order, or other equitable relief from
any court of competent jurisdiction, restraining Xxxxxx from committing any
violation of the covenants and obligations set forth in Sections 6.1 and 6.2
hereof.
7.2. Remedies Cumulative. The Company's rights and remedies under
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Section 7.1 hereof are cumulative and are in addition to any other rights and
remedies the Company may have at law or in equity.
8. MISCELLANEOUS
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8.1. Notices. Any written notice, required or permitted under this
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Agreement, shall be deemed sufficiently given if either hand delivered or if
sent by fax or overnight courier. Written notices must be delivered to the
receiving party at his or its address on the signature page of this Agreement.
The parties may change the address at which written notices are to be received
in accordance with this section.
8.2. Assignment. Neither the Company nor Xxxxxx may assign, transfer,
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or delegate its or his rights or obligations hereunder and any attempt to do so
shall be void. This Agreement shall be binding upon and shall inure to the
benefit of the Company and its successors and assigns.
8.3. Entire Agreement. This Agreement contains the entire agreement of
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the parties with respect to the subject matter hereof, and all other prior
agreements, written or oral, are hereby merged herein and are of no further
force or effect. This Agreement may be modified or amended only by a written
agreement that is signed by the Company and Xxxxxx. No waiver of any section or
provision of this Agreement will be valid unless such waiver is in writing and
signed by the party against whom enforcement of the waiver is sought. The waiver
by the Company of any
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section or provision of this Agreement shall not apply to any subsequent breach
of this Agreement. Captions to the various sections in this Agreement are for
the convenience of the parties only and shall not affect the meaning or
interpretation of this Agreement. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but together they shall
constitute one and the same instrument.
8.4. Severability. The provisions of this Agreement shall be deemed
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severable, and if any part of any provision is held illegal, void, or invalid
under applicable law such provision may be changed to the extent reasonably
necessary to make the provision, as so changed, legal, valid and binding. If any
provision of this Agreement is held illegal, void, or invalid in its entirety,
the remaining provisions of this Agreement shall not in any way be affected or
impaired but shall remain binding in accordance with their terms.
8.5. Continuing Obligations. Sections 4.2, 6.1 and 6.2 of this
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Agreement shall continue and survive the termination of this Agreement.
8.6. Applicable Law. This Agreement and the rights and obligations of
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the Company and Xxxxxx thereunder shall be governed by and construed and
enforced under the laws of the State of California applicable to agreements made
and to be performed entirely within such State.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TIER TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxx
Title: Senior Vice President and Chief Financial Officer
Address: 0000 Xxxxx Xxxx., Xxx. 000
Xxxxxx Xxxxx, XX 00000
/s/ Xxxxxxx X. Xxxxxx
XXXXXXX X. XXXXXX
Address:
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EXHIBIT A
Incentive Compensation Formula
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Xxxxxx shall receive annual incentive compensation of at least $75,000
per year (the "Annual Minimum") or $18,750 per quarter (the "Quarterly
Minimum"), upon the achievement of targeted level of earnings before interest,
taxes, depreciation and amortization ("EBITDA") of the Company. For calendar
1997, the targeted level of EBITDA shall be $412,500 per calendar quarter, or
$1,650,000 for the calendar year. If the targeted level of EBITDA is met for any
calendar quarter (the "Quarterly EBITDA Requirement"), the quarterly incentive
compensation payment shall be made to Xxxxxx on or before thirty days following
the end of such quarter. However, the right to receive such payment shall be
earned by and vested in Xxxxxx on the last day of each such quarter. Assuming
Xxxxxx has achieved the Quarterly EBITDA Requirement, the amount to be paid to
Xxxxxx for that quarter shall be determined by multiplying the Quarterly Minimum
by a fraction, the numerator of which is the actual EBITDA achieved for such
period and the denominator of which is the targeted level of EBITDA for the
quarter. EBITDA for any calendar quarter may not be carried over to the next
calendar quarter; provided, however, if the Quarterly EBITDA Requirement is not
met for one or more calendar quarters during any calendar year for the term of
this Agreement, but the annual target is met for such calendar year, Xxxxxx
shall be entitled to receive the difference between the annual incentive
compensation payment,determined by multiplying the Annual Minimum by a fraction,
the numerator of which is the actual EBITDA achieved for such the calendar year
and the denominator of which is the targeted level of EBITDA for the calendar
year, and the total of all quarterly incentive compensation payments made to
Xxxxxx during such calendar year. Such annual payment will be made to Xxxxxx by
March 31 of the following year. However, the right to receive such payment shall
be earned by and vested in Xxxxxx on the last day of each such calendar year.
For subsequent calendar years during the Term, the targeted level of
EBITDA shall be fixed by the Board, in consultation with Xxxxxx, prior to
commencement of the year in question. EBITDA will be determined by the Company's
Chief Financial Officer in accordance with the Company's normal accounting
practices consistently applied.
12
EXHIBIT B
Benefits for Xxxxxx'x Employment Agreement
------------------------------------------
1. Group Term and Keyman Life Insurance
2. Standard medical plan.
3. Standard three weeks vacation.
4. Standard 11 holidays.
5. Standard long term disability insurance.
6. Automobile (owned by company) or mutually acceptable allowance
in lieu thereof.
7. Pension supplement.
8. Standard defined benefit pension plan.
9. Incentive Compensation plan.
10. D & O liability insurance.
11. Annual physical examination.
12. Thrift savings (401(k) Plan.)
13. Personal liability insurance.
14. Other.
13
EXHIBIT B
Benefits for Xxxxxx'x Employment Agreement
------------------------------------------
1. Group Term and Keyman Life Insurance.
2. Standard medical plan.
3. Standard three weeks vacation.
4. Standard 11 holidays.
5. Standard long term disability insurance.
6. Automobile (owned by company) or mutually acceptable allowance
in lieu thereof.
7. Pension supplement.
8. Standard defined benefit pension plan.
9. Incentive Compensation plan.
10. D & O liability insurance.
11. Annual physical examination.
12. Thrift savings (401(k) Plan.)
13. Personal liability insurance.
14. Other.
14
