Exhibit
10.34
EMPLOYMENT
AGREEMENT
This Employment Agreement (the “ Agreement
”) is made and entered into as of the 1st
day of October, 2008 by and between Tier
Technologies, Inc., a Delaware corporation (together
with its successors and assigns, the “ Company
”), and Nina K. Vellayan (the “ Executive
”).
W I T N E S S E T
H
WHEREAS, the Company desires to employ the Executive as its Senior
Vice President, Chief Operating Officer, and to enter into an
employment agreement embodying the terms of such employment;
and
WHEREAS, the Executive desires to enter into this Agreement and to
accept such employment, subject to the terms and provisions of this
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual
covenants contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is mutually
acknowledged, the Company and the Executive, intending to be
legally bound, agree as follows:
(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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a conviction of the Executive of, or a plea of
guilty or nolo contendere by the Executive to, any
felony;
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an intentional violation by the Executive of
federal or state securities laws;
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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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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;
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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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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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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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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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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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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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the dissolution or liquidation of the Company;
or
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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.
(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 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:
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any reduction in the Executive’s Base
Salary or a reduction in the minimum bonus opportunity below fifty
percent (50%) of Base Salary;
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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
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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.
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.
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Position, Duties and Responsibilities
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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.
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.
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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 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.)
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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.
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.
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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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Reimbursement of Business & Relocation
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 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.
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 .
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.
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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
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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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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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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one (1) times the
Base Salary in effect on the Date of Termination;
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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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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 of the Executive’s employment by the Executive
(except as provided in Section 11(e)), the Executive shall be
entitled to the following: `
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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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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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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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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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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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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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one (1) times the Base Salary in effect on the
Date of Termination; and
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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.
(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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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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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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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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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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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
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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 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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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 (Exhibit B).
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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
Ex
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