0001104659-10-001859.txt : 20100115 0001104659-10-001859.hdr.sgml : 20100115 20100115144147 ACCESSION NUMBER: 0001104659-10-001859 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20100115 DATE AS OF CHANGE: 20100115 GROUP MEMBERS: ERNEST K. JACQUET GROUP MEMBERS: GIANT INVESTMENT, LLC GROUP MEMBERS: JOHN C. RUTHERFORD GROUP MEMBERS: PCAP II, LLC GROUP MEMBERS: PCAP PARTNERS II, LLC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TIER TECHNOLOGIES INC CENTRAL INDEX KEY: 0001045150 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 943145844 STATE OF INCORPORATION: DE FISCAL YEAR END: 0814 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-52757 FILM NUMBER: 10530042 BUSINESS ADDRESS: STREET 1: 10780 PARKRIDGE BLVD STREET 2: 4TH FLOOR CITY: RESTON STATE: VA ZIP: 20191 BUSINESS PHONE: 5713821090 MAIL ADDRESS: STREET 1: 10780 PARKRIDGE BLVD STREET 2: 4TH FLOOR CITY: RESTON STATE: VA ZIP: 20191 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: PARTHENON INVESTORS II L P CENTRAL INDEX KEY: 0001132655 IRS NUMBER: 043527200 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 200 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 617-478-7000 MAIL ADDRESS: STREET 1: 200 STATE STREET CITY: BOSTON STATE: MA ZIP: 02109 SC 13D/A 1 a10-1660_1sc13da.htm SC 13D/A

	UNITED STATES
	SECURITIES AND EXCHANGE COMMISSION
	Washington, D.C. 20549

	SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 7)*

Tier Technologies, Inc.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

88650Q100

(CUSIP Number)

John C. Rutherford

c/o Parthenon Capital LLC

265 Franklin Street

18th Floor

Boston, MA 02110

Telephone: (617) 960-4000

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

WITH A COPY TO:

Joshua N. Korff

Kirkland & Ellis LLP

601 Lexington Avenue

New York, New York 10022

(212) 446-4800

January 8, 2010

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 88650Q100

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Giant Investment, LLC

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With(1)			7.	Sole Voting Power

			8.	Shared Voting Power 1,799,321

			9.	Sole Dispositive Power

			10.	Shared Dispositive Power 1,799,321

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person(1) 1,799,321

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.9%

	14.	Type of Reporting Person (See Instructions) OO

(1) See discussion in Item 5 of this Schedule 13D.

CUSIP No. 88650Q100

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Parthenon Investors II, L.P.

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With(2)			7.	Sole Voting Power

			8.	Shared Voting Power 1,748,401

			9.	Sole Dispositive Power

			10.	Shared Dispositive Power 1,748,401

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person(2) 1,748,401

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.6%

	14.	Type of Reporting Person (See Instructions) PN

(2) See discussion in Item 5 of this Schedule 13D.

CUSIP No. 88650Q100

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) PCap Partners II, LLC

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With(3)			7.	Sole Voting Power

			8.	Shared Voting Power 1,748,401

			9.	Sole Dispositive Power

			10.	Shared Dispositive Power 1,748,401

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person(3) 1,748,401

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.6%

	14.	Type of Reporting Person (See Instructions) OO

(3) See discussion in Item 5 of this Schedule 13D.

CUSIP No. 88650Q100

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) PCap II, LLC

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization Delaware

Number of Shares Beneficially Owned by Each Reporting Person With(4)			7.	Sole Voting Power

			8.	Shared Voting Power 1,748,401

			9.	Sole Dispositive Power

			10.	Shared Dispositive Power 1,748,401

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person(4) 1,748,401

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.6%

	14.	Type of Reporting Person (See Instructions) OO

(4) See discussion in Item 5 of this Schedule 13D.

CUSIP No. 88650Q100

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) John C. Rutherford

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization New Zealand

Number of Shares Beneficially Owned by Each Reporting Person With(5)			7.	Sole Voting Power

			8.	Shared Voting Power 1,799,321

			9.	Sole Dispositive Power

			10.	Shared Dispositive Power 1,799,321

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person(5) 1,799,321

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.9%

	14.	Type of Reporting Person (See Instructions) IN

(5) See discussion in Item 5 of this Schedule 13D.

CUSIP No. 88650Q100

	1.	Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only) Ernest K. Jacquet

	2.	Check the Appropriate Box if a Member of a Group (See Instructions)
		(a)			o
		(b)			o

	3.	SEC Use Only

	4.	Source of Funds (See Instructions) WC

	5.	Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) o

	6.	Citizenship or Place of Organization United States

Number of Shares Beneficially Owned by Each Reporting Person With(6)			7.	Sole Voting Power

			8.	Shared Voting Power 1,799,321

			9.	Sole Dispositive Power

			10.	Shared Dispositive Power 1,799,321

	11.	Aggregate Amount Beneficially Owned by Each Reporting Person(6) 1,799,321

	12.	Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) o

	13.	Percent of Class Represented by Amount in Row (11) 9.9%

	14.	Type of Reporting Person (See Instructions) IN

(6) See discussion in Item 5 of this Schedule 13D.

CUSIP No. 88650Q100

This Statement on Schedule 13D/A (this “Statement”) relates to the shares of Common Stock, par value $0.01 per share , (the “Common Stock”) of Tier Technologies, Inc. (“Tier”). This Statement is filed by Giant Investment, LLC, a Delaware limited liability company (“Giant”); Parthenon Investors II, L.P., a Delaware Limited Partnership (“Parthenon”); PCap Partners II, LLC, a Delaware limited liability company (“PCap Partners”); PCap II, LLC, a Delaware limited liability company (“PCap II”); John C. Rutherford and Ernest K. Jacquet.

The information set forth in response to each separate Item below shall be deemed to be a response to all Items where such information is relevant. The Schedule 13D originally filed on July 15, 2005 and amended on August 9, 2005, December 19, 2005, February 9, 2007, October 3, 2007, December 30, 2008 and January 6, 2009 is hereby amended further as follows:

CUSIP No. 88650Q100

Item 4.	Purpose of Transaction
Item 4 is hereby amended and restated in its entirety as follows:
The reporting persons originally acquired shares of Tier for investment purposes because of their belief that the market price of the Common Stock was less than the intrinsic value of Tier on a per-share basis. The reporting persons intend to optimize the value of their investments and, therefore, review from time to time Tier’s business affairs, financial position, governance, management, capital structure, future plans and contractual rights and obligations and consider all alternatives available to the reporting persons with respect to their investment. As part of such review, the reporting persons may also, from time to time, seek to meet with and have discussions with Tier’s management and directors and may communicate with other holders of the Common Stock to understand their views of Tier’s operating strategy and financial performance. Based on such review, the reporting persons believe that Tier would benefit from the re-election of Mr. Zachary Sadek to the board of directors of Tier. As a result, on January 8, 2010, Giant, Parthenon, PCap Partners, PCap II and John C. Rutherford (collectively, the “Parthenon Group”) entered into an agreement (the “Proxy Agreement”) with Tier, pursuant to which Tier’s board of directors agreed to (i) nominate Mr. Zachary Sadek for re-election as a director of Tier at Tier’s 2010 annual meeting of stockholders (the “2010 Annual Meeting”), (ii) recommend that the stockholders of Tier at the 2010 Annual Meeting vote to elect Mr. Zachary Sadek as a director, and (iii) use its reasonable best efforts (which shall include the solicitation of proxies and the voting of shares for which the designees of Tier’s board of directors hold proxies) to ensure that Mr. Zachary Sadek is elected at the 2010 Annual Meeting, subject to certain limitations. In addition, under the Proxy Agreement, the Parthenon Group granted an irrevocable proxy (the “Proxy”) to certain executive officers of Tier (the “Proxyholders”) to vote on behalf of the Parthenon Group all Common Stock and other securities of Tier entitled to vote in the election of directors (the “Voting Securities”) beneficially owned by the Parthenon Group at the 2010 Annual Meeting in favor of the election of any person at the 2010 Annual Meeting (i) nominated by Tier’s board of directors and serving on Tier’s board of directors as of January 8, 2010 and/or (ii) nominated by Tier’s board of directors in accordance with the nomination procedures of Tier’s board of directors in effect on January 8, 2010 and for whom the Parthenon Group has authorized the Proxyholders to vote. Pursuant to the Proxy Agreement, the Parthenon Group is also subject to certain restrictions with respect to, among other things, the solicitation of proxies, election of directors of Tier and transfer of beneficial ownership of the Voting Securities until the 2010 Annual Meeting. In addition to the foregoing, the reporting persons may engage Tier in discussions that may include one or more of the other actions described in subsections (a) through (j) of Item 4 of Schedule 13D. Depending on various factors including, without limitation, Tier’s financial position and strategic direction, the outcome of the discussions with Tier’s management, directors and/or stockholders, the outcome of the election of directors at Tier’s 2010 annual meeting of stockholders, actions taken by the board of directors of Tier, price levels of the Common Stock, other investment opportunities available to the reporting persons, conditions in the securities market and general economic and industry conditions, the reporting persons may in the future take such actions with respect to their investments in Tier as they deem appropriate including, without limitation, acquiring or disposing the Common Stock or other securities of Tier through open market transactions, privately negotiated transactions, a tender offer, a merger, an exchange offer, or otherwise, engaging in any hedging or similar transactions with respect to the reporting person’s holdings of Tier’s Common Stock or other securities and/or otherwise changing their intention with respect to any and all matters referred to in Item 4 of Schedule 13D.

Item 5.

Interest in Securities of the Issuer

Item 5 has been amended or supplemented as follows:

As of January 12, 2010:

(a)-(b) Giant directly beneficially owns 1,799,321 shares of Common Stock, representing approximately 9.9% of the outstanding Common Stock of Tier based on 18,150,965 shares of Common Stock outstanding as reported in Tier’s annual report on Form 10-K filed on November 10, 2009. Accordingly, as parents of Giant, each of Parthenon (managing member of Giant), PCap Partners (general partner of Parthenon) and PCap II (managing member of PCap Partners) may be deemed to beneficially own their proportional interest in the shares of Common Stock directly beneficially owned by Giant, comprising 1,748,401 shares of Common Stock, representing approximately 9.6% of the outstanding Common Stock of Tier.

Additionally, as control persons of various entities indirectly investing in Giant, each of Mr. Rutherford and Mr. Jacquet may be deemed to beneficially own a proportional interest in the shares of Common Stock directly beneficially owned by Giant comprising 1,799,321 shares of Common Stock, representing approximately 9.9% of the outstanding Common Stock of Tier.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Item 6 is hereby amended and restated in its entirety as follows:

The information set forth under Item 4 is hereby incorporated by reference.

The descriptions of the Proxy Agreement and the Proxy do not purpose to be complete and are qualified in their entirety by reference to the complete text of such documents, copies of which are filed as exhibits hereto and incorporated herein by reference.

CUSIP No. 88650Q100

Item 7.	Material to Be Filed as Exhibits
99.1 Joint Filing Agreement. 99.2 Proxy Agreement, dated January 8, 2010, by and among Giant Investment, LLC, Parthenon Investors II, L.P., PCap Partners II, LLC, PCap II, LLC, John C. Rutherford and Tier Technologies, Inc. 99.3 Irrevocable Proxy, dated January 8, 2010, by and among Giant Investment, LLC, Parthenon Investors II, L.P., PCap Partners II, LLC, PCap II, LLC and John C. Rutherford.

CUSIP No. 88650Q100

After reasonable inquiry and to the best of each of the undersigned's knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct.

Dated: January 15, 2010

	Giant Investment, LLC

	By: Parthenon Investors II, L.P., as managing member

	By: PCap Partners II, LLC, as general partner

	By: PCap II, LLC, as general partner

	By: /s/ John C. Rutherford
	Name: John C. Rutherford
	Title: Managing Member


	Parthenon Investors II, L.P.

	By: PCap Partners II, LLC, as general partner

	By: PCap II, LLC, as general partner

	By: /s/ John C. Rutherford
	Name: John C. Rutherford
	Title: Managing Member


	PCap Partners II, LLC

	By: PCap II, LLC, as general partner

	By: /s/ John C. Rutherford
	Name: John C. Rutherford
	Title: Managing Member

CUSIP No. 88650Q100

	PCap II, LLC


	By: /s/ John C. Rutherford
	Name: John C. Rutherford
	Title: Managing Member


	/s/ John C. Rutherford
	Name: John C. Rutherford


	/s/ Ernest K. Jacquet
	Name: Ernest K. Jacquet

CUSIP No. 88650Q100

INDEX TO EXHIBITS

Exhibit Number		Document
99.1		Joint Filing Agreement.

99.2		Proxy Agreement, dated January 8, 2010, by and among Giant Investment, LLC, Parthenon Investors II, L.P., PCap Partners II, LLC, PCap II, LLC, John C. Rutherford and Tier Technologies, Inc.

99.3		Irrevocable Proxy, dated January 8, 2010, by and among Giant Investment, LLC, Parthenon Investors II, L.P., PCap Partners II, LLC, PCap II, LLC and John C. Rutherford.

EX-99.1 2 a10-1660_1ex99d1.htm EX-99.1

Exhibit 99.1

SCHEDULE 13D JOINT FILING AGREEMENT

In accordance with the requirements of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, and subject to the limitations set forth therein, the parties set forth below agree to jointly file the Schedule 13D to which this joint filing agreement is attached, and have duly executed this joint filing agreement as of the date set forth below.

Dated: January 15, 2010

		Giant Investment, LLC

		By: Parthenon Investors II, L.P.,
		as managing member

		By: PCap Partners II, LLC,
		as general partner

		By: PCap II, LLC,
		as general partner

		By: /s/ John C. Rutherford
		Name: John C. Rutherford
		Title: Managing Member


		Parthenon Investors II, L.P.

		By: PCap Partners II, LLC,
		as general partner

		By: PCap II, LLC,
		as general partner

		By: /s/ John C. Rutherford
		Name: John C. Rutherford
		Title: Managing Member

		PCap Partners II, LLC

		By: PCap II, LLC,
		as general partner

		By: /s/ John C. Rutherford
		Name: John C. Rutherford
		Title: Managing Member


		PCap II, LLC


		By: /s/ John C. Rutherford
		Name: John C. Rutherford
		Title: Managing Member


		/s/ John C. Rutherford
		Name: John C. Rutherford


		/s/ Ernest K. Jacquet
		Name: Ernest K. Jacquet

EX-99.2 3 a10-1660_1ex99d2.htm EX-99.2

Exhibit 99.2

AGREEMENT

This Agreement dated this 8th day of January, 2010 (this “Agreement”), is made by and among Giant Investment, LLC, a Delaware limited liability company (“Giant”), Parthenon Investors II, L.P., a Delaware limited partnership (“Parthenon”), PCap Partners II, LLC, a Delaware limited liability company (“PCap Partners”), PCap II, LLC, a Delaware limited liability company (“PCap II”), and John C. Rutherford (the foregoing individuals and entities being collectively referred to herein as the “Parthenon Group”), and Tier Technologies, Inc., a Delaware corporation (the “Company”).

WHEREAS, the Parthenon Group nominated two individuals for election to the Company’s Board of Directors (the “Board”) at the 2009 annual meeting of stockholders of the Company, and one of the Parthenon Group’s nominees, Zachary F. Sadek (“Mr. Sadek”), was elected to the Board at that meeting; and

WHEREAS, the Company and the members of the Parthenon Group have determined that the interests of the Company and its stockholders would be best served by entering into this Agreement;

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties, and agreements hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, hereby agree as follows:

Section 1. Board Composition. The Board shall (i) nominate Mr. Sadek (the “Parthenon Nominee”) for re-election as a director of the Company at the 2010 Annual Meeting, (ii) recommend that the stockholders of the Company at the 2010 Annual Meeting vote to elect the Parthenon Nominee as a director, and (iii) use its reasonable best efforts (which shall include the solicitation of proxies and the voting of shares for which the Board’s designees hold proxies) to ensure that the Parthenon Nominee is elected at the 2010 Annual Meeting; provided, however, that the Board and the holders of proxies granted to the Board’s designees shall not be required to cast, or cause to be cast, in the aggregate more votes for the election of the Parthenon Nominee than may be validly cast pursuant to the Proxy (which term is defined below), plus, if and only if the votes entitled to be cast pursuant to the Proxy are insufficient to ensure the election of the Parthenon Nominee to the Board at the 2010 Annual Meeting, and if and only if the Proxy validly permits the Proxyholders (which term is defined below) to vote an aggregate of at least 1,799,321 shares of Common Stock at the 2010 Annual Meeting, then up to such additional number of votes as shall be necessary to ensure the election of the Parthenon Nominee to the Board at the 2010 Annual Meeting.

Section 2. Voting; Proxy; Nominee Information.

(a) The Parthenon Group and their affiliates (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (“Affiliates”) shall (i) cause all shares of the Voting Securities (as defined below) that they beneficially own (as determined by Rule 13d-3 of the Exchange Act) as of the record date for the 2010 Annual Meeting to be present for quorum purposes at the 2010 Annual Meeting, (ii) not support or participate in any “withhold the vote” or similar campaign with respect to any meeting to elect directors of the Company, and, in the event of any such campaign, will vote their shares in accordance with this

paragraph, and (iii) not vote any shares of Voting Securities or grant any consent in violation of the agreements set forth in Section 3(a). In furtherance of the obligations set forth in this subsection and in Section 3(a), the members of the Parthenon Group have executed and delivered to the Company an irrevocable proxy in the form of Exhibit A (the “Proxy”) constituting and appointing the individuals named therein, and the individuals constituted and appointed pursuant to the power of substitution therein, as proxy holders (such persons, the “Proxyholders”) with respect to all Voting Securities beneficially owned by the Parthenon Group as of the date hereof or hereafter acquired. The members of the Parthenon Group hereby authorize the Proxyholders to cast the votes entitled to be cast pursuant to the Proxy and to cumulate such votes in the Proxyholders’ discretion in favor of the election of any person at the 2010 Annual Meeting (A) nominated by the Board and serving on the Board as of the date hereof and/or (B) nominated by the Board in accordance with the Board’s nomination procedures in effect on the date hereof and for whom the members of the Parthenon Group have specifically authorized the Proxyholders to vote; provided, that, subject to the limitation in the proviso to Section 1, the Proxyholders shall cause to be cast such number of votes (including those entitled to be cast pursuant to the Proxy) in favor of the election of the Parthenon Nominee to the Board that is required to ensure the election of the Parthenon Nominee to the Board at the 2010 Annual Meeting. The Parthenon Group shall take such actions as the Company may reasonably request, including making timely requests of the record holder of and the intermediaries through which the Parthenon Group beneficially owns Voting Securities and taking all other actions necessary to obtain a “legal proxy,” to permit the Proxyholders to exercise the rights purported to be conveyed by the Proxy.

(b) To facilitate the voting of any Voting Securities beneficially owned by the Parthenon Group, or the granting of any consent with respect thereto, in any matter other than a matter subject to Sections 2(a) and 3(a), the members of the Parthenon Group shall provide written instructions to the Proxyholders no less than five Business Days prior to the 2010 Annual Meeting, and the Proxyholders shall vote such Voting Securities in accordance with such written instructions on any matter other than a matter subject to Section 2(a) or Section 3(a).

(c) The Parthenon Group shall promptly provide to the Company any information reasonably requested by the Company for inclusion in any filings or submissions required to be made by the Company with or to the U.S. Securities and Exchange Commission (the “SEC”).

Section 3. Additional Agreements.

(a) For the period commencing on the date hereof and ending on the Business Day immediately following the conclusion of the 2010 Annual Meeting, including any adjournments or postponements thereof (the “Termination Date”), each member of the Parthenon Group will not, and will cause each of its respective Affiliates, directors, officers, employees, agents, consultants, advisors, and other representatives, including legal counsel, accountants, and financial advisors (collectively, “Representatives”) not to, do any of the following, directly or indirectly, unless they have obtained the prior written consent of the Board:

(i) (A) engage, or in any way participate, directly or indirectly, in any “solicitation” (as such term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) of proxies or consents in any “election contest” with respect to the Company’s

directors (regardless of whether it involves the election or removal of directors of the Company), (B) seek to advise, encourage, or influence any Person with respect to the voting of any voting securities of the Company in any “election contest” with respect to the Company’s directors (regardless of whether it involves the election, removal of, or withholding votes for directors of the Company), (C) initiate, propose, or otherwise “solicit” (as such term is defined in Rule 14a-1(l) promulgated by the SEC under the Exchange Act) stockholders of the Company for the approval of stockholder proposals in connection with the election or removal of or withholding votes for directors of the Company, or (D) induce or attempt to induce any other Person to initiate any such stockholder proposal;

(ii) in connection with any “election contest” with respect to the Company’s directors (regardless of whether it involves the election or removal of or withholding votes for directors of the Company), form, join, or in any way participate in a partnership, syndicate, or other group, including any “group” as defined under Section 13(d)(3) of the Exchange Act, with respect to any voting securities of the Company, other than a “group” that only includes members who are currently identified as Reporting Persons in the Parthenon Group’s Schedule 13D filings (or Affiliates thereof);

(iii) seek, alone or in concert with others, (A) to call a meeting of stockholders or solicit consents from stockholders, or conduct a nonbinding referendum of stockholders, related to the composition of the Board, (B) to obtain representation on the Board except as otherwise expressly permitted in this Agreement, or (C) to effect the removal of any member of the Board;

(iv) sell, offer to sell, or agree to sell, all or substantially all, directly or indirectly, through swap or hedging transactions or otherwise, any voting rights decoupled from the underlying Voting Securities held by the Parthenon Group to any Third Party (as defined below);

(v) enter into any discussions, negotiations, agreements, or understandings with any Third Party with respect to the foregoing, or advise, assist, encourage, or seek to persuade any Third Party to take any action with respect to any of the foregoing, or otherwise take or cause any action inconsistent with any of the foregoing; or

(vi) request, directly or indirectly, any amendment or waiver of any provision of this Section 3(a) (including this clause (vi)) by the Company or any of its Representatives.

(b) For the period commencing on the date hereof and ending on the Termination Date, no member of the Parthenon Group shall sell, transfer, or otherwise dispose of (including by merger or otherwise by operation of law) beneficial ownership of any Voting Securities, unless the transferee thereof executes an irrevocable proxy in form and substance satisfactory to the Company, and takes such other actions as the Company may reasonably request, to permit the Proxyholders to exercise all voting and consent rights with respect to such Voting Securities through the Termination Date.

(c) The Company shall not increase the number of directors constituting the entire Board to a number greater than nine.

Section 4. Representations and Warranties.

(a) The members of the Parthenon Group represent and warrant, jointly and severally, as follows:

(i) Each member of the Parthenon Group has the power and authority to execute, deliver, and carry out the terms and provisions of this Agreement and the Proxy and to consummate the transactions contemplated hereby and thereby.

(ii) Each of this Agreement and the Proxy has been duly and validly authorized, executed, and delivered by each member of the Parthenon Group, constitutes a valid and binding obligation and agreement of each such member, and is enforceable against each such member in accordance with its terms.

(iii) The members of the Parthenon Group, together with their Affiliates, beneficially own, directly or indirectly, an aggregate of 1,799,321 shares of Common Stock, and such shares of Common Stock constitute all of the Voting Securities of the Company beneficially owned by the members of the Parthenon Group and their Affiliates.

(iv) Mr. Sadek is “independent” under the NASDAQ Stock Market, Inc. listing standards (other than with respect to any opinion of the Company’s board of directors referenced therein, as to which the Parthenon Group makes no representation) and Rule 10A-3 of the Exchange Act.

(v) The information provided by the Parthenon Group with respect to Mr. Sadek for inclusion in any filings or submissions by the Company with or to the SEC (A) shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (B) shall not contain any statement which, at the time and in the light of the circumstances under which such statement is made, will be false or misleading with respect to any material fact, and (C) shall not omit to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier filing with or submission to the SEC.

(b) The Company hereby represents and warrants as follows:

(i) The Company has the power and authority to execute, deliver, and carry out the terms and provisions of this Agreement and to consummate the transactions contemplated hereby.

(ii) This Agreement has been duly and validly authorized, executed, and delivered by the Company, constitutes a valid and binding obligation and agreement of the Company, and is enforceable against the Company in accordance with its terms.

Section 5. Specific Performance. Each of the members of the Parthenon Group, on the one hand, and the Company, on the other hand, acknowledges and agrees that irreparable injury to the other party hereto would occur in the event any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached, and that such injury would not be adequately compensable in damages. It is accordingly agreed that the

members of the Parthenon Group, on the one hand, and the Company, on the other hand, shall each be entitled to specific enforcement of, and injunctive relief to prevent any violation of, the terms hereof and the other party hereto will not take any action, directly or indirectly, in opposition to the party seeking relief on the grounds that any other remedy or relief is available at law or in equity, and each party further agrees to waive any requirement for the security or posting of any bond in connection with such remedy.

Section 6. Certain Definitions. As used in this Agreement, (a) the term “Common Stock” shall mean the common stock of the Company, par value $0.01 per share; (b) the term “Person” shall mean any individual, partnership (whether general or limited), corporation, limited liability company, joint venture, or other entity, group, syndicate, trust, government or agency thereof, or any other association or entity whatsoever; (c) the term “Third Party” shall mean any person or entity that is not a party to this Agreement, a member of the Board, a director or officer of the Company, or legal counsel to any party to this Agreement; (d) the term “Voting Securities” shall mean the Common Stock and any other securities of the Company entitled to vote in the election of directors, or securities convertible into, or exercisable or exchangeable for Common Stock or other securities entitled to vote in the election of directors, whether or not subject to the passage of time, contingencies, contractual restrictions, or any combination thereof (including any derivative securities representing interests in Common Stock); (e) the term “Business Day” shall mean each Monday, Tuesday, Wednesday, Thursday, and Friday that is not a day on which banking institutions in New York City are generally authorized or obligated by law or executive order to close; and (f) “beneficial ownership” is determined pursuant to Rule 13d-3 of the Exchange Act, and the terms “beneficially own,” “beneficial owner,” “beneficial ownership,” and variations thereof have the meanings determined in accordance with Rule 13d-3 of the Exchange Act.

Section 7. Termination. The obligations in Sections 1, 2, and 3 shall terminate on the Termination Date.

Section 8. No Waiver. Any waiver by any party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasion shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement.

Section 9. Successors and Assigns; Assignment. All the terms and provisions of this Agreement shall inure to the benefit of, and shall be enforceable by, the successors and assigns of each of the parties hereto. No party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of the other parties.

Section 10. Entire Agreement; Amendments; Interpretation and Construction.

(a) This Agreement contains the entire understanding of the parties with respect to its subject matter. There are no restrictions, agreements, promises, representations, warranties, covenants, or other undertakings other than those expressly set forth in this Agreement.

(b) This Agreement may be amended only by a written instrument duly executed by the Company and the Parthenon Group or their respective successors or assigns.

(c) Each of the parties hereto acknowledges that it has been represented by counsel of its choice throughout all negotiations that have preceded the execution of this Agreement, and that it has executed the same with the advice of said counsel. Each party and its counsel cooperated and participated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto exchanged among the parties shall be deemed the work product of all of the parties and may not be construed against any party by reason of its drafting or preparation. Accordingly, any rule of law or any legal decision that would require interpretation of any ambiguities in this Agreement against any party that drafted or prepared it is of no application and is hereby expressly waived by each of the parties hereto, and any controversy over interpretations of this Agreement shall be decided without regard to events of drafting or preparation.

(d) When reference is made in this Agreement to a Section or subsection, such reference shall be to a Section or subsection of this Agreement unless otherwise indicated. Whenever the words “include”, “includes,” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” The words “hereof,” “herein,” “hereby,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

Section 11. Headings. The section headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

Section 12. Notices. All notices, demands and other communications to be given or delivered under, or by reason of, the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt), (b) upon sending (on the date sent if a Business Day, or if not sent on a Business Day, the first Business Day thereafter) if sent by facsimile to the facsimile number below, with electronic confirmation of sending, provided, however, that in each case notice by facsimile shall be deemed to have been given only if a copy is sent within one Business Day thereafter by registered mail, return receipt requested, in each case to the appropriate mailing addresses set forth below, (c) one (1) Business Day after being sent by a nationally recognized overnight carrier to the addresses set forth below, or (d) when actually delivered if sent by any other method that results in delivery (with written confirmation of receipt):

If to the Parthenon Group (or any member thereof), to:

Giant Investment LLC
c/o Parthenon Capital LLC
265 Franklin Street, 18th Floor
Boston, MA 02110
Attention: Brian Golson
Facsimile: 617-960-4010

If to the Company, to:

Tier Technologies, Inc.
10780 Parkridge Blvd., 4th floor
Reston, VA 20191
Attention: Chief Executive Officer
Facsimile: 571-382-1030

in each case, or to such other address as the Person to whom notice is given may have previously furnished to the others in writing in the manner set forth above.

Section 13. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without reference to the conflict of laws principles thereof.

Section 14. Consent to Jurisdiction. The parties hereby irrevocably and unconditionally consent to the exclusive jurisdiction of the courts of the State of Delaware located in Wilmington, Delaware for any action, suit, or proceeding arising out of or relating to this Agreement. The parties further hereby irrevocably and unconditionally waive any objection to the laying of venue of any action, suit, or proceeding arising out of or relating to this Agreement in such courts and hereby further irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such action, suit, or proceeding brought in any such court has been brought in an inconvenient forum.

Section 15. Counterparts. This Agreement may be executed in counterparts and may be exchanged by PDF or facsimile, each of which shall be an original, but all of which together shall constitute one and the same Agreement.

Section 16. Severability. If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired, or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such an occurrence, the parties shall negotiate in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

Section 17. No Third Party Beneficiaries. This Agreement is solely for the benefit of the parties hereto and is not enforceable by any other Person.

[Remainder of page intentionally left blank.]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

	GIANT INVESTMENT, LLC

	By:	Parthenon Investors II, L.P.,
		as managing member

	By:	PCap Partners II, LLC,
		as general partner

	By:	PCap II, LLC,
		as general partner


	By:	/s/ John C. Rutherford
	Name:	John C. Rutherford
	Title:	Managing Member


	PARTHENON INVESTORS II, L.P.

	By:	PCap Partners II, LLC,
		as general partner

	By:	PCap II, LLC,
		as general partner

	By:	/s/ John C. Rutherford
	Name:	John C. Rutherford
	Title:	Managing Member


	PCAP PARTNERS II, LLC

	By:	PCap II, LLC,
		as general partner


	By:	/s/ John C. Rutherford
	Name:	John C. Rutherford
	Title:	Managing Member


	PCAP II, LLC


	By:	/s/ John C. Rutherford
	Name:	John C. Rutherford
	Title:	Managing Member

	By:	/s/ John C. Rutherford
	Name:	John C. Rutherford


	TIER TECHNOLOGIES, INC.


	By:	/s/ Ronald L. Rossetti
	Name:	Ronald L. Rossetti
	Title:	Chief Executive Officer and Chairman of the Board

Exhibit A

IRREVOCABLE PROXY

Each of the undersigned holders of shares of capital stock of Tier Technologies, Inc., a Delaware corporation (the “Company”), hereby constitutes and appoints Ronald W. Johnston and Keith S. Omsberg and each of them, with full powers of substitution, as the undersigned’s proxy for and on the undersigned’s behalf, to act, vote, execute written consents, and/or waive any and all notice requirements which may be applicable under the Company’s Certificate of Incorporation (as the same is now in effect or may hereafter be amended, the “Certificate of Incorporation”) or otherwise, in each case with respect to all of the shares of capital stock of the Company now or hereafter beneficially owned by the undersigned during the Term (as defined below) (all such securities collectively, the “Proxy Shares”), as fully and to the same extent and effect as the undersigned itself might do, in accordance with the terms and conditions of the Agreement of even date herewith among the undersigned and the Company (the “Agreement”). Each of the undersigned agrees that any shares of capital stock or voting securities of the Company that the undersigned may purchase or with respect to which the undersigned otherwise acquires beneficial ownership during the Term shall be subject to the terms and conditions of this Irrevocable Proxy and shall constitute Proxy Shares.

Upon execution of this Irrevocable Proxy, each of the undersigned hereby revokes any and all prior proxies or powers of attorney given by the undersigned with respect to the matters as to which this Irrevocable Proxy relates and agrees not to grant any subsequent proxies or powers of attorney with respect to such matters during the Term and not to provide voting instructions with respect to the Proxy Shares in any manner inconsistent with this Irrevocable Proxy or the Agreement during the Term. This Irrevocable Proxy is irrevocable (to the extent provided in the General Corporation Law of the State of Delaware, 8 Del. Laws ch.1, § 101, et seq., as it may be amended from time to time) for the duration of the Term, is coupled with an interest, and is granted in consideration of the benefits to the undersigned arising from the Agreement. All authority herein conferred shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors, and assigns of the undersigned.

This Irrevocable Proxy is effective as of the date written below and will continue in force until the business day immediately following the conclusion of the 2010 annual meeting of stockholders of the Company, including any adjournments or postponements thereof (the “Term”).

IN WITNESS WHEREOF, the undersigned have executed this Irrevocable Proxy, effective as of the 8th day of January, 2010.

PCAP PARTNERS II, LLC		PCAP II, LLC

By:	PCap II, LLC,
	as general partner	By:
		Name:
		Title:
By:
Name:
Title:

A-1

GIANT INVESTMENT, LLC		PARTHENON INVESTORS II, L.P.

By:	Parthenon Investors II, L.P.,	By:	PCap Partners II, LLC,
	as managing member		as general partner

By:	PCap Partners II, LLC,	By:	PCap II, LLC,
	as general partner		as general partner

By:	PCap II, LLC,
	as general partner	By:
		Name:
		Title:
By:
Name:
Title:


		By:
		Name: John C. Rutherford

A-2

EX-99.3 4 a10-1660_1ex99d3.htm EX-99.3

Exhibit 99.3

IRREVOCABLE PROXY

Each of the undersigned holders of shares of capital stock of Tier Technologies, Inc., a Delaware corporation (the “Company”), hereby constitutes and appoints Ronald W. Johnston and Keith S. Omsberg and each of them, with full powers of substitution, as the undersigned’s proxy for and on the undersigned’s behalf, to act, vote, execute written consents, and/or waive any and all notice requirements which may be applicable under the Company’s Certificate of Incorporation (as the same is now in effect or may hereafter be amended, the “Certificate of Incorporation”) or otherwise, in each case with respect to all of the shares of capital stock of the Company now or hereafter beneficially owned by the undersigned during the Term (as defined below) (all such securities collectively, the “Proxy Shares”), as fully and to the same extent and effect as the undersigned itself might do, in accordance with the terms and conditions of the Agreement of even date herewith among the undersigned and the Company (the “Agreement”). Each of the undersigned agrees that any shares of capital stock or voting securities of the Company that the undersigned may purchase or with respect to which the undersigned otherwise acquires beneficial ownership during the Term shall be subject to the terms and conditions of this Irrevocable Proxy and shall constitute Proxy Shares.

Upon execution of this Irrevocable Proxy, each of the undersigned hereby revokes any and all prior proxies or powers of attorney given by the undersigned with respect to the matters as to which this Irrevocable Proxy relates and agrees not to grant any subsequent proxies or powers of attorney with respect to such matters during the Term and not to provide voting instructions with respect to the Proxy Shares in any manner inconsistent with this Irrevocable Proxy or the Agreement during the Term. This Irrevocable Proxy is irrevocable (to the extent provided in the General Corporation Law of the State of Delaware, 8 Del. Laws ch.1, § 101, et seq., as it may be amended from time to time) for the duration of the Term, is coupled with an interest, and is granted in consideration of the benefits to the undersigned arising from the Agreement. All authority herein conferred shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors, and assigns of the undersigned.

IN WITNESS WHEREOF, the undersigned have executed this Irrevocable Proxy, effective as of the 8th day of January, 2010.

PCAP PARTNERS II, LLC		PCAP II, LLC

By:	PCap II, LLC,
	as general partner	By:	/s/ John C. Rutherford
		Name: John C. Rutherford
		Title: Managing Member
By:	/s/ John C. Rutherford
Name: John C. Rutherford
Title: Managing Member

GIANT INVESTMENT, LLC		PARTHENON INVESTORS II, L.P.

By:	Parthenon Investors II, L.P.,	By:	PCap Partners II, LLC,
	as managing member		as general partner

By:	PCap Partners II, LLC,	By:	PCap II, LLC,
	as general partner		as general partner

By:	PCap II, LLC,
	as general partner	By:	/s/ John C. Rutherford
		Name: John C. Rutherford
		Title: Managing Member
By:	/s/ John C. Rutherford
Name: John C. Rutherford
Title: Managing Member


		By:	/s/ John C. Rutherford
		Name: John C. Rutherford