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Employment Agreement - Tier Technologies Inc. and James L. Bildner

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                SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
                ------------------------------------------------
                                        
     SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the "Agreement") dated as
of February 16, 1998 by and between TIER TECHNOLOGIES, INC., a California
corporation (the "Company") and JAMES L. BILDNER ("Bildner").

     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
            ----------

     1.1.   Position.  During the Term (as hereinafter defined) of this 
            --------                                             
Agreement and subject to the terms and conditions set forth herein, the Company
agrees to employ Bildner as its Chairman of the Board and Chief Executive
Officer, reporting only to the Board of Directors of the Company.

     1.2.   Election to Office.  During the Term of this Agreement, the Company
            ------------------                                                 
shall use its best efforts to sustain and continue Bildner's position and
designation as Chairman of the Board and Chief Executive Officer.

     1.3.   Fulfillment of Duties.  As long as the Company sustains and
            ---------------------                                      
continues Bildner's position and designation as Chairman and Chief Executive
Officer of the Company, Bildner 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 Bildner 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, Bildner will perform
            --------                                                          
his duties and services at such locations as he shall deem appropriate, except
that Bildner agrees to make such business trips to the Company's principal
executive offices and to other locations as may be reasonable and necessary in
the performance of his services hereunder.

     2.     COMPENSATION AND BENEFITS
            -------------------------

     2.1.   Salary.  In consideration of and as compensation for the services
            ------                                                           
agreed to be performed by Bildner hereunder, the Company agrees to pay Bildner
during the Term of this Agreement a base salary (the "Base Salary") of not less
than $455,000 per year, payable bi-monthly in accordance with the Company's
regular payroll practices.  The Company may review Bildner's Base Salary and
other compensation (including bonuses and incentive compensation) from time to
time during the Term of 

                                       1
<PAGE>
 
this Agreement and, at the recommendation of the Compensation Committee of the
Board of Directors of the Company (the "Committee"), may increase his Base
Salary or other compensation (including bonuses and incentive compensation) from
time to time. Any increase in Base Salary or other compensation (including
bonuses or incentive compensation) shall in no way limit or reduce any other
obligation of the Company hereunder and, once established at an increased rate,
Bildner's Base Salary hereunder shall not be reduced.

     2.2  Incentive Compensation.  During the term of this Agreement, in
          ----------------------                                        
addition to the Base Salary provided in Section 2.1 above, Bildner shall be
eligible to receive additional incentive compensation, in an amount not to
exceed 85% of Bildner's then applicable Base Salary, upon achievement of
performance or other goals to be established from time to time by the Committee.
Such incentive compensation may be payable in cash, or in stock, stock options
or other stock based awards, or in any combination of cash and stock based
awards, as shall be determined by the Committee.

     2.3  Participation in Benefit Plans.  During the Term of this Agreement,
          ------------------------------                                     
Bildner 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 A) 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.

     2.4  Reimbursement of Expenses.  The Company will reimburse Bildner for all
          -------------------------                                             
business expenses, including, without limitation, traveling, entertainment and
similar expenses, incurred by Bildner 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 Bildner 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.

     2.5  Vacation and Sick Leave.  During the Term of this Agreement, Bildner
          -----------------------                                             
will be entitled to three weeks of paid vacation per year.  Bildner shall also
be entitled to paid sick leave in accordance with the policy applicable to the
other senior executives of the Company.

     2.6  Relocation Loan and Housing Allowance.
          ------------------------------------- 

          (a) Concurrent with the execution of the First Amended and Restated
                                                                             
Agreement of December 31, 1996, the Company funded an unsecured loan to Bildner
in the principal amount of $50,000 bearing simple interest at 5.75% per annum
(the "Relocation Loan").  Repayment of the principal amount of the Relocation
Loan and any interest payable thereon shall continue to be forgiven, as follows:
(i) on a pro rata 

                                       2
<PAGE>
 
basis, during Bildner's employment with the Company, upon the close of business
on the last business day of each month commencing with the month ending December
31, 1996 and ending November 30, 1999 and (ii) in its entirety under the
circumstances set forth in Section 4.2 hereof. In the event that Bildner's
employment under this Agreement is terminated by Bildner without Good Reason (as
defined herein) or for Cause as defined in Section 4.1(iii)(C), Bildner shall
pay the total of unforgiven principal and interest due under the Relocation Loan
within ninety (90) days of the occurrence of such event. The Relocation Loan
shall be evidenced by a promissory note in form acceptable to Bildner and the
Company and consistent with the terms of this Agreement.

            (b) During each month of his employment until the month ending
December 31, 1999, Bildner shall be entitled to receive a housing allowance of
$2,750 per month, which amount may be issued on a monthly basis, or at the
option of Bildner, in advance (the "Housing Allowance").  If the Housing
Allowance is paid in advance, and thereafter Mr. Bildner's employment hereunder
shall terminate for any reason whatsoever before December 31, 1999, Mr. Bildner
shall pay the Company, within ninety (90) days of such termination, an amount
equal to $2,750 for each complete month remaining from the date of his
termination to the month ending on December 31, 1999.

     3.     TERM
            ----

     3.1.   Term.  The "Term" of employment under this Agreement means the 
            ----                                   
period commencing on December 31, 1996 and expiring on August 1, 2001 or the
earlier termination hereof pursuant to Section 4.1.

     4.     TERMINATION OF EMPLOYMENT
            -------------------------

            4.1.    Events of Termination.  Upon the occurrence of any of the
                    ---------------------                                    
events described in this Section 4.1 during the Term of this Agreement,
Bildner's employment hereunder shall terminate and Bildner shall be entitled to
the benefits provided in Section 4.2 hereof.

                    (i)     Termination of Bildner's employment with the Company
due to Bildner's death.

                    (ii)    If, as a result of Bildner's incapacity due to
physical or mental illness, injury or disability, Bildner 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 Bildner's employment for
"Disability." "Absent from his duties" means, for the purposes of this Section
4.1(ii), that Bildner is devoting less than 40 hours per week to his duties
under this Agreement.

                                       3
<PAGE>
 
               (iii)   The Company shall be entitled to terminate Bildner's
employment for Cause.  For purposes of this Agreement, "Cause" shall mean:

               (A)     the willful and continued failure by Bildner 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 Bildner has not substantially performed his duties in good faith;

               (B)     the willful engaging by Bildner in conduct which causes
          material harm to the Company, monetarily or otherwise; or

               (C)     Bildner's 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 Bildner's 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, Bildner 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 Bildner 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)  Bildner shall be entitled to terminate his employment for Good
Reason.  For purposes of this Agreement, "Good Reason" shall, without Bildner's
express written consent, mean:

                (A)  the assignment to Bildner of any duties substantially
          inconsistent with his status as Chairman and Chief Executive Officer
          of the Company;

                (B)  a reduction by the Company in Bildner's Base Salary as in
          effect on the date hereof or as the same may be increased from time to
          time;

                                       4
<PAGE>
 
                (C)  the relocation of the Company's principal executive offices
          to a location not approved by Bildner or the Company's requiring
          Bildner to be based in a location not approved by Bildner;

                (D)  the failure by the Company to continue in effect any
          pension, health, compensation or other benefit plan in which Bildner
          participates (including those listed on Exhibit A), 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 Bildner),
          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 Bildner 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 Bildner's employment which is
          not effected pursuant to a Notice of Termination satisfying the
          requirements of 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.

                Bildner's 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 Bildner's duties hereunder by another officer of
          the Company, but any such arrangement shall not affect or in any way
          diminish Bildner's rights hereunder.

          (v)   Any purported termination by the Company or by Bildner 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 Bildner 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 incentive compensation, bonus, option, benefit and insurance plans in which
he was participating when the notice giving rise to the dispute was given (or
provide Bildner with benefits substantially 

                                       5
<PAGE>
 
similar, as determined by an employee benefit consultant of national standing
selected by the Company and reasonably satisfactory to Bildner, 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 Bildner terminated his
employment for other than Good Reason or the Company rightfully terminated
Bildner's employment for Cause, Bildner shall reimburse the Company for all
amounts paid to him under this Section 4.1(vi) (less any amounts determined to
be owing to Bildner under any other provision of this Agreement), with interest
thereon calculated at a rate of six percent per annum.

     4.2.    Effect of Termination.
             --------------------- 

             (i) Upon the termination of Bildner's employment as a result of his
Disability, Bildner 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 Bildner could have become eligible during the year in which such
          termination occurs.

                 (B) any 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 any then outstanding principal amount plus
          accrued interest of the Relocation Loan in its entirety.

                 (D) the indemnity described in Section 4.2(vi) hereto.

          (ii)  Upon the termination of Bildner's employment as a result of his
death,  Bildner's 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

                                       6
<PAGE>
 
          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 Bildner could have become eligible during the year in which such
          termination occurs.

                 (B) any 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 any then outstanding principal amount plus
          accrued interest of the Relocation Loan in its entirety.

                 (D) the indemnity described in Section 4.2(vi) hereto.

          (iii)   Subject to Section 4.l (vi) hereof: (a) if Bildner's
employment shall be terminated for Cause as described in Section 4.1(iii)(A) or
(B) hereto, the Company shall pay Bildner 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 Bildner's employment shall be terminated for Cause as described in Section
4.1(iii)(C) hereto, the Company shall pay Bildner 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.  Upon any such termination
for Cause, the outstanding principal amount of the Relocation Loan plus accrued
interest shall be due and payable in full.

          (iv)   If Bildner's employment by the Company shall be terminated (a)
by the Company other than for Cause, Death or Disability, or (b) by Bildner for
Good Reason, then Bildner shall be entitled to the benefits provided below:

               (A) the Company shall pay Bildner, 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 Bildner's
          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 

                                       7
<PAGE>
 
          from the time it would have become payable; and (ii) one hundred
          percent (100%) of the maximum amount of incentive compensation for
          which Bildner could have become eligible during the year in which such
          termination occurs;

               (B)  any 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 then outstanding principal balance plus
          accrued interest of the Relocation Loan in its entirety.

               (D)  the indemnity described in Section 4.2(vi) hereto.

          (v)  Bildner 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 Bildner's employment for
any reason, the Company will take all necessary action to release Bildner from
any obligations under any guarantees by Bildner of the Company's corporate debt.
Bildner's 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 Bildner 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
           -------------------                                          
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 the facts and circumstances claimed to
provide a basis for termination of employment under the provision so indicated.

                                       8
<PAGE>
 
           (ii)  "Date of Termination" means (i) if employment is terminated for
Disability, thirty days after Notice of Termination is given (provided that
Bildner 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
           ----------

     5.1.  Assumption by Successors.  The Company shall require any successor
           ------------------------                                          
(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 Bildner 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
           -----------------------------------

     6.1.  Non-Competition.  During Bildner's employment by the Company
           ---------------                                             
hereunder and during the period of one year after the termination of Bildner's
employment hereunder by the Company for Cause or by Bildner for other than Good
Reason:

                                       9
<PAGE>
 
          (i)   Bildner 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.

          (ii)  Bildner 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.
           ------------------------ 

           (a)  Bildner 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, Bildner agrees to undertake the following obligations
with respect to such Confidential Information:

                (i)   Bildner agrees to keep any and all Confidential
          Information in trust for the use and benefit of the Company;

                (ii)  Bildner agrees that, except as required by Bildner's
          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) Bildner 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)  Bildner 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 Bildner.
          Bildner 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 Bildner 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 

                                       10
<PAGE>
 
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 Bildner's 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.

          In the event that Bildner 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, Bildner 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 Bildner's employment (for Cause or otherwise)
hereunder.  Bildner shall notify the Company of any disclosure required to be
made in connection with the preceding sentence as soon as practicable after
Bildner becomes aware of such required disclosure.


     7.     REMEDIES
            --------

     7.1.   Injunctive Relief.  Bildner acknowledges and agrees that the
            -----------------                                           
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, Bildner agrees that the Company
shall be entitled to an injunction, restraining order, or other equitable relief
from any court of competent jurisdiction, restraining Bildner 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
            -------------------                                          
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.

                                       11
<PAGE>
 
     8.     MISCELLANEOUS
            -------------

     8.1.   Notices.  Any written notice, required or permitted under this
            -------                                                       
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 Bildner may assign, transfer,
            ----------                                                        
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
            ----------------                                                  
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 Bildner.  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 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
            ------------                                                   
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
            ----------------------                                    
Agreement shall continue and survive the termination of this Agreement.

     8.6.   Applicable Law.  This Agreement and the rights and obligations of
            --------------                                                   
the Company and Bildner 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.

                                       12
<PAGE>
 
     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

                              The "Company"
                              TIER TECHNOLOGIES, INC.



                              By: /s/ George K. Ross
                                  -----------------------------
 
                              Title:  Executive Vice President, Chief 
                                      Financial Officer
                                     --------------------------
                              Address:   1350 Treat Blvd., Ste. 250
                                         Walnut Creek, CA  94596



                              "Bildner"



                               /s/ James L. Bildner
                              ---------------------------------
                              JAMES L. BILDNER
                              ADDRESS:   1350 TREAT BLVD., STE. 250
                                         WALNUT CREEK, CA  94596

                                       13
<PAGE>
 
                                   EXHIBIT A
                                        
                  Benefits for Bildner's Employment Agreement
                  -------------------------------------------
                                        
     1.    Group Term and Key Man 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