Buy-Sell Agreement - Tier Technologies Inc., James L. Bildner and William G. Barton
TIER TECHNOLOGIES, INC.
BUY-SELL AGREEMENT
THIS BUY-SELL AGREEMENT ("Agreement") is entered into as of
______________________ ___, 1997 between James L. Bildner ("Bildner") and
William G. Barton ("Barton").
RECITALS
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The holders of Class A Common Stock in Tier Technologies, Inc. (the
"Company") have created a voting trust (the "Trust") pursuant to the Voting
Trust Agreement of even date herewith (the "Voting Trust Agreement"). Bildner
and Barton (individually, a "Shareholder" and collectively, the "Shareholders"),
who are both trustees and beneficiaries of the Trust, seek to articulate, in the
form of this Agreement, procedures for the transfer of their Certificates (as
defined in the Voting Trust Agreement) in respect of shares of the Company
should such transfer become necessary or desirable.
NOW, THEREFORE, incorporating the foregoing Recitals and in
consideration of the mutual agreements and covenants contained herein, the
parties hereby agree as follows:
1.
APPLICABILITY
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1.1 Applicability. The terms and procedures set forth in this
Agreement shall apply to the transfer of Certificates either during life
("intervivos"), as set forth in Section 3, or at death, as set forth in Section
4.
2.
ENFORCEMENT
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2.1 Restriction on Transfer. To accomplish the purposes of this
Agreement and the Voting Trust Agreement, any transfer, sale, assignment,
hypothecation, encumbrance, or alienation, regardless of the manner,
circumstances, timing, or nature or such transfer, whether intervivos or at
death (collectively, "Transfer"), of any Certificate(s) is void and transfers no
right, title, or interest in or to those shares to the purported transferee,
buyer, assignee, pledgee, or encumbrance holder, except as specifically provided
herein.
2.2 Legend on Certificates. Each Certificate shall have the following
statement conspicuously printed on its face and each party shall cooperate in
the process of printing such statements:
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"The transfer, sale, assignment, hypothecation, encumbrance, or
alienation of this certificate is restricted by a Buy-Sell Agreement
dated ________, which may be inspected at the offices of the Company
during normal business hours. All of the terms and provisions of the
Buy-Sell Agreement are incorporated by this reference and made a part
of this certificate."
3.
INTERVIVOS TRANSFER
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3.1 Generally. The Articles of Incorporation of the Company provide
that certain Transfers shall cause Class A Common Stock to be converted to Class
B Common Stock (a "Conversion").
3.1.1 No Conversion. A Transfer of a Certificate that would not
result in a Conversion shall be permitted, with the terms of the Transfer to be
determined by the transferor and the transferee, in their sole discretion.
3.1.2 Conversion. An intervivos Transfer of a Certificate that
would result in Conversion shall be prohibited for 5 years from the date hereof.
After the expiration of 5 years from the date hereof, such a Transfer would be
permitted, subject to the right of first refusal discussed in Section 3.2
hereof.
3.1.3 Remain Subject. Any transferred Certificate shall remain
subject to this Agreement.
3.2 Right of First Refusal. Before either Shareholder makes an
intervivos Transfer of a Certificate which would result in Conversion, the other
shall have the opportunity to purchase the Certificate under the terms of this
Section 3.2. The party desiring to Transfer his Certificate (the "Transferring
Party") shall inform the other party (the "Non-Transferring Party") of his
intent to Transfer. The Non-Transferring Party shall have two (2) days to decide
whether to purchase the Certificate. If the Non-Transferring Party decides not
to purchase the Certificate, or fails to respond to the Transferring Party's
notice, then the Transferring Party may make an intervivos Transfer of his
Certificate subject to the terms of the Voting Trust Agreement. If the Non-
Transferring Party decides to purchase the Certificate, the terms of the
purchase shall be as provided in Sections 3.2.1 and 3.2.2.
3.2.1 Price. The purchase price for the Transfer described in
Section 3.2, stated on a per share of Class A Common Stock basis, shall be equal
to the market value of a share of Class B Common Stock of the Company on the
date that the Transferring Party notifies the Non-Transferring Party of his
intent to Transfer (pursuant to Section 3.2 hereof). The market value of the
Class B share shall be equal to the average of opening and closing values on the
day of the aforementioned notice. No premium or discount shall be taken for
differences in voting power between the Class A and Class B shares.
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3.2.2 Payment. Payment for the Transfer described in Section 3.2
shall be made within thirty (30) days of such Transfer, either in cash or with a
number of Class B Common Stock shares equal to the number of Class A Common
Stock shares represented by the transferred Certificate.
4.
TRANSFER AT DEATH
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4.1 Obligation to Purchase. Upon the death of either Shareholder, the
other (the "Survivor") shall have a fully recourse obligation to purchase the
Certificate of the deceased (the "Deceased"), under the terms set forth in this
Section 4.
4.2 Price. The purchase price for the Transfer described in Section
4.1, stated on a per share of Class A Common Stock basis, shall be equal to the
market value of a share of Class B Common Stock of the Company on the date of
the Deceased's death. The market value of the Class B share shall be equal to
the average of opening and closing values on the day of the aforementioned
notice. No premium or discount shall be taken for differences in voting power
between the Class A and Class B shares.
4.3 Payment. Payment for the Transfer described in Section 4.1 shall
be made as follows: As much of the purchase price as possible shall be paid in
cash, using solely the proceeds of the insurance policy described in Section 4.4
below. The remainder shall be paid within one hundred twenty (120) days of
death. The remainder may be paid (i) in cash; or (ii) with one share of Class B
Common Stock for each Class A Common Stock share represented by the transferred
Certificate, or any proportion of (i) and (ii).
4.4 Insurance. Each Shareholder shall obtain a 10-year level term
life insurance policy on the life of the other, in the amount of $5 million, for
the purpose of making the payment contemplated in Section 4.3 (individually, a
"Policy" and collectively, the "Policies"). Each Shareholder hereby consents to
the acquisition of such policies and agrees to cooperate in the acquisition and
administration of the policies. The details of the policies are set forth in
Exhibit A attached hereto.
4.5 Implementation. The following procedures shall apply to this
Section 4.
4.5.1 Beneficiary and Payment. Each Shareholder shall be the
named beneficiary and beneficial owner of the Policy on the life of the other
Shareholder, and shall make premium payments on such Policy to the appropriate
insurance company.
4.5.2 Transfers. The Shareholders agree that as long as this
Agreement is in effect, they will maintain the Policies and will not exercise
any of the rights, privileges, and benefits accruing under any policy they own
subject to this Agreement, nor will they Transfer any such policy.
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4.5.3 Delinquent Payment. The beneficial owner of each Policy
shall file with each insurance company insuring the life of a Shareholder under
this Agreement a request that copies of all delinquent payment notices be sent
to the insured Shareholder. If any premium is not paid in full on or before 10
days before it is due, the insured may pay the premium on behalf of the other
Shareholder. Payment by the insured shall be considered a loan to the other
Shareholder to be repaid on demand of the insured, with interest from the date
of payment at an annual rate equal to the maximum rate established by applicable
law as of such date.
4.5.4 Proceeds. On the death of either Shareholder, the Survivor
shall collect the proceeds of the Policy on the life of the Deceased and pay
those proceeds over to the authorized legal representative of the Deceased for
the purpose of the payment contemplated in Section 4.3. Any proceeds in excess
of the purchase price provided in Section 4.2 shall be paid to the estate of the
Deceased.
4.5.5 Release of Certificate. Once the full payment contemplated
by Section 4.3 has been made, the authorized legal representative of the
Deceased shall transfer the Certificate of the Deceased to the Survivor.
4.6 Death of Both Parties. Upon the death of the second to die of
Bildner and Barton, the Trust terminates and so shall any obligations under this
Agreement terminate.
5.
GENERAL PROVISIONS
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5.1 Notice. Any notice required by this Agreement shall be faxed or
mailed to the other party at the address shown, which notice shall, where the
party required to provide notice is deceased, be faxed or mailed by the party's
authorized legal representative.
James L. Bildner William G. Barton
Chairman President & COO
TIER Technologies, Inc. TIER Technologies, Inc.
1350 Treat Blvd., Ste. 250 1350 Treat Blvd., Ste. 250
Walnut Creek, CA 94596 Walnut Creek, CA 94596
510-937-3902 (Fax) 510-937-3752 (Fax)
5.2 Assurances. Each party will execute all certificates and other
documents and will do all such filing, recording, publishing and other acts as
the parties deem appropriate to comply with the requirements of law for the
execution and application of this Agreement.
5.3 Specific Performance. The parties recognize that irreparable injury
will result from a breach of any provision of this Agreement and that money
damages will be inadequate
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to fully remedy the injury. Accordingly, in the event of a breach or threatened
breach of one or more of the provisions of this Agreement, any party who may be
injured (in addition to any other remedies which may be available to that party)
will be entitled to one or more preliminary or permanent orders (i) restraining
and enjoining any act which would constitute a breach or (ii) compelling the
performance of any obligation which, if not performed, would constitute a
breach.
5.4 Complete Agreement. This Agreement supersedes all prior written and
oral statements by the parties with respect to the subject matter hereof,
including any prior representation, statement, condition or warranty. Any
modification of this Agreement must be in writing and be signed by all of the
parties.
5.5 Applicable Law. All questions concerning the construction, validity
and interpretation of this Agreement and the performance of the obligations
imposed by this Agreement will be governed by the laws of the State of
California.
5.6 Section Titles. The headings herein are inserted as a matter of
convenience only and do not define, limit or describe the scope of this
Agreement or the intent of the provisions hereof.
5.7 Binding Provisions. This Agreement is binding upon, and to the limited
extent specifically provided herein, inures to the benefit of, the parties
hereto and their respective heirs, executors, administrators, personal and legal
representatives, successors and assigns.
5.8 Terms. Common nouns and pronouns will be deemed to refer to the
masculine, feminine, neuter, singular and plural, as the identity of the person
may in the context require.
5.9 Separability of Provisions. Each provision of this Agreement will be
considered separable. If, for any reason, any provision or provisions herein are
determined to be invalid and contrary to any existing or future law, such
invalidity will not impair the operation of or affect those portions of this
Agreement which are valid.
5.10 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original and all of which, when
taken together, constitute one and the same document. The signature of any party
to any counterpart will be deemed a signature to, and may be appended to, any
other counterpart.
5.11 Termination. Any obligations under this Agreement shall terminate upon
the termination of the Trust.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
SHAREHOLDERS:
_________________________ ___________________________
James L. Bildner William G. Barton
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EXHIBIT A
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INSURANCE POLICIES
Exhibit A, Page 1