Exhibit 10.69
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (this "Agreement"), dated as of March 27, 2000, is
between TIER TECHNOLOGIES, INC. (the "Company") and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇").
WHEREAS, on February 28, 1997, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("▇▇▇▇▇▇") entered into a
promissory note payable to the Company in the amount of $939,800, due February
28, 2007 (the "First ▇▇▇▇▇▇ Note"), secured by shares of Common Stock of the
Company owned by ▇▇▇▇▇▇ pursuant to a pledge agreement dated as of February 28,
1997, as amended by the Amended and Restated Pledge Agreement dated as of August
1, 1997 (the "Pledge Agreement"); and
WHEREAS, ▇▇▇▇▇▇ and the Company amended and restated the First ▇▇▇▇▇▇ Note
and replaced it with a revised note (the "Revised First ▇▇▇▇▇▇ Note") and
amended and restated the Pledge Agreement (the "Second Amended and Restated
Pledge Agreement") in order to facilitate the operation of Section 11(b) thereof
and to secure the Revised First ▇▇▇▇▇▇ Note with Class A Common Stock
beneficially owned by ▇▇▇▇▇▇;
WHEREAS, ▇▇▇▇▇▇ and the Company amended and restated the Second Amended and
Restated Pledge Agreement (the "Third Amended and Restated Pledge Agreement") in
order to eliminate administrative burdens related to the structure of the Second
Amended and Restated Pledge Agreement;
WHEREAS, on February 28, 1997, ▇▇▇▇▇▇ entered into a promissory note
payable to the Company in the amount of $152,081, due February 28, 2007 (the
"Second ▇▇▇▇▇▇ Note");
WHEREAS, on July 15, 1997, ▇▇▇▇▇▇ entered into a promissory note payable to
the Company in the amount of $25,000, due July 15, 2007 (the "Third ▇▇▇▇▇▇ Note"
and together with the Revised First ▇▇▇▇▇▇ Note and the Second ▇▇▇▇▇▇ Note, the
"▇▇▇▇▇▇ Notes");
WHEREAS, pursuant to that certain Assignment and Assumption Agreement
("Assumption Agreement") dated of even date herewith between ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ and
the Company, ▇▇▇▇▇▇▇ has agreed to assume the ▇▇▇▇▇▇ Notes in exchange for
shares of Class A Common Stock of the Company held by ▇▇▇▇▇▇ and to secure the
▇▇▇▇▇▇ Notes with the Shares (as defined herein); and
WHEREAS, in connection with ▇▇▇▇▇▇▇'▇ assumption of the ▇▇▇▇▇▇ Notes,
▇▇▇▇▇▇▇ has also agreed to enter into this Pledge Agreement pursuant to the
terms hereunder.
NOW, THEREFORE, for good and valuable consideration and to secure the
payment of ▇▇▇▇▇▇▇'▇ indebtedness to the Company, the parties agree as follows:
1. ▇▇▇▇▇▇▇'▇ Indebtedness.
(a) In connection herewith ▇▇▇▇▇▇▇ has entered into the Assumption
Agreement and thereby has assumed ▇▇▇▇▇▇'▇ indebtedness under the ▇▇▇▇▇▇ Notes,
payable to the order of the Company.
1.
(b) Pursuant to the Assumption Agreement, the Company has cancelled the
▇▇▇▇▇▇ Notes, and ▇▇▇▇▇▇▇ has executed and delivered to the Company three
promissory notes in substantially the same form as the ▇▇▇▇▇▇ Notes (the "New
Notes").
(c) ▇▇▇▇▇▇▇ has executed the Assumption Agreement and is required to
secure the New Notes by a pledge of the Shares and delivery of this Pledge
Agreement.
(d) The number of shares of Class A Common Stock of the Company set forth
on Schedule A hereto, which are currently beneficially owned by ▇▇▇▇▇▇▇ (the
"Shares"), shall serve as the security for the New Notes.
2. Pledge. ▇▇▇▇▇▇▇ hereby pledges to the Company, and grants to the Company a
security interest in, the following (the "Pledged Collateral"): (i) the Shares
and the certificates representing the Shares; and (ii) securities of the Company
associated with the Shares issued in connection with any stock dividend or stock
split, or securities of the Company issued in connection with a
recapitalization, merger, reorganization or similar transaction.
3. Security for Obligations.
(a) This Agreement secures the payment of all of ▇▇▇▇▇▇▇'▇ present and
future obligations, duties and liabilities under the New Notes and under this
Agreement (all referred to as the "Obligations").
(b) This Agreement shall create a continuing security interest in the
Pledged Collateral and shall (i) remain in full force and effect until payment
in full of the Obligations; (ii) be binding upon ▇▇▇▇▇▇▇ and his successors and
assigns; and (iii) inure to the benefit of the Company and its successors,
transferees, and assigns. Notwithstanding anything to the contrary herein,
▇▇▇▇▇▇▇ shall have the right to reduce the number of Shares constituting the
Pledged Collateral from time to time whenever the fair market value of the
Shares are greater than the then outstanding balance of the New Notes, and the
Company shall promptly release all Shares other than that number of Shares
having a fair market value equal to the then outstanding balance of the New
Notes.
4. Delivery of Pledged Shares. All certificates or instruments representing
or evidencing the Shares shall be held by or on behalf of the Company under this
Agreement and shall be in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in blank, all
in form and substance satisfactory to the Company. If ▇▇▇▇▇▇▇ fails to perform
any Obligation contained in this Agreement, the Company may itself perform, or
cause performance of, that Obligation, and the expenses of the Company incurred
in connection with that performance shall be payable by ▇▇▇▇▇▇▇ under Section 9
hereto.
5. Representations and Warranties. ▇▇▇▇▇▇▇ represents and warrants as follows:
(a) ▇▇▇▇▇▇▇ is the beneficial owner of the Pledged Collateral free and
clear of any lien on the Pledged Collateral except for the security interest
created by this Agreement and the other terms and conditions set forth in the
Stock Option Agreements. The Pledged Collateral is held of record by the Tier
Technologies, Inc. Voting Trust.
2.
(b) The pledge of the Pledged Collateral under this Agreement creates a
valid and perfected first priority interest in the Pledged Collateral, securing
the payment of the Obligations.
(c) No authorization, approval, or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required either
(i) for the pledge by ▇▇▇▇▇▇▇ of the Pledged Collateral under this Agreement or
for the execution, delivery, or performance of this Agreement by ▇▇▇▇▇▇▇; or
(ii) for the exercise by the Company of the voting or other rights provided for
in this Agreement or the remedies in respect of the Pledged Collateral under
this Agreement (other than restrictions under any federal or state securities
law applicable to the offer or sale of unregistered securities).
6. Rights in Absence of Default.
(a) So long as there has been and is no Event of Default: (i) involving
failure to make the payment described in Section 2 of any of the New Notes, or
(ii) involving the voluntary placement by ▇▇▇▇▇▇▇ of a lien upon all or a
significant portion of the Pledged Collateral:
(i) ▇▇▇▇▇▇▇ shall be entitled to exercise any and all voting and
other consensual rights pertaining to any or all of the Shares, subject to any
other agreement to which the Shares may be subject.
(ii) Securities of the Company associated with the Shares issued in
connection with any stock dividend or stock split, or securities of the Company
issued in connection with a recapitalization, merger, reorganization or similar
transaction shall be immediately delivered to the Company as Pledged Collateral
in the same form as so received (with any necessary endorsement). Any other
dividends, distributions, or interest paid or payable in respect of, or
instruments and other property received, receivable, or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral shall be paid to ▇▇▇▇▇▇▇.
(iii) The Company shall execute and deliver (or cause to be executed
and delivered) to ▇▇▇▇▇▇▇ all such proxies and other instruments as ▇▇▇▇▇▇▇ may
reasonably request for the purpose of enabling him to exercise the voting and
other rights that he is entitled to exercise pursuant to paragraph (i) of this
Section 6(a).
(b) When and so long as there is an Event of Default (i) involving failure
to make the payment described in Section 2 of any of the New Notes, or (ii)
involving the voluntary placement by ▇▇▇▇▇▇▇ of a lien upon all or a significant
portion of the Pledged Collateral, all rights of ▇▇▇▇▇▇▇ to exercise the voting
and other rights that he would otherwise be entitled to exercise pursuant to
Section 6(a)(i) shall cease, and all those rights shall become vested in the
Company, which shall then have the sole right to exercise those voting and other
rights.
7. Transfers and Liens. ▇▇▇▇▇▇▇ agrees that he will not (i) sell or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral
without the prior written consent of the Company; or (ii) voluntarily create any
lien upon or with respect to any of the Pledged Collateral, except for the
security interest under this Agreement.
3.
8. Events of Default; Remedies upon Default.
(a) The following shall constitute Events of Default ("Events of Default")
under this Agreement:
(i) if ▇▇▇▇▇▇▇ fails to perform or observe any term, covenant, or
Obligation under this Agreement or the New Notes, or if any representation or
warranty made by ▇▇▇▇▇▇▇ in this Agreement or the New Notes is untrue or
misleading in any material respect as of the date with respect to which that
representation or warranty was made; or
(ii) if a notice of lien, levy, or assessment is filed or recorded
with respect to all or a substantial part of the Pledged Collateral, except for
a lien that relates to current taxes not yet due and payable, and if the
applicable claim is not discharged or satisfied within ninety (90) days of
▇▇▇▇▇▇▇'▇ actual knowledge of that filing or recordation (such affected Pledged
Collateral shall hereinafter be referred to as the "Affected Collateral"); or
(iii) if all or a substantial part of the Pledged Collateral is
attached, seized, or subjected to a writ or distress warrant, or is levied upon,
or comes within the possession of any receiver, trustee, custodian, or assignee
for the benefit of creditors, and that Pledged Collateral is not returned to
▇▇▇▇▇▇▇ or the writ, distress warrant, or levy is not dismissed, stayed, or
lifted within ninety (90) days (such affected Pledged Collateral shall also
hereinafter be referred to as the "Affected Collateral");
provided, however, with respect to subparagraphs 8(a)(ii) and (iii) hereto, if
prior to the end of such ninety (90) day period, ▇▇▇▇▇▇▇ provides the Company
with additional collateral to secure the New Notes with a fair market value
equal to or exceeding the fair market value of the Affected Collateral, which
collateral may be Shares or cash (or such other collateral, subject to the
consent of the Company, which consent shall not be unreasonably withheld) at the
discretion of ▇▇▇▇▇▇▇ and which collateral ▇▇▇▇▇▇▇ hereby agrees shall be
subject to the terms of this Agreement, no Event of Default shall be deemed to
have occurred.
(b) When and so long as there is any Event of Default, the Company may
exercise in respect of the Pledged Collateral, in addition to other rights and
remedies provided for in this Agreement or otherwise available to it, all the
rights and remedies of a secured party upon a default under the Uniform
Commercial Code in effect in the State of California at that time.
(c) Notwithstanding anything else contained herein to the contrary, so
long as there has been and is no Event of Default: (i) involving failure to make
the payment described in Section 2 of any of the New Notes, or (ii) involving
the voluntary placement by ▇▇▇▇▇▇▇ of a lien upon all or a significant portion
of the Pledged Collateral, ▇▇▇▇▇▇▇ shall be entitled to exercise any and all
voting and other consensual rights pertaining to any or all of the Shares.
9. Expenses. On demand, ▇▇▇▇▇▇▇ will pay the Company all reasonable expenses,
including attorneys' fees and costs, which the Company may incur in connection
with (i) the exercise or enforcement of any of the rights of the Company under
this Agreement; or (ii) ▇▇▇▇▇▇▇'▇ failure to perform or observe any of the
provisions of this Agreement.
4.
10. Security Interest Absolute. All rights and security interests of the
Company, and all Obligations of ▇▇▇▇▇▇▇, under this Agreement shall be absolute
and unconditional irrespective of: (i) any lack of validity or enforceability of
the New Notes or any other agreement or instrument relating to it; (ii) any
change in the time, manner, or place of payment of, or in any other term of, any
of the Obligations, or any other amendment or waiver of or consent to any
departure from the New Notes; (iii) any exchange, release, or non-perfection of
any other collateral, or any release, amendment, or waiver of any of the
Obligations; or (iv) any other circumstance that might otherwise constitute a
defense available to, or a discharge of, ▇▇▇▇▇▇▇ in respect of the Obligations
or of this Agreement.
11. Further Assurances. ▇▇▇▇▇▇▇ agrees that at any time and from time to time,
at his expense, ▇▇▇▇▇▇▇ will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that the Company may request, in order to perfect and protect any
security interest granted or purported to be granted by this Agreement or to
enable the Company to exercise and enforce its rights and remedies under this
Agreement with respect to any Pledged Collateral.
12. Entire Agreement; Amendment; Waiver. This Agreement, the Assumption
Agreement and the New Notes embody the entire agreement of the parties hereto
with respect to the subject matter of this Agreement and supersede all prior
agreements with respect to that subject matter. This Agreement may not be
amended or modified except in a writing signed by both parties. No waiver of any
provision of this Agreement shall be deemed to, or shall, operate as a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. Except as expressly provided in this Agreement, no waiver
shall be binding unless executed in writing by the party making the waiver.
13. Notices. All notices and other communications provided for under this
Agreement shall be given as follows:
If to the Company:
TIER TECHNOLOGIES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Financial Officer
If to ▇▇▇▇▇▇▇:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o Tier Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
14. Captions. Captions are used for reference purposes only and should be
ignored in the interpretation of the Agreement. Unless the context requires
otherwise, all references in this Agreement to Sections are to the sections of
this Agreement.
5.
15. Governing Law; Terms. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
wholly made and performed in the State of California. Unless otherwise defined
above, terms defined in Division 9 of the Uniform Commercial Code as adopted in
the State of California are used in this Agreement with their statutory
meanings.
The parties have duly executed this Agreement as of the date first written
above.
TIER TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇▇
Chief Financial Officer
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
6.
STOCK POWER AND ASSIGNMENT
SEPARATE FROM STOCK CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain PLEDGE AGREEMENT dated as
of March 15, 2000 (the "Agreement"), the undersigned hereby sells, assigns, and
transfers to TIER TECHNOLOGIES, INC. (the "Company"), ____________ shares of
Class A Common Stock of the Company, standing in the undersigned's name or in
the name of Tier Technologies, Inc. Voting Trust (of which the undersigned is
beneficial owner) on the books of the Company represented by Certificate No(s).
_____________ delivered herewith. The undersigned does hereby irrevocably
constitute and appoint the Secretary of the Company as the undersigned's
attorney-in-fact, with full power of substitution, to transfer this stock on the
books of the Company. THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE
AGREEMENT.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Instructions: Please sign this Stock Power above, but do not fill in any blanks
other than the signature lines.
The purpose of this Stock Power and Assignment Separate from Stock Certificate
is to enable the Company to acquire the Shares in accordance with the terms of
the Agreement.
SCHEDULE A
PLEDGED SHARES AND
OTHER COLLATERAL
161,142 shares of Class A Common Stock (represented by Voting Trust Certificate
No. ___)
