SCHEDULE 14A
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(Rule
14A-101)
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INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant
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Filed by a Party other than the
Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to
240.14a-12
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TIER
TECHNOLOGIES, INC.
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(Name
of Registrant as Specified In Its Charter)
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DISCOVERY
EQUITY PARTNERS, L.P., DISCOVERY GROUP I, LLC,
DANIEL J. DONOGHUE AND MICHAEL R. MURPHY
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(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
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Payment of Filing Fee (Check the
appropriate box):
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x
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No fee required
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Fee computed on table below per
Exchange Act Rules 14(a)-6(i)(4) and 0-11.
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Title of each class of securities to
which transaction applies:
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Aggregate number of securities to
which transaction applies:
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Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and state how it was
determined):
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4)
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Proposed maximum aggregate value of
transaction:
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5)
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Total fee paid:
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Fee paid previously with preliminary
materials
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Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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1)
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Amount Previously Paid:
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2)
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Form, Schedule or Registration
Statement No.:
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3)
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Filing Party:
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4)
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Date Filed:
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PRELIMINARY COPY
SUBJECT TO COMPLETION, DATED JANUARY 9, 2009
TIER TECHNOLOGIES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 11, 2009
PROXY STATEMENT OF DISCOVERY EQUITY PARTNERS,
L.P., DISCOVERY GROUP I, LLC,
DANIEL J. DONOGHUE AND MICHAEL R. MURPHY
January [ ], 2009
To Tier Technologies, Inc. Stockholders:
Discovery Equity Partners, L.P. (Discovery Equity
Partners), Discovery Group I, LLC (Discovery Group I), Daniel J. Donoghue
and Michael R. Murphy (collectively, the Discovery Group) are furnishing this
Proxy Statement to holders of the common stock, $0.01 par value (Common Stock),
of Tier Technologies, Inc., a Delaware corporation (the Company or Tier),
in connection with our solicitation of proxies for use at the 2009 Annual
Meeting of Stockholders of the Company and at any and all adjournments or
postponements thereof (the Stockholder Meeting). The Company has stated that the Stockholder
Meeting will be held at the headquarters of the Company, 10780 Parkridge Boulevard,
Reston, Virginia, on Wednesday, March 11, 2009, at 10:00 a.m.,
Eastern Standard Time. The Board of
Directors of the Company (the Board of Directors or the Board) has fixed
the close of business on January 16, 2009 as the record date for determining
the stockholders entitled to receive notice of, to attend, and to vote at the
Stockholder Meeting.
This Proxy Statement and the accompanying
WHITE proxy card are first being sent or given to stockholders of the Company
on or about January [ ], 2009.
This solicitation is being conducted by the Discovery
Group. The Discovery Group beneficially
owns approximately 9.9% of the Common Stock reported by the Company as
outstanding as of November 28, 2008.
As more fully discussed below, the Discovery Group is soliciting proxies
to be used at the Stockholder Meeting for the following actions:
(1)
To
elect Mr. Daniel J. Donoghue and Mr. Michael R. Murphy as directors
of the Company (collectively, the Discovery Group Nominees);
(2)
To
ratify the selection of McGladrey & Pullen, LLP as the Companys
independent registered public accounting firm for the fiscal year ending September 30,
2009;
(3)
To approve a stockholder proposal submitted
by Discovery Equity Partners to the Company under SEC Rule 14a-8 that requests
that the Board of Directors restore to stockholders their rights to directly
influence the strategic direction and possible sale of the Company by (i) terminating
the Companys poison pill rights plan and (ii) reinstating the ability
of stockholders owning at least 10% of the voting power to call special
meetings of stockholders.
According to the Companys Annual Report on Form 10-K
for the fiscal year ended September 30, 2008, there were 19,734,463 shares
of Common Stock outstanding as of November 28, 2008. The Companys stockholders are entitled to
one vote per share of Common Stock.
However, the Companys certificate of incorporation provides that
stockholders have cumulative voting rights with respect to the election of
directors. Cumulative voting rights
entitle you to give a nominee as many votes as is equal to the number of shares
you own multiplied by the number of directors to be elected, or you may
distribute your votes among the nominees as you see fit.
We are soliciting the discretionary authority to
cumulate votes, and the persons named as proxies on our proxy card will have
the authority to cumulate votes at their discretion. We will use the authority granted to us by
our WHITE proxy card to cumulate votes for the Discovery Group Nominees to
assure that the maximum number of Discovery Group Nominees are elected to the
Board of Directors.
We urge you to elect the Discovery Group Nominees to
the Board of Directors because we believe that the election of new members to
the Board would be beneficial to the Company and its stockholders. The
Discovery Nominees have extensive experience as executives of financial
institutions, advisors to public and private companies, founders of a
successful investment firm, publishers of research on small capitalization
public companies, valuation experts and leaders of M&A transactions. Discovery Groups investment of approximately
$16 million in the Company aligns the interests of the Discovery Group Nominees
with all fellow stockholders. The Discovery
Group Nominees intend to bring the perspective of a large investor to the Board
and will seek to work constructively with the other members of the Board, as
well as the existing Tier management team.
The Discovery Nominees hope to help the Company expeditiously to reduce
what the Discovery Group believes is excessive overhead, to determine if
Company capital should be returned to stockholders, to eliminate any
unnecessary corporate takeover defenses, and to proactively evaluate all
strategic alternatives to unlock the value of the Companys Electronic Payment
Processing (EPP) business for stockholders.
Accordingly, we urge you to sign and date the WHITE
proxy card supplied by the Discovery Group and return it in the enclosed
postage-paid envelope, whether or not you plan to attend the meeting, in order
to vote:
(A) FOR the election of Daniel J. Donoghue and
Michael R. Murphy to the Board of Directors,
(B) FOR the ratification of the selection of
McGladrey & Pullen, LLP as the Companys independent registered public
accounting firm for the fiscal year ending September 30, 2009, and
(C)
FOR the stockholder
proposal (the Stockholder Proposal) requesting that the Companys Board of
Directors restore to stockholders their rights to directly influence the
strategic direction and possible sale of the Company by (i) terminating
the Companys poison pill rights plan and (ii) reinstating the ability
of stockholders owning at least 10% of the voting power to call special
meetings of stockholders.
If your shares are held in
the name of a brokerage firm, bank or nominee, only that entity can vote such
shares and only upon receipt of your specific instruction. Accordingly, we urge you to contact the
person responsible for your account and instruct that person to execute the
WHITE proxy card on your behalf.
YOUR VOTE IS IMPORTANT. If you agree with the reasons for the
Discovery Groups solicitation set forth in this Proxy Statement and believe
that the election of the Discovery Group Nominees to the Board of Directors and
the adoption of the Stockholder Proposal can make a difference,
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please
vote for the election of the Discovery Group Nominees and the adoption of the
Stockholder Proposal, no matter how many or how few shares you own.
THE DISCOVERY GROUP URGES
YOU NOT TO SIGN ANY PROXY CARD THAT IS SENT TO YOU BY THE COMPANY, EVEN AS A FORM OF
PROTEST. By executing the WHITE proxy
card, you will authorize us to vote FOR the election of the two Discovery Group
Nominees and for the Stockholder Proposal.
If you have already signed a proxy card sent to you by the Company, you
may revoke that proxy at any time prior to the time a vote is taken by (i) submitting
a duly executed proxy bearing a later date to the Secretary of the Company, (ii) filing
with the Secretary of the Company a later dated written revocation or (iii) attending
and voting at the Stockholder Meeting in person.
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Thank you for your support,
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On behalf of the Discovery Group,
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Sincerely,
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/s/ Daniel J. Donoghue
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Daniel J. Donoghue
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/s/ Michael R. Murphy
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Michael R. Murphy
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IF YOU HAVE ANY QUESTIONS, REQUIRE ASSISTANCE IN VOTING THE
WHITE PROXY CARD OR NEED ADDITIONAL COPIES OF OUR PROXY MATERIALS,
PLEASE CALL OUR PROXY SOLICITOR:
THE ALTMAN GROUP
1200 Wall Street West
Lyndhurst, NJ 07071
Stockholders Call Toll Free: (866) 856-4969
Banks and Brokerage Firms Call Collect: (201) 806-7300
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GENERAL
The Board of Directors currently consists of eight
directors who serve for a one year term.
According to the Companys proxy statement (the Company Proxy Statement),
filed in preliminary form on January [
], 2009, [eight] directors are to be elected to the Board of Directors
at the Stockholder Meeting, to hold office until their successors have been
elected and qualified. The Company has
nominated [the eight current members of the Board] to stand for re-election at
the Stockholder Meeting (the Company Nominees).
We are currently seeking your proxy for the election
to the Board of Directors of two individuals - Mr. Daniel J. Donoghue and Mr. Michael
R. Murphy. We are soliciting the
discretionary authority to cumulate votes, and the persons named as proxies on
our proxy card will have the authority to cumulate votes at their
discretion. We will use the authority
granted to us by our WHITE proxy card to cumulate votes for the Discovery Group
Nominees to assure that the maximum number of Discovery Group Nominees are elected
to the Board of Directors. We are also
seeking your proxy to vote for the Stockholder Proposal and for the
ratification of the selection of McGladrey & Pullen, LLP as the
Companys independent registered public accounting firm for the fiscal year
ending September 30, 2009
For information concerning voting procedures at the
Stockholder Meeting, see Voting and Proxy Procedures.
BACKGROUND OF THIS SOLICITATION
The Discovery Group has been a stockholder of the
Company since March 2007. The
Discovery Group acquired shares of common stock through open market purchases
as part of its proprietary investment strategy and, as of the date of this
Proxy Statement, the Discovery Group beneficially owns 1,957,563 shares of
Common Stock, representing approximately 9.9% of the outstanding Common
Stock. 1,684,608 of the shares of Common
Stock beneficially owned by the Discovery Group are owned directly by Discovery
Equity Partners, and the remaining 272,955 shares of Common Stock beneficially
owned by the Discovery Group are owned directly by another investment
partnership. (the Other Partnership) for which Discovery Group I is the
investment manager and over which shares Discovery Group I exercises
discretionary investment management authority.
In connection with its investment in the Company, the
Discovery Group reviews the Companys business affairs, financial position,
management, capital structure, and future plans on an ongoing basis. In addition, as part of its review,
representatives of the Discovery Group have held meetings and telephone
conversations with the Companys management, directors, other stockholders, and
other interested parties, including companies and other institutions having
operations in the electronic payments industry, regarding the Companys
performance, its business plan and strategic alternatives available to it.
On May 12, 2008, the Discovery Group filed a
Schedule 13D with the Securities and Exchange Commission (the SEC) indicating
that we had acquired 5.8% of the outstanding Common Stock. In the Schedule 13D, t
he Discovery Group indicated that it had
acquired such shares of Common Stock because of its belief that the trading
prices of the Common Stock do not adequately reflect the potential value of the
Companys underlying business and assets.
The Discovery Group indicated that it had held meetings with certain
members of the Companys management and directors and had also sent written
communication to the entire Board of Directors, and that during these meetings
and correspondences, the Discovery Group had expressed certain recommendations
to the Company, including a strong desire for the Board of Directors to engage
an investment bank to explore all strategic alternatives available to the
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Company,
including the potential sale of the Company.
The Schedule 13D indicated that the Discovery Groups recommendations
were based on (i) discussions with large transaction processing companies
expressing an interest in acquiring the Company, (ii) a competitive
takeover valuation that will provide a significant premium to the Companys
current stock price, (iii) competitive threats to the Company from larger,
more efficient industry participants, and (iv) obstacles that will prevent
the Company from achieving a significant increase in shareholder value on a
stand-alone basis, including senior management turnover, an extremely high cost
structure, and the Companys lack of credibility with public investors.
On
June 9, 2008, representatives of the Discovery Group made a presentation
by conference call to two members of the Companys Board of Directors. In addition to reiterating the recommendation
that the Board engage an investment bank and explore strategic alternatives,
the Discovery Group representatives presented the Board members with feedback
from informal discussions with several large Company investors, wherein the
investors had expressed the view that they were disappointed with the
performance of management of the Company, had a strong desire to for the Board
to authorize the Company to repurchase shares, and would like to see the
Company sold to a strategic buyer.
On September 9, 2008, Discovery Equity Partners
submitted to the Company the Stockholder Proposal under SEC Rule 14a-8 for
inclusion in the Companys proxy statement for the Companys 2009 Annual
Meeting of Stockholders.
On October 28, 2008,
Discovery Equity Partners received a letter dated October 27, 2008 from
the Vice President and General Counsel of the Company stating that the Company
had no record of having received the Stockholder Proposal.
On October 30, 2008,
Discovery Equity Partners sent a letter to the Vice President and General
Counsel of the Company providing detailed evidence that Discovery Equity Partners
proposal was properly submitted to the Company in the manner and within the
time period required by SEC Rule 14a-8, and that representatives of the
Company have been aware of the submission of such proposal since the time of
such submission. It is the understanding
of Discovery Equity Partners that the Company intends to include the
Stockholder Proposal in the Company Proxy Statement.
On December 4, 2008, Discovery Equity Partners
delivered to the Company notice under the Companys bylaws of Discovery Equity
Partners intention to nominate the Discovery Group Nominees for election at
the Stockholder Meeting.
Also on December 4, 2008, Discovery Equity
Partners delivered to the Company a letter addressed to the Board of Directors
setting forth certain of its reasons for its intention to nominate the
Discovery Group Nominees. The Discovery
Group also issued a press release with respect to its intention to nominate the
Discovery Group Nominees.
On December 17, 2008, Discovery Equity Partners
sent to the Company a written request as permitted by the Delaware General
Corporation Law with respect to the inspection and use of the Companys
stockholders list and related materials in connection with the solicitation of
proxies for Stockholder Meeting. On December 23,
2008, the Company sent to Discovery Equity Partners a letter agreeing to
provide such materials subject to Discovery Equity Partners entering into a
confidentiality agreement with respect to the use and disclosure thereof, and
agreeing to pay certain costs of the Company in connection with the production
thereof.
On January 9, 2009, the Discovery Group filed a
preliminary version of this Proxy Statement with the SEC.
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REASONS FOR THIS
SOLICITATION
We expect that the Discovery Group Nominees, if
elected, would bring the fresh perspective of a large investor to the Board of
Directors. We believe that the Discovery
Group Nominees, if elected, can work with the other members of the Board of
Directors to:
·
expeditiously reduce what the Discovery Group
believes is excessive overhead at the Company,
·
promptly return to stockholders what the
Discovery Group believes is the Companys excess capital,
·
eliminate any unnecessary corporate takeover
defenses, and
·
proactively evaluate all strategic
alternatives to unlock the value of the Companys EPP business for
stockholders.
However, t
here can be
no assurance that the Discovery Group Nominees and the Board of Directors will
succeed in creating stockholder value.
Under Delaware corporate law, the Board of Directors
is charged with the management of the Company, including determining its
strategic direction. The Discovery Group
believes that if the Discovery Group Nominees are elected, they would be in a
position as directors of the Company to influence the strategic direction of
the Company by bringing to the Board the perspective of a significant
stockholder. The Discovery Group
believes that a major issue with the existing Board and Company management is
that there is a significant misalignment between their interest and that of the
Companys stockholders, since n
o director or officer beneficially owns more than 3% of the outstanding
stock, and the ownership level of this group is de minimis if unexercised
options and restricted stock units are excluded from the calculation.
As members of the Board of Directors, the Discovery
Group Nominees would be able to present initiatives to the entire Board of
Directors, actively participate in Board discussions and argue in support of
positions that they believe would benefit the Companys stockholders. If elected, the Discovery Group Nominees
would have greater access to Company information and management, which would
allow them to be more knowledgeable and effective advocates in favor of these
positions. While the Discovery Group
Nominees will not constitute a majority of the Board of Directors, the
Discovery Group Nominees believe that the other directors of the Company will,
in the discharge of their fiduciary duties under Delaware law, consider all
reasonable proposals to enhance stockholder value by exploring these proposals
and acting on them if they determine that such proposals are in the best
interests of the Companys stockholders.
The Discovery Group Nominees believe that the
following matters should be addressed by the Board of Directors as soon as
possible and, if elected, the Discovery Group Nominees will work to have the
Board address them.
Corporate Overhead
. The Discovery Group Nominees believe that the
Board of Directors has sanctioned what the Discovery Group Nominees think is an
excessive level of corporate overhead, given the Companys revenue base and
profitability. If the Company is to
become profitable, the Discovery Group Nominees believe its level of corporate
overhead must be reduced rapidly and significantly.
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This is illustrated by information in the Companys
recently issued Annual Report for the fiscal year ended September 30, 2008
(the 2008 Annual Report). In the
Annual Report, the costs and expenses attributed to Corporate &
Eliminations (which the Company describes as corporate overhead and other
costs that could not be directly assigned to our EPP operations or to our
Discontinued Operations, as well as eliminations for transactions between our
Continuing and Discontinued Operations) are shown as $27.2 million, $16.6
million and $16.8 million for fiscal years 2006, 2007 and 2008,
respectively. These costs have contributed
materially to the amount of the Companys reported loss from continuing
operations for those same years of $(19.6) million, $(18.4) million and $(12.0)
million.
While the Company has sought to somewhat decrease
corporate overhead, the Companys Chief Executive Officer has publicly stated
that corporate overhead would only be reduced to a run rate of $10 million at
the end of fiscal year 2009 (with projected corporate overhead of approximately
$12 million for the full 2009 fiscal year) and a run rate of $9 million at the
end of fiscal year 2010. Even if these
projections are achieved, the reduction in overhead seems inadequate. The Companys EPP business is now the Companys
predominant business (the 2008 Annual Report indicates that the Companys only
other
business is one
remaining Packaged Software Systems Integration operation for which it
continues to seek a buyer) and the EPP business stand-alone Income from
Continuing Operations for 2008, 2007 and 2006 was only $3.2 million, $5.9
million and $5.6 million, respectively, as reported in the 2008 Annual
Report. Thus, even if the Companys
corporate overhead projection is achieved, the run rate for corporate overhead
for at the end of 2009 would still exceed EPPs 2008 income by more than 3
times.
In the view of the Discovery Group Nominees, the
current level of corporate overhead is unsustainable and must be reduced
rapidly, and the Discovery Group Nominees plan to work with the Board and
Company management to seek ways to effect such a reduction.
Return of Capital to
Stockholders
. The
Companys cash balance has grown materially and steadily since the end of
fiscal year 2000, when it stood at $19.9 million. At the end of fiscal year 2008,
the Companys cash balance (including cash invested in auction rate securities
that were reclassified by the Company as a long-term investment because of
market illiquidity and in restricted investments) was approximately $87
million. This increase in cash was not
sudden, as the Companys reported cash balance, when compared with the cash
balance at the prior fiscal year-end, increased for fiscal years 2001, 2002,
2004, 2005, 2007 and 2008. The Company
now holds more than $4.50 per share in cash, including its ill-timed investments
in auction rate securities that are now illiquid. The Discovery Group Nominees believe that the
Board of Directors should consider whether this level of cash is actually
needed for the Companys operations and the implementation of its business
plan, and if not, whether the Company should return a portion of such cash to
stockholders through share repurchases or a special dividend or other means.
Takeover
Defenses
. In January 2006, the Company adopted a poison
pill stockholder rights plan that the Discovery Group Nominees believe
effectively prevents any person from acquiring 15% or more of the outstanding
common stock without the Boards consent and also adopted a Bylaw amendment
that denied stockholders the right to call special meetings. These actions appear to have been taken in
response to Tiers widely reported operating and accounting problems at the
time. The Discovery Group Nominees
believe that the Board of Directors should now have the confidence to reverse
the defensive mechanisms then adopted, since in the opinion of the Discovery
Group Nominees, they no longer serve the best interests of the Company and its
stockholders and represent a
de facto
transfer of voting rights away from stockholders to management. The Discovery Group Nominees believe that
poison pills reduce accountability and entrench management, prevent investors
from making financially meaningful investments in small capitalization
companies like the Company, and allow a board of directors unilaterally to
block offers for a company that are in the best interests of stockholders. In addition, in the opinion of the Discovery
Group Nominees, if a companys board of directors and
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management have no
meaningful equity stake (as the Discovery Group Nominees believe is the case
with the Company), this creates a significant conflict of interest between the
board of directors and stockholders. The
Discovery Group Nominees note that in response to stockholder complaints, numerous
companies have terminated or not renewed their poison pills. The Discovery Group Nominees also believe
that the elimination of the right of stockholders to call special meetings
limits the direct voice of stockholders in the Companys strategic direction by
allowing management to unilaterally decide if a proposal may be presented to
stockholders between annual meetings, and that for a rapidly changing business,
annual meetings do not provide the access necessary for stockholders to bring
forward and vote on critical and timely matters while the company is undergoing
such transformations. The Discovery
Group Nominees, if elected, will seek to cause the Board to implement the
Stockholder Proposal.
Strategic Alternatives
. The Discovery Group Nominees believe that the
Companys EPP business has significant value.
They also believe that one
strategy to unlock the value of the EPP business is to sell Tier to one of the
many strategic parties that are potentially interested in acquiring the
business since a strategic buyer could reduce the effect of the Companys
corporate overhead on EPPs profitability and potentially augment the EPP
business growth and profitability in other ways. The Discovery Group Nominees believe that
because of these benefits to a buyer, the right transaction could deliver a
premium to the Companys stockholders.
The Discovery Group Nominees, if elected, will seek to cause the
Board to eliminate any impediments to the evaluation of potential transactions
with interested parties.
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The Discovery Group Nominees will constitute [twenty
five] percent of the Board of Directors if they are elected and, therefore,
even if they vote unanimously, will not be able to adopt any measures without
the support of other members of the Board of Directors. Depending on the responsiveness of the Board
to any proposals or initiatives presented by the Discovery Group Nominees, the
Discovery Group may seek to nominate additional directors independent of both
the Company and the Discovery Group to the Board of Directors at the Companys
2010 annual meeting if the Discovery Group believes that additional
representation on the Board would make Discovery Group Nominees efforts more
effective.
The Discovery Group Nominees do not anticipate that
they will have any conflicts of interest with respect to the Company, if
elected, and recognize their fiduciary duty obligations to all
stockholders. None of the Discovery
Group Nominees has any contract, arrangement or understanding with the Company,
and no other direct financial interest concerning the Company, other than
through the beneficial ownership of Common Stock by the Discovery Group as
disclosed in this Proxy Statement.
THE DISCOVERY GROUP RECOMMENDS A VOTE FOR THE ELECTION
OF THE DISCOVERY GROUP NOMINEES BECAUSE THEY BELIEVE THAT THE DISCOVERY GROUP
NOMINEES WOULD CONTRIBUTE TO THE CREATION OF STOCKHOLDER VALUE.
MATTERS TO BE CONSIDERED AT THE STOCKHOLDER MEETING
PROPOSAL 1: ELECTION OF DIRECTORS
The Board of Directors currently consists of eight directors. Directors hold office until the Companys
next annual meeting and until their successors are elected and qualified,
unless prior to that time they have resigned, retired or otherwise left
office. According to the Company Proxy
Statement, [eight] directors are to be elected to the Board at the Stockholder
Meeting. By letter dated December 3,
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2008, Discovery Equity
Partners gave notice to the Company of its intention to nominate the Discovery
Group Nominees to serve as directors of the Company.
We are seeking your proxy for the election to the
Board of Directors of two individuals - Mr. Daniel J. Donoghue and Mr. Michael
R. Murphy. We are soliciting the
discretionary authority to cumulate votes, and the persons named as proxies on
our proxy card will have the authority to cumulate votes at their
discretion. We will use the authority
granted to us by our WHITE proxy card to cumulate votes for the Discovery Group
Nominees to assure that the maximum number of Discovery Group Nominees are
elected to the Board of Directors. Under
applicable proxy rules, we are required either to solicit proxies only for Messrs. Donoghue
and Murphy, or to solicit proxies for Messrs. Donoghue and Murphy and for
such number of the Company Nominees as equal the number of director positions
then subject to election. Our decision
to solicit proxies only for Messrs. Donoghue and Murphy will result in
limiting ability of stockholders who use the WHITE proxy card to exercise their
voting rights with respect to the Company Nominees.
Each of the Discovery Group Nominees has consented to
being named as a nominee in this Proxy Statement and to serve as a director of
the Company, if elected. The Discovery
Group does not expect that either of the Discovery Group Nominees will be
unable to stand for election, but in the event that any of Discovery Group
Nominees is unable to stand for election or to serve for any reason, including
by reason of the taking or announcement of any action by the Company that has,
or if consummated would have, the effect of disqualifying any such Discovery
Group Nominee from serving as a director, any shares of Common Stock
represented by the WHITE proxy card will be voted for a substitute candidate selected
by the Discovery Group.
Information Regarding the
Discovery Group Nominees
The following information concerning age, principal
occupation and business experience during the last five years, and current
directorships has been furnished to the Discovery Group by the Discovery Group
Nominees.
Daniel J. Donoghue, age 47, is a founder and Managing
Member of each of Discovery Group Holding Company, LLC, a Delaware limited
liability company, Discovery Group I, and Discovery Group II, LLC, a Delaware
limited liability company (Discovery Group II and collectively with Discovery
Group I and Discovery Group Holding Company, LLC, the Discovery Group Entities). Discovery Group I is the sole general partner
of Discovery Equity Partners, which invests in shares of publicly-traded small
capitalization companies, and Discovery Group I also manages other private
investment accounts (including the investments of the Other Partnership). Discovery Group II is the sole general partner
of Discovery Financial Partners, L.P., which was formed to invest in shares of
publicly-traded micro-capitalization banks and other financial institutions but
which is not currently conducting business.
Mr. Donoghues employment by the Discovery Group Entities
represents his principal occupation or employment. Mr. Donoghue has been a Managing Member
of one or more of the Discovery Group Entities since January 2007. From January 1997 through January 2007,
Mr. Donoghue was employed by Piper Jaffray & Co., an investment
banking firm, where he was engaged in merger and acquisition advisory
activities. Mr. Donoghue is a
certified public accountant and has a Master of Business Administration degree
in Finance from the University of Chicago.
Michael R. Murphy, age 43, is also a founder and Managing
Member of each of the Discovery Group Entities.
Mr. Murphys employment by the Discovery Group Entities represents
his principal occupation or employment. Mr. Murphy
has been a Managing Member of one or more of the Discovery Group Entities since
January 2007. From August 1997
through January 2007, Mr. Murphy was employed by Piper Jaffray &
Co., an investment banking firm, where he was engaged in merger and acquisition
9
advisory activities. Mr. Murphy has a Master of Business
Administration degree in Finance from the University of Chicago.
If elected, each Discovery Group Nominee would receive
such directors fees as may be payable by the Company to non-employee directors
in accordance with its practice at the time.
Except as described below, no Discovery Group Nominee would receive
additional compensation from the Discovery Group Entities in connection with
this solicitation, and there are no understandings or arrangements between the
Discovery Group Nominees or any other person pursuant to which the nominations
are to be made by the Discovery Group.
Pursuant to the constituent documents of Discovery Equity Partners and
Discovery Group I, Discovery Equity Partners and Discovery Group I will indemnify
and hold harmless each Discovery Group Nominee from any and all losses, claims
costs, damages, liabilities and expenses incurred by the Discovery Group
Nominee resulting from any action, proceeding or investigation based upon or
arising from certain actions, events or occurrences, including the solicitation
of proxies to which this Proxy Statement relates and (if applicable) such
persons ongoing services as a director of the Company, to the extent not
otherwise indemnified by the Company, other than with respect to certain
excluded losses.
As of the date hereof, each Discovery Group Nominee
may be deemed to beneficially own 1,957,563 shares of Common Stock,
representing approximately 9.9% of the outstanding Common Stock
, representing approximately 9.9% of the
19,734,463 shares of Common Stock as reported to be outstanding by the Company
as of November 28, 2008.
The Discovery Group
believes that each Discovery Group Nominee would be independent under the
applicable standards of the NASDAQ Stock Market and the independence standards
applicable to the Company under paragraph (a)(1) of Item 407 of Regulation
S-K under the Securities Exchange Act of 1934, as amended (the Exchange Act). In this regard, each of the Discovery Group
Nominees has advised the Discovery Group that to the best of such Discovery
Group Nominees knowledge and belief:
(a)
He
is not, nor at any time during the past three years was, employed by the
Company;
(b)
He
has not accepted, nor does he have a Family Member (as defined below) who has
accepted, any compensation from the Company during any period of twelve
consecutive months within the three years preceding the date hereof.
(c)
He
is not a Family Member of an individual who is, or at any time during the past
three years was, employed by the Company as an executive officer.
(d)
He
is not, nor does he have a Family Member who is, a partner in, or a controlling
shareholder or an executive officer of, any organization to which the Company
made, or from which the Company received, payments for property or services in
the current or any of the past three fiscal years that exceed 5% of the
recipients consolidated gross revenues for that year, or $200,000, whichever
is more.
(e)
He
is not, nor does he have a Family Member who is, employed as an executive
officer of another entity where at any time during the past three years any of
the executive officers of the Company serve on the compensation committee of
such other entity.
(f)
He
is not, nor does he have a Family Member who is, a current partner of the
Companys outside auditor, or was a partner or employee of the Companys
outside auditor who worked on the Companys audit at any time during any of the
past three years.
10
For purposes of the foregoing, Family Member means a
Discovery Group Nominees spouse, parents, children and siblings, whether by
blood, marriage or adoption, or anyone residing in such persons home.
There are no blood, marriage or adoption relationships
(excepting relationships more remote than first cousin) between either of the
Discovery Group Nominees, or between either of the Discovery Group Nominees and
any director or executive officer of the Company, or to the knowledge of the
Discovery Group as of the date hereof, any nominee of the Company to become a
director or executive officer of the Company.
Except as otherwise disclosed in this Proxy Statement,
(i) no Discovery Group Nominee or any associate of a Discovery Group
Nominee is a party adverse to the Company or any of its subsidiaries or has a
material interest adverse to the Company or any of is subsidiaries in any
material proceeding, and (ii) there is no event that occurred during the
past five years with respect to any Discovery Group Nominee that is required to
be described under Item 401(f) of Regulation S-K.
No Discovery Group Nominee nor any associate of a
Discovery Group Nominee has any arrangement or understanding with any person (a) with
respect to future employment by the Company or its affiliates (as defined in Rule 12b-2
under the Exchange Act) or (b) with respect to any future transactions to
which the Company or any of its affiliates will be or may be a party.
Except for each Discovery Group Nominees agreement to
stand for election to the Board of Directors and to serve if elected, and
except for each Discovery Group Nominees interest in the Common Stock that may
be deemed to be beneficially owned by him as described herein, no Discovery
Group Nominee has a substantial interest, either direct or indirect, by
security holdings or otherwise, in the matters to be acted on pursuant to this
Proxy Statement.
No Discovery Group Nominee nor any associate of a
Discovery Group Nominee or any immediate family member of any such Discovery
Group Nominee or associate has engaged in or had a direct or indirect material
interest in any transaction, or series of similar transactions, since October 1,
2007, or any currently proposed transaction, or series of similar transactions,
to which the Company or any of its subsidiaries was or is to be a party, in
which the amount involved exceeds $120,000.
No Discovery Group Nominee has failed to file reports
related to the Company that are required by Section 16(a) of the
Exchange Act.
PROPOSAL 2:
RATIFICATION OF SELECTION OF
MCGLADREY & PULLEN LLP
According to the Company Proxy Statement, the Company
is soliciting proxies for the ratification of the selection of McGladrey &
Pullen LLP as the Companys independent registered public accounting firm for
the fiscal year ending September 30, 2009.
The Board of Directors has unanimously recommended a vote for this
proposal. Please refer to the Company
Proxy Statement for a detailed discussion of this proposal, including various
arguments in favor of and/or against such proposal. We urge you to vote FOR the appointment of
McGladrey & Pullen LLP as the Companys independent registered public
accounting firm for the fiscal year ending September 30, 2009 on the WHITE
proxy card. If you do not indicate any
voting instruction, we will vote the WHITE proxy card FOR this proposal.
11
PROPOSAL 3:
APPROVAL
OF THE STOCKHOLDER PROPOSAL
According to the Company Proxy Statement, the Company
has submitted for the consideration of stockholders the Stockholder Proposal
submitted by Discovery Equity Partners to the Company under Rule 14a-8. The Stockholder Proposal, including Discovery
Equity Partners Supporting Statement, reads as follows:
Stockholder Proposal
RESOLVED, that the stockholders of Tier Technologies, Inc.
(Tier) request that Tiers Board of Directors restore to stockholders their
rights to directly influence the strategic direction and possible sale of Tier
by (i) terminating Tiers poison pill rights plan and (ii) reinstating
the ability of stockholders owning at least 10% of the voting power to call
special meetings of stockholders.
Supporting Statement
In January 2006, the Board of Tier stripped its
stockholders, without their consent, of their ability to directly receive
offers for Tier by implementing a poison pill that effectively prevents any
person from acquiring 15% or more of the outstanding common stock without the
Boards consent. Further, the Board
eliminated the ability of stockholders to pursue value-creation proposals
between annual meetings by denying stockholders the right to call special
meetings. These actions appear to have
been taken in response to Tiers widely reported operating and accounting
problems.
Nearly three years have passed since these events and
Tier is no longer the poorly integrated collection of weak performing
businesses with inadequate financial controls that it then was. The Board should now have the confidence to
reverse the defensive mechanisms then adopted, since they no longer serve the
best interests of Tier and its stockholders and represent a
de facto
transfer of voting rights away from stockholders to
management.
Poison pills reduce accountability and entrench
management, prevent investors from making financially meaningful investments in
small capitalization companies like Tier, and allow a Board unilaterally to
block offers for a company that are in the best interests of stockholders. If a companys Board and management have no
meaningful equity stake (as is the case with Tier), this creates a significant
conflict of interest between the Board and stockholders. Recently, in response to stockholder
complaints, numerous companies have terminated or not renewed their poison
pills. Tiers Board should remove its
obsolete poison pill that currently acts as an impediment to realizing
shareholder value.
The elimination of the right of stockholders to call
special meetings limits the direct voice of stockholders in Tiers strategic
direction by allowing management to unilaterally decide if a proposal may be
presented to stockholders between annual meetings. Tier is rapidly changing its
Board composition, its management team, its operations, and its overall
strategic direction. Annual meetings do
not provide the access necessary for shareholders to bring forward and vote on
critical and timely matters while the company is undergoing such
transformations.
By supporting this proposal, stockholders can advise
the Board of their concerns regarding Tiers continued maintenance of defenses
against offers and proposals that may maximize shareholder value, and express
their desire that the Board be open to all strategic alternatives for Tier,
including its sale. While the adoption
of this proposal will
12
not legally bind the Board, we trust that given its
fiduciary responsibilities, the Board will honor the stockholders wishes as
reflected in the vote on the proposal.
Discovery, one of Tiers largest shareholders,
strongly urges you to vote
FOR
this
proposal.
According to the Company Proxy Statement, the Board of
Directors has unanimously recommended a vote [against] the Stockholder
Proposal. Please refer to the Company
Proxy Statement for the Boards arguments regarding the Stockholder Proposal.
For the reasons stated above, the Discovery Group
recommends that stockholders vote FOR the Stockholder Proposal. We urge you to vote FOR the Stockholder
Proposal on the WHITE proxy card. If you
do not indicate any voting instruction, we will vote the WHITE proxy card FOR
the Stockholder Proposal.
Except as set forth in this Proxy Statement, the
Discovery Group is not aware of any other matter to be considered at the
Stockholder Meeting. However, if the
Discovery Group learns of any other proposals made at a reasonable time before
the Stockholder Meeting, the Discovery Group will either supplement this Proxy
Statement and provide an opportunity to stockholders to vote by proxy directly
on such matter or will not exercise discretionary authority with respect
thereto. If other proposals are made
thereafter (including at the Stockholder Meeting), the persons named as proxies
on the WHITE proxy card solicited by the Discovery Group will vote such proxies
in their discretion.
INFORMATION ABOUT
THE PARTICIPANTS
Discovery Equity Partners, Discovery Group I, and Messrs. Donoghue
and Murphy are the participants in the solicitation of proxies contemplated
hereby and are herein collectively referred to sometimes as the Participants. The Other Partnership is not a participant in
the solicitation of proxies contemplated hereby.
Discovery Equity Partners is an Illinois limited
partnership which invests in shares of publicly-traded small capitalization
companies.
Discovery Group I is a Delaware limited liability
company that is the sole general partner of Discovery Equity Partners, is the
investment manager of the Other Partnership, and manages other private
investment accounts investing in shares of publicly-traded small capitalization
companies. Discovery Group I is also a
limited partner in the Other Partnership.
Daniel J. Donoghue is a founder and Managing Member of
each of Discovery Group Entities. Mr. Donoghues
employment by the Discovery Group Entities represents his principal occupation
or employment.
Michael R. Murphy is a founder and Managing Member of
each of the Discovery Group Entities. Mr. Murphys
employment by the Discovery Group Entities represents his principal occupation
or employment.
The business address of each of Discovery Equity
Partners, Discovery Group I, and Messrs. Donoghue and Murphy is
191 North Wacker Drive, Suite 1685,
Chicago, Illinois 60606.
13
Discovery Equity Partners is the record owner of 500
shares of Common Stock and the beneficial owner of 1,684,108 shares of Common
Stock that are not owned of record by Discovery Equity Partners, representing
approximately 8.5% of the 19,734,463 shares of Common Stock as reported to be
outstanding by the Company as of November 28, 2008. Discovery Group I and
Messrs. Donoghue and Murphy may be
deemed to beneficially own 1,957,563 shares of Common Stock, representing
approximately 9.9% of the 19,734,463 shares of Common Stock as reported to be
outstanding by the Company as of November 28, 2008. Discovery Group I and Messrs. Donoghue
and Murphy do not directly own any shares of Common Stock or other securities
of the Company. The members of the Discovery Group are parties to joint filing
agreements pursuant to which they have agreed to file jointly the Statement on
Schedule 13D and amendments thereto with respect to their beneficial ownership
of the Common Stock.
Additional information
concerning the Participants and their associates is set forth in Appendix A to
this Proxy Statement. Additional
information concerning transactions in securities of the Company effected
during the past two years by the Participants and their associates is set forth
in Appendix B to this Proxy Statement.
SOLICITATION; EXPENSES
Proxies may be solicited by mail, advertisement, the
Internet, courier, telephone, facsimile, email and personal solicitation by the
Discovery Group, the Discovery Group Nominees and the Discovery Groups proxy
solicitor. No additional compensation
will be paid to the Discovery Group Nominees for the solicitation of
proxies. Banks, brokerage houses and
other custodians, nominees and fiduciaries will be requested to forward the
Discovery Groups solicitation material to their customers for whom they hold
shares, and the Discovery Group will reimburse them for their reasonable
out-of-pocket expenses.
Discovery Group I has on behalf of the Discovery Group
retained The Altman Group to assist in the solicitation of proxies and to act
as an advisor and consultant in connection with the solicitation of
proxies. Discovery Group I will pay The
Altman Group a fee of up to $30,000 in connection with the solicitation, which
fee includes a base fee, a fee payable when definitive proxy solicitation
materials are mailed to stockholders, and certain success fees. Discovery Group I has also agreed to
reimburse The Altman Group for its out-of-pocket expenses, set up fees and
telephone call fees. Approximately
fifteen persons will be used by The Altman Group in its solicitation
efforts. Pursuant to the terms of the
agreement with The Altman Group, Discovery Group I will indemnify The Altman
Group and its officers, directors and employees, from any and all losses
incurred by The Altman Group in connection with, among other things, the
solicitation of the proxies for the Stockholder Meeting.
The directors, officers,
members and employees of the Discovery Group Entities (including the Discovery
Group Nominees) may also participate in the solicitation of proxies. These persons will not be paid additional
remuneration for their efforts.
The entire expense of preparing, assembling, printing
and mailing this Proxy Statement and related materials and the cost of
soliciting proxies will be borne by the Discovery Group.
The Discovery Group estimates that the total
expenditures relating to its proxy solicitation incurred by the Discovery Group
will be approximately $[ ],
approximately $[ ] of which has been
incurred to date.
14
The Discovery Group
currently intends to seek reimbursement from the Company upon completion of the
solicitation of all expenses incurred in connection with the solicitation of
proxies for the election of the Discovery Group Nominees for the Board at the
Stockholders Meeting if any of the Discovery Group Nominees are elected. The Discovery Group does not intend to submit
the question of such reimbursement to a vote of the stockholders of the
Company.
VOTING AND PROXY PROCEDURES
The Discovery Group believes that it is in the best
interest of the Companys stockholders to elect the Discovery Group Nominees
and to approve the Stockholder Proposal at the Stockholder Meeting. THE DISCOVERY GROUP RECOMMENDS A VOTE FOR THE
ELECTION OF THE DISCOVERY GROUP NOMINEES AND FOR THE APPROVAL OF THE
STOCKHOLDER PROPOSAL BECAUSE THE DISCOVERY GROUP BELIEVES THAT SUCH ACTIONS
WOULD CONTRIBUTE TO THE CREATION OF STOCKHOLDER VALUE.
HOW DO I VOTE BY PROXY?
For the proxy solicited
hereby to be voted, the WHITE proxy card to be supplied by the Discovery Group
Nominees must be signed, dated and returned to the Discovery Group, c/o The
Altman Group, in the enclosed postage-paid envelope in time to be voted at the
Stockholder Meeting. If you wish to vote
for the Discovery Group Nominees, you must submit the WHITE proxy card supplied
by the Discovery Group and must NOT submit the Companys proxy card. While the Companys proxy card can be voted
for the Stockholder Proposal, it CANNOT be voted for the Discovery Group
Nominees.
WHAT IF I AM NOT THE RECORD HOLDER OF MY SHARES?
If your shares are held in the name of a brokerage
firm, bank or nominee, only that entity can vote such shares and only upon
receipt of your specific instruction.
Accordingly, we urge you to contact the person responsible for your
account and instruct that person to execute on your behalf the WHITE proxy
card. If you hold your shares through a
brokerage firm, bank or nominee and wish to vote your shares in person at the
Stockholder Meeting, you must obtain a legal proxy from such custodian in order
to vote in person at the Stockholder Meeting.
IF I PLAN TO ATTEND THE STOCKHOLDER MEETING, SHOULD I
STILL SUBMIT A WHITE
PROXY?
Whether or not you plan to attend the Stockholder
Meeting, we urge you to submit a WHITE proxy card. Returning the enclosed proxy card will not
affect your right to attend and vote at the Stockholder Meeting.
WHAT IF I WANT TO REVOKE MY PROXY?
Any proxy may be revoked as to all matters covered
thereby at any time prior to the time a vote is taken by (i) submitting a
duly executed proxy bearing a later date to the Secretary of the Company, (ii) filing
with the Secretary of the Company a later dated written revocation or (iii) attending
and voting at the Stockholder Meeting in person. Attendance at the Stockholder Meeting will
not in and of itself constitute a revocation.
15
Please note that if you hold your shares through a
brokerage firm, bank or nominee and wish to revoke your proxy, you must follow
the instructions provided by that brokerage firm, bank or nominee to revoke
your earlier vote and revote.
Although a revocation is effective if delivered to the
Company, we request that either the original or a copy of any revocation be
sent to the Discovery Group, c/o The Altman Group, 1200 Wall Street West,
Lyndhurst, NJ 07071, so that the Discovery Group will be aware of all
revocations.
IF YOU PREVIOUSLY SIGNED AND
RETURNED A [ ] PROXY CARD TO THE
COMPANY, WE URGE YOU TO REVOKE IT BY (1) SIGNING, DATING AND RETUNING THE
WHITE PROXY CARD, (2) ATTENDING THE STOCKHOLDER MEETING AND VOTING IN
PERSON OR (3) DELIVERING A WRITTEN NOTICE OF REVOCATION TO THE SECRETARY
OF THE COMPANY OR THE DISCOVERY GROUP.
WHAT SHOULD I DO IF I RECEIVE A PROXY CARD SOLICITED
BY THE COMPANY?
If you submit a proxy to us by signing and returning
the enclosed WHITE proxy card, do not sign or return the proxy card solicited
by the Company or follow any voting instructions provided by the Company unless
you intend to change your vote, because only your latest-dated proxy will be
counted.
If you have already sent a proxy card to the Company,
you may revoke it and provide your support to the Discovery Group Nominees by
signing, dating and returning the enclosed WHITE proxy card.
WHO CAN VOTE?
The Board of Directors has established January 16,
2009 as the record date for the Stockholder Meeting (the Record Date). Only holders of record of Common Stock on the
Record Date will be entitled to vote at and attend the Stockholder
Meeting. If you are a stockholder of
record on the Record Date, you will retain the voting rights in connection with
the Stockholder Meeting even if you sell such shares after the Record
Date. Accordingly, it is important that
you vote the shares of Common Stock held by you on the Record Date, or grant a
proxy to vote such shares on the WHITE proxy card, even if you sell such shares
after such date.
WHAT IS THE REQUIRED QUORUM?
The holders of a majority of the shares of Common
Stock entitled to vote at the Stockholder Meeting, present in person or by
proxy, constitute a quorum.
WHAT VOTE IS REQUIRED TO ELECT THE DISCOVERY GROUP
NOMINEES AND APPROVE THE STOCKHOLDER PROPOSAL?
Based on the Company Proxy Statement, with respect to
the election of directors at the Stockholder Meeting:
·
the [eight]
nominees receiving the highest number of affirmative votes at the Stockholder
Meeting will be elected to the Board of Directors; and
·
abstentions and
broker non-votes will be counted as present when determining whether there is
a quorum, but will not be counted toward a nominees attainment of a plurality.
16
Based on the Company Proxy Statement, with respect to
the approval of the Stockholder Proposal at the Stockholder Meeting:
·
the affirmative
vote of a majority of the shares of Common Stock present at the meeting, in
person or by proxy and voting thereon, is required to approve the Stockholder
Proposal; and
·
proxies that are
marked abstain will be treated as votes and will have the same effect as a
vote against the Stockholder Proposal.
HOW WILL MY SHARES BE VOTED?
In the election of directors as the Stockholder
Meeting, you are entitled to give a nominee as many votes as is equal to the
number of shares you own multiplied by the number of directors to be elected,
or you may distribute your votes among the nominees as you see fit. For example, if you own 100 shares as of the
Record Date, and if eight directors are to be elected at the Stockholder
Meeting, you have 800 votes that you can allocate among the nominees in any
manner you choose.
With respect to the approval of the Stockholder
Proposal, each share of Common Stock present in person or by proxy at the
Stockholder Meeting will be entitled to one vote.
Shares of Common Stock represented by a valid,
unrevoked WHITE proxy card will be voted in accordance with the recommendations
made in this Proxy Statement unless you otherwise indicate on the proxy
card. We are soliciting the
discretionary authority to cumulate votes, and the persons named as proxies on
our proxy card will have the authority to cumulate votes at their
discretion. We will use the authority
granted to us by our WHITE proxy card to cumulate votes for the Discovery Group
Nominees to assure that the maximum number of Discovery Group Nominees are
elected to the Board of Directors.
Except as set forth in this Proxy Statement, the
Discovery Group is not aware of any other matter to be considered at the
Stockholder Meeting. However, if the
Discovery Group learns of any other proposals made at a reasonable time before
the Stockholder Meeting, the Discovery Group will either supplement this Proxy
Statement and provide an opportunity to stockholders to vote by proxy directly
on such matter or will not exercise discretionary authority with respect
thereto. If other proposals are made
thereafter (including at the Stockholder Meeting), the persons named as proxies
on the WHITE proxy card solicited by the Discovery Group will vote such proxies
in their discretion.
THE DISCOVERY GROUP IS ONLY PROPOSING TWO NOMINEES,
WHILE [EIGHT] DIRECTORS ARE EXPECTED TO BE ELECTED AT THE STOCKHOLDER
MEETING. IF I VOTE MY SHARES ON THE
WHITE PROXY CARD, HOW MANY NOMINEES WILL I BE VOTING FOR?
The Discovery Group is seeking to elect the maximum
number of Discovery Group Nominees. The Discovery Group expects to cumulate all
of the votes received in favor of the Discovery Group Nominees. If the two Discovery Group Nominees are
elected, the nominees of the Company who receive the greatest number of votes
would be elected as the [six] other directors.
17
APPRAISAL RIGHTS
Stockholders of the Company do not have rights of
appraisal or dissenters rights with respect to any matter to be acted upon at
the Stockholder Meeting.
INFORMATION ABOUT THE COMPANY
Based upon documents publicly filed by the Company,
the mailing address of the principal executive offices of the Company is 10780
Parkridge Boulevard, Reston, Virginia 20191.
The Company is subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended, and, in
accordance therewith, is required to file reports, proxy statements and other
information with the SEC. Reports,
registration statements, proxy statements and other information filed by the
Company with the SEC may be inspected at, and copies may be obtained from, the
public reference facilities maintained at the SEC at 100 F Street, N.E.,
Washington, DC 20549. Copies of such
material can also be obtained upon written request addressed to the SEC, Public
Reference Section, 100 F Street, N.E., Washington, DC 20549, at prescribed
rates. You may obtain information on the
operation of the SECs Public Reference Room by calling the SEC at
(800) SEC-0330. The SEC also
maintains a web site on the Internet (
http://www.sec.gov
)
where reports, proxy and information statements and other information regarding
issuers and others that file electronically with the SEC may be obtained free
of charge.
The
Discovery Group has omitted from this Proxy Statement certain disclosure
required by applicable law to be included in the Company Proxy Statement. Such
disclosure includes, among other things, information regarding securities of
the Company beneficially owned by the Companys directors, nominees and
management; certain stockholders beneficial ownership of more than 5% of the
Companys voting securities; information concerning executive compensation; and
information concerning the procedures for submitting stockholder proposals and
director nominations intended for consideration at the 2009 Annual Meeting of
Stockholders of the Company and for consideration for inclusion in the proxy
materials for that meeting. Please refer
to the Company Proxy Statement for such information. The Participants take no responsibility for
the accuracy or completeness of information contained in the Company Proxy
Statement.
Date: January [
], 2009
Discovery Equity Partners, L.P.
Discovery Group I, LLC
Daniel J. Donoghue
Michael R. Murphy
18
APPENDIX A
INFORMATION CONCERNING
PARTICIPANTS IN THE PROXY SOLICITATION
The following sets forth the name, business address,
and the number of shares of Common Stock of the Company beneficially owned (as
determined in accordance with Rule 13d-3 under the Exchange Act) as of January [ ], 2009 by each of the Participants:
Name
|
|
Business Address
|
|
Number of Shares of
Common Stock of
the Company
Beneficially Owned
|
|
Percent of Common
Stock of the
Company(1)
|
|
|
|
|
|
|
|
|
|
Discovery Equity
Partners, L.P. (2)
|
|
191
North Wacker Drive,
|
|
1,684,608
|
|
8.5
|
%
|
|
|
Suite 1685,
Chicago, Illinois
|
|
|
|
|
|
|
|
60606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Discovery Group I, LLC
(3)(4)
|
|
191
North Wacker Drive,
|
|
1,957,563
|
|
9.9
|
%
|
|
|
Suite 1685,
Chicago, Illinois
|
|
|
|
|
|
|
|
60606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel J. Donoghue
(3)(4)
|
|
191
North Wacker Drive,
|
|
1,957,563
|
|
9.9
|
%
|
|
|
Suite 1685,
Chicago, Illinois
|
|
|
|
|
|
|
|
60606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael R. Murphy
(3)(4)
|
|
191
North Wacker Drive,
|
|
1,957,563
|
|
9.9
|
%
|
|
|
Suite 1685,
Chicago, Illinois
|
|
|
|
|
|
|
|
60606
|
|
|
|
|
|
(1)
All
percentages are based on the 19,734,463 shares of Common Stock outstanding as
of November 28, 2008 according to the Companys Annual Report on Form 10-K
for the fiscal year ended September 30, 2008.
(2)
Discovery
Equity Partners directly owns shares of Common Stock, 500 of which are owned of
record and 1,684,108 of which are held in a nominee account maintained at a
securities brokerage firm. The name and
address of the record holder of the 1,684,108 shares beneficially owned by
Discovery Equity Partners is Cede & Co., c/o Depository Trust Co., P.O. Box
20, Bowling Green Station, New York, New York 10004.
(3)
The
Other Partnership directly owns 272,995 shares of Common Stock, none of which
are owned of record and all of
which are held in a nominee account maintained at a securities brokerage
firm. The name and address of the record
holder of the 272,995 shares beneficially owned by the Other Partnership is
Cede & Co., c/o Depository Trust Co., P.O. Box 20, Bowling Green
Station, New York, New York 10004.
19
(4)
Discovery
Group I is the sole general partner of Discovery Equity Partners and is the
investment manager of the Other Partnership, and has sole discretionary
investment authority with respect to, the Partnerships investment in the
Common Stock. Messrs. Donoghue and Murphy are the sole managing
members of Discovery Group I. As a consequence, Discovery Group I and Messrs. Donoghue
and Murphy may be deemed to share beneficial ownership of all of the shares of
Common Stock owned by Discovery Equity Partners and the Other Partnership. Messrs. Donoghue and Murphy do not own (i) of
record any shares of Common Stock and (ii) beneficially or of record
shares of any other class of stock or other securities of the Company.
----------------------------------
Except as set forth in this Proxy Statement or in the
Appendices hereto, to the knowledge of the Discovery Group:
(i)
no
Participant owns beneficially, directly or indirectly, or has the right to
acquire, any securities of the Company or any parent or subsidiary of the
Company;
(ii)
no
Participant owns any securities of the Company which are owned of record but
not beneficially;
(iii)
no
Participant has purchased or sold any securities of the Company within the past
two years;
(iv)
no
Participant is, or was within the past year, a party to any contract,
arrangement or understanding with any person with respect to any securities of
the Company within the past year, including, but not limited to, joint
ventures, loan or option agreements, puts or calls, guarantees against loss or
guarantees of profit, division of losses or profits, or the giving or
withholding of proxies;
(v)
none
of the associates (as defined below) of any participant beneficially owns,
directly or indirectly, any securities of the Company;
(vi)
no
Participant nor any associate of a Participant or any immediate family member
of any such Participant or associate has engaged in or had a direct or indirect
material interest in any transaction, or series of similar transactions, since October 1,
2007, or any currently proposed transaction, or series of similar transactions,
to which the Company or any of its subsidiaries was or is to be a party, in
which the amount involved exceeds $120,000;
(vii)
no
Participant nor any associate of a Participant has any arrangement or
understanding with any person (a) with respect to future employment by the
Company or its affiliates or (b) with respect to any future transactions
to which the Company or any of its affiliates will be or may be a party; and
(viii)
no
person who is a party to an arrangement or understanding pursuant to which a
nominee for election as director is proposed to be elected (including, without
limitation, any Participant), has a substantial interest, direct or indirect,
by security holdings or otherwise, in any matter to be acted on at the
Stockholder Meeting.
For purposes of the foregoing, the term associate
shall have the meaning set forth in Rule 14a-1 of Regulation 14A under the
Exchange Act.
20
Information concerning transactions in the Common
Stock by the Participants and their associates effected during the past two
years is set forth in Appendix B to the Proxy Statement.
21
APPENDIX B
TRANSACTIONS IN TIER TECHNOLOGIES, INC. COMMON STOCK
Except for the shares of Common Stock of the Company
owned by Discovery Equity Partners and the Other Partnership, neither Mr. Donoghue
nor Mr. Murphy has purchased or sold any Common Stock of the Company
within the past two years. The following
is a schedule of all transactions by Discovery Equity Partners and the Other
Partnership in the Common Stock within the past two years, which schedule sets
forth with respect to Discovery Equity Partners and the Other Partnership, as
the case may be, the date of such transaction, the number of shares of Common
Stock purchased or sold by Discovery Equity or the Other Partnership, as the
case may be, on such date, and whether such transaction constituted a purchase
or sale (amounts in parentheses indicate a sale of shares).
In connection with the purchases of Common Stock,
Discovery Equity Partners and the Other Partnership used (i) available
cash and (ii) in certain cases, the proceeds of a margin loan facility
which is collateralized by Discovery Equity Partners and the Other Partnerships
portfolios of investment securities, including the Common Stock. These margin loans were obtained from one
broker under customary terms and conditions.
Since the time of such purchases, Discovery Equity Partners and the
Other Partnership have ceased using shares of the Common Stock as collateral
for such margin loans, and thus no margin loans secured by Common Stock remain
outstanding as of the date of this Proxy Statement.
Date
|
|
Discovery
|
|
Other
Partnership
|
|
3/5/07
|
|
255
|
|
45
|
|
3/6/07
|
|
50
|
|
|
|
3/12/07
|
|
425
|
|
75
|
|
3/13/07
|
|
2,677
|
|
473
|
|
3/14/07
|
|
935
|
|
165
|
|
3/15/07
|
|
765
|
|
135
|
|
3/16/07
|
|
1,020
|
|
180
|
|
3/19/07
|
|
2,567
|
|
453
|
|
3/20/07
|
|
17,570
|
|
3,100
|
|
3/21/07
|
|
85
|
|
15
|
|
3/22/07
|
|
531
|
|
94
|
|
3/23/07
|
|
425
|
|
75
|
|
3/26/07
|
|
43
|
|
7
|
|
4/10/07
|
|
6,660
|
|
1,175
|
|
4/10/07
|
|
49,300
|
|
8,700
|
|
4/12/07
|
|
4,250
|
|
750
|
|
4/13/07
|
|
2,295
|
|
405
|
|
22
Date
|
|
Discovery
|
|
Other
Partnership
|
|
4/16/07
|
|
3,655
|
|
645
|
|
4/18/07
|
|
2,550
|
|
450
|
|
4/19/07
|
|
935
|
|
165
|
|
4/20/07
|
|
1,530
|
|
270
|
|
4/24/07
|
|
340
|
|
60
|
|
4/25/07
|
|
11,305
|
|
1,995
|
|
4/26/07
|
|
765
|
|
135
|
|
4/30/07
|
|
2,550
|
|
450
|
|
5/1/07
|
|
3,740
|
|
660
|
|
5/1/07
|
|
21,250
|
|
3,750
|
|
5/7/07
|
|
2,975
|
|
525
|
|
5/8/07
|
|
1,275
|
|
225
|
|
5/15/07
|
|
8,500
|
|
1,500
|
|
5/16/07
|
|
2,125
|
|
375
|
|
5/17/07
|
|
6,375
|
|
1,125
|
|
5/18/07
|
|
4,250
|
|
750
|
|
5/21/07
|
|
425
|
|
75
|
|
5/22/07
|
|
6,800
|
|
1,200
|
|
5/23/07
|
|
1,445
|
|
255
|
|
5/24/07
|
|
8,415
|
|
1,485
|
|
5/25/07
|
|
765
|
|
135
|
|
5/29/07
|
|
85,000
|
|
15,000
|
|
5/30/07
|
|
37,400
|
|
6,600
|
|
6/4/07
|
|
4,250
|
|
750
|
|
6/7/07
|
|
510
|
|
90
|
|
6/8/07
|
|
85
|
|
15
|
|
6/11/07
|
|
5,780
|
|
1,020
|
|
6/12/07
|
|
4,250
|
|
750
|
|
6/12/07
|
|
85,000
|
|
15,000
|
|
6/15/07
|
|
4,250
|
|
750
|
|
6/18/07
|
|
4,250
|
|
750
|
|
6/19/07
|
|
4,250
|
|
750
|
|
23
Date
|
|
Discovery
|
|
Other
Partnership
|
|
6/20/07
|
|
4,250
|
|
750
|
|
6/21/07
|
|
3,740
|
|
660
|
|
6/22/07
|
|
2,210
|
|
390
|
|
6/25/07
|
|
4,250
|
|
750
|
|
6/26/07
|
|
18,700
|
|
3,300
|
|
6/26/07
|
|
63,750
|
|
11,250
|
|
6/28/07
|
|
85
|
|
15
|
|
6/29/07
|
|
1,615
|
|
285
|
|
7/3/07
|
|
4,250
|
|
750
|
|
7/5/07
|
|
1,700
|
|
300
|
|
7/6/07
|
|
12,750
|
|
2,250
|
|
7/9/07
|
|
29,325
|
|
5,175
|
|
7/10/07
|
|
17,425
|
|
3,075
|
|
7/11/07
|
|
6,885
|
|
1,215
|
|
7/12/07
|
|
5,355
|
|
945
|
|
7/16/07
|
|
680
|
|
120
|
|
7/17/07
|
|
9,180
|
|
1,620
|
|
7/18/07
|
|
1,275
|
|
225
|
|
7/20/07
|
|
1,615
|
|
285
|
|
7/23/07
|
|
8,160
|
|
1,440
|
|
7/24/07
|
|
21,250
|
|
3,750
|
|
7/26/07
|
|
25,500
|
|
4,500
|
|
7/30/07
|
|
8,500
|
|
1,500
|
|
7/31/07
|
|
7,480
|
|
1,320
|
|
8/1/07
|
|
8,500
|
|
1,500
|
|
8/3/07
|
|
3,825
|
|
675
|
|
8/6/07
|
|
4,250
|
|
750
|
|
8/7/07
|
|
4,250
|
|
750
|
|
8/8/07
|
|
2,550
|
|
450
|
|
8/9/07
|
|
2,550
|
|
450
|
|
8/10/07
|
|
4,250
|
|
750
|
|
8/13/07
|
|
4,250
|
|
750
|
|
24
Date
|
|
Discovery
|
|
Other
Partnership
|
|
8/15/07
|
|
8,500
|
|
1,500
|
|
8/16/07
|
|
9,000
|
|
1,000
|
|
8/17/07
|
|
9,000
|
|
1,000
|
|
8/20/07
|
|
9,000
|
|
1,000
|
|
8/21/07
|
|
7,200
|
|
800
|
|
8/22/07
|
|
3,600
|
|
400
|
|
8/23/07
|
|
9,500
|
|
500
|
|
8/24/07
|
|
14,060
|
|
740
|
|
8/27/07
|
|
190
|
|
10
|
|
8/31/07
|
|
3,966
|
|
209
|
|
9/4/07
|
|
5,533
|
|
292
|
|
9/5/07
|
|
7,600
|
|
400
|
|
9/6/07
|
|
6,650
|
|
350
|
|
9/7/07
|
|
3,800
|
|
200
|
|
9/10/07
|
|
5,700
|
|
300
|
|
9/11/07
|
|
1,045
|
|
55
|
|
9/12/07
|
|
1,235
|
|
65
|
|
9/13/07
|
|
1,375
|
|
72
|
|
9/14/07
|
|
2,045
|
|
108
|
|
9/17/07
|
|
5,700
|
|
300
|
|
9/18/07
|
|
7,125
|
|
375
|
|
9/19/07
|
|
5,700
|
|
300
|
|
9/20/07
|
|
5,320
|
|
280
|
|
9/20/07
|
|
21,250
|
|
3,750
|
|
9/21/07
|
|
950
|
|
50
|
|
9/24/07
|
|
3,325
|
|
175
|
|
9/26/07
|
|
340
|
|
60
|
|
3/20/08
|
|
|
|
(2,593
|
)
|
3/24/08
|
|
|
|
(700
|
)
|
3/25/08
|
|
(800
|
)
|
|
|
3/27/08
|
|
(25,533
|
)
|
(4,505
|
)
|
3/31/08
|
|
(700
|
)
|
|
|
25
Date
|
|
Discovery
|
|
Other
Partnership
|
|
4/8/08
|
|
(400
|
)
|
|
|
4/9/08
|
|
(200
|
)
|
|
|
4/11/08
|
|
(1,955
|
)
|
(345
|
)
|
4/15/08
|
|
(8,160
|
)
|
(1,440
|
)
|
4/16/08
|
|
(8,502
|
)
|
(1,500
|
)
|
4/17/08
|
|
(2,210
|
)
|
(390
|
)
|
4/22/08
|
|
(400
|
)
|
|
|
4/28/08
|
|
700
|
|
|
|
5/1/08
|
|
91,630
|
|
16,170
|
|
5/5/08
|
|
3,911
|
|
690
|
|
5/6/08
|
|
3,570
|
|
630
|
|
5/7/08
|
|
34,727
|
|
6,129
|
|
5/8/08
|
|
26,106
|
|
4,250
|
|
5/9/08
|
|
1,735
|
|
282
|
|
5/12/08
|
|
21,760
|
|
3,840
|
|
6/4/08
|
|
10,395
|
|
1,693
|
|
6/9/08
|
|
600
|
|
|
|
6/10/08
|
|
11,324
|
|
1,844
|
|
6/11/08
|
|
15,490
|
|
2,522
|
|
6/12/08
|
|
2,408
|
|
392
|
|
6/13/08
|
|
3,055
|
|
497
|
|
6/18/08
|
|
2,150
|
|
350
|
|
6/19/08
|
|
4,042
|
|
658
|
|
6/20/08
|
|
4,512
|
|
734
|
|
6/23/08
|
|
1,720
|
|
280
|
|
6/24/08
|
|
1,290
|
|
210
|
|
6/25/08
|
|
3,393
|
|
552
|
|
6/26/08
|
|
1,462
|
|
238
|
|
6/27/08
|
|
2,322
|
|
378
|
|
6/30/08
|
|
2,719
|
|
443
|
|
7/1/08
|
|
3,956
|
|
644
|
|
7/2/08
|
|
6,450
|
|
1,050
|
|
26
Date
|
|
Discovery
|
|
Other
Partnership
|
|
7/3/08
|
|
3,870
|
|
630
|
|
7/7/08
|
|
1,108
|
|
192
|
|
7/8/08
|
|
4,809
|
|
835
|
|
7/10/08
|
|
4,175
|
|
725
|
|
7/11/08
|
|
1,022
|
|
178
|
|
7/14/08
|
|
14,327
|
|
2,489
|
|
7/15/08
|
|
2,556
|
|
444
|
|
7/16/08
|
|
3,067
|
|
533
|
|
7/17/08
|
|
852
|
|
148
|
|
7/18/08
|
|
511
|
|
89
|
|
7/21/08
|
|
|
|
400
|
|
7/23/08
|
|
2,574
|
|
426
|
|
7/24/08
|
|
2,674
|
|
442
|
|
7/25/08
|
|
1,459
|
|
241
|
|
7/28/08
|
|
9,953
|
|
1,647
|
|
7/29/08
|
|
973
|
|
161
|
|
7/30/08
|
|
1,133
|
|
187
|
|
7/31/08
|
|
944
|
|
156
|
|
8/1/08
|
|
1,287
|
|
213
|
|
8/4/08
|
|
515
|
|
85
|
|
8/5/08
|
|
1,287
|
|
213
|
|
8/6/08
|
|
601
|
|
99
|
|
8/7/08
|
|
2,660
|
|
440
|
|
8/13/08
|
|
4,633
|
|
767
|
|
8/14/08
|
|
2,862
|
|
474
|
|
8/15/08
|
|
86,401
|
|
14,299
|
|
8/18/08
|
|
10,468
|
|
1,732
|
|
8/19/08
|
|
3,389
|
|
561
|
|
8/19/08
|
|
50,622
|
|
8,378
|
|
8/22/08
|
|
3,861
|
|
639
|
|
8/25/08
|
|
429
|
|
71
|
|
8/26/08
|
|
2,060
|
|
341
|
|
27
Date
|
|
Discovery
|
|
Other
Partnership
|
|
8/27/08
|
|
1,802
|
|
298
|
|
8/28/08
|
|
971
|
|
161
|
|
9/3/08
|
|
3,003
|
|
497
|
|
9/4/08
|
|
1,373
|
|
227
|
|
9/5/08
|
|
37,752
|
|
6,248
|
|
9/5/08
|
|
4,462
|
|
738
|
|
9/8/08
|
|
12,613
|
|
2,087
|
|
9/9/08
|
|
300
|
|
|
|
9/15/08
|
|
4,554
|
|
754
|
|
9/16/08
|
|
8,580
|
|
1,420
|
|
9/17/08
|
|
1,103
|
|
182
|
|
9/18/08
|
|
8,580
|
|
1,420
|
|
9/19/08
|
|
3,076
|
|
509
|
|
9/22/08
|
|
13,041
|
|
2,158
|
|
9/23/08
|
|
10,542
|
|
1,745
|
|
9/24/08
|
|
7,085
|
|
1,172
|
|
9/25/08
|
|
9,867
|
|
1,633
|
|
9/26/08
|
|
3,775
|
|
625
|
|
9/29/08
|
|
33,033
|
|
5,467
|
|
10/1/08
|
|
4,901
|
|
811
|
|
10/2/08
|
|
8,915
|
|
1,475
|
|
10/6/08
|
|
6,006
|
|
994
|
|
10/7/08
|
|
15,530
|
|
2,570
|
|
10/7/08
|
|
2,831
|
|
469
|
|
10/8/08
|
|
6,625
|
|
1,096
|
|
10/9/08
|
|
2,402
|
|
398
|
|
10/10/08
|
|
2,917
|
|
483
|
|
10/13/08
|
|
2,574
|
|
426
|
|
10/14/08
|
|
1,973
|
|
327
|
|
10/15/08
|
|
2,917
|
|
483
|
|
10/16/08
|
|
27,937
|
|
4,624
|
|
10/17/08
|
|
35,155
|
|
5,818
|
|
28
Date
|
|
Discovery
|
|
Other
Partnership
|
|
10/20/08
|
|
14,669
|
|
2,428
|
|
10/21/08
|
|
9,781
|
|
1,619
|
|
10/22/08
|
|
2,440
|
|
404
|
|
10/23/08
|
|
12,934
|
|
2,141
|
|
10/24/08
|
|
3,689
|
|
611
|
|
10/27/08
|
|
550
|
|
|
|
10/28/08
|
|
1,802
|
|
298
|
|
10/29/08
|
|
858
|
|
142
|
|
11/3/08
|
|
2,746
|
|
454
|
|
11/4/08
|
|
2,059
|
|
341
|
|
11/5/08
|
|
4,594
|
|
760
|
|
11/6/08
|
|
4,153
|
|
687
|
|
11/7/08
|
|
2,574
|
|
426
|
|
11/10/08
|
|
1,716
|
|
284
|
|
11/11/08
|
|
1,459
|
|
241
|
|
11/12/08
|
|
1,888
|
|
312
|
|
11/13/08
|
|
899
|
|
149
|
|
11/14/08
|
|
1,802
|
|
298
|
|
11/18/08
|
|
6,435
|
|
1,065
|
|
11/19/08
|
|
1,680
|
|
278
|
|
11/20/08
|
|
10,124
|
|
1,676
|
|
29
IMPORTANT
Please review this proxy statement and the enclosed
materials carefully. YOUR VOTE IS VERY
IMPORTANT, no matter how many or how few shares you own.
1.
If
your shares are registered in your own name, please sign, date and mail the
enclosed WHITE proxy card to The Altman Group in the postage-paid envelope
provided.
2.
If
your shares are held in the name of a brokerage firm, bank nominee or other
institution, only it can vote your shares and only after receiving your
specific instructions. Accordingly, you
should contact the person responsible for your account and give instructions
for a WHITE proxy card to be issued representing your shares.
3.
After
signing the enclosed WHITE proxy card, do not sign or return the Companys
proxy card unless you intend to change your vote, because only your latest
dated proxy card will be counted.
4.
If
you have previously signed and returned a proxy card to the Company, you have
every right to change your vote. Only
your latest dated proxy card will count.
You may revoke any proxy card already sent to the Company by signing,
dating and mailing the enclosed WHITE proxy card in the postage-paid envelope
provided. Any proxy may be revoked at
any time prior to the 2009 Stockholder Meeting by delivering a written notice
of revocation or a later-dated proxy for the 2009 Stockholder Meeting to the
Discovery Group, or by voting in person at the 2009 Stockholder Meeting.
If you have any questions concerning this Proxy
Statement, would like to request additional copies of this Proxy Statement or
need help voting your shares or executing your proxy, please contact our proxy
solicitor:
THE ALTMAN GROUP
1200 Wall Street West
Lyndhurst, NJ 07071
Stockholders Call Toll Free: (866) 856-4969
Banks and Brokerage Firms Call Collect: (201) 806-7300
30
TIER TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE DISCOVERY
GROUP
AND NOT ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Daniel J. Donoghue or
Michael R. Murphy, or either of them, with full power of substitution, as
proxies to vote, as indicated above, for and in the name of the undersigned all
shares of Tier Technologies, Inc. (the Company) that the undersigned is
entitled to vote at the Companys 2009 Annual Meeting of Stockholders scheduled
to be held on March 11, 2009 at the Companys headquarters, 10780
Parkridge Boulevard, Reston, Virginia, at 10:00 a.m. Eastern Standard
Time, and at any adjournments or postponements of that meeting, or at any
meeting held in lieu thereof.
This proxy card revokes all previously given by the
undersigned.
This proxy will be voted in accordance with your
instructions specified on the reverse side hereof. If you do not give any specific instructions,
this proxy will be voted FOR the election of the Discovery Group Nominees,
Daniel J. Donoghue and Michael R. Murphy, FOR Proposal 2 as set forth the
reverse side hereof, and FOR Proposal 3 as set forth the reverse side hereof. IN ADDITION, THE PROXIES ARE AUTHORIZED TO
VOTE IN THEIR DISCRETION FOR ANY SUBSTITUTE NOMINEES AS THE PROXIES MAY SELECT
IF ANY NOMINEE NAMED HEREIN IS UNABLE TO SERVE AND ON ANY OTHER MATTERS THAT MAY PROPERLY
COME BEFORE THE STOCKHOLDER MEETING THAT THE PROXIES WERE NOT AWARE OF A
REASONABLE TIME BEFORE THE STOCKHOLDER MEETING.
Stockholders have the right to vote cumulatively in
the election of directors and at the Stockholder Meeting we intend to invoke
our right to cumulate our votes for the election of our nominees, Daniel J.
Donoghue and Michael R. Murphy. THIS
PROXY CARD GIVES OUR PROXIES FULL DISCRETIONARY AUTHORITY TO VOTE CUMULATIVELY
AND TO ALLOCATE VOTES AMONG MESSRS. DONOGHUE AND MURPHY, UNLESS AUTHORITY TO
VOTE FOR ANY OF THEM IS WITHHELD ON REVERSE SIDE.
IMPORTANT: PLEASE SIGN AND DATE ON THE REVERSE SIDE.
DETACH PROXY
CARD HERE
------------------------------------------------------------------------------------------------------------------------------------------------
PLEASE MARK AN
X IN THE
APPROPRIATE
BOX BELOW.
WE RECOMMEND THAT YOU VOTE FOR THE DIRECTOR NOMINEES LISTED IN PROPOSAL
1 BELOW.
1.
Election of Directors
FOR our director
|
|
WITHHOLD for all
|
nominees
|
o
|
nominees
o
|
|
|
|
|
Nominees: Mr. Daniel J. Donoghue, Mr. Michael
R. Murphy
YOU MAY WITHHOLD AUTHORITY TO VOTE FOR
ANY INDIVIDUAL BY WRITING THE NAME OF THE NOMINEE YOU DO NOT SUPPORT ON THE
LINE BELOW. IF YOU WITHHOLD
DISCRETIONARY AUTHORITY TO VOTE FOR ONE OF THE DISCOVERY GROUP NOMINEES, WE
WILL ALLOCATE YOUR VOTES TO THE OTHER NOMINEE.
WE RECOMMEND THAT YOU VOTE FOR PROPOSAL 2 BELOW.
|
|
FOR
|
AGAINST
|
ABSTAIN
|
2. Appointment of McGladrey &
Pullen, LLP as the Companys independent
|
o
|
o
|
o
|
registered public accounting firm for the fiscal year ending September 30,
2009.
|
|
WE RECOMMEND THAT YOU VOTE FOR PROPOSAL 3 BELOW.
|
|
|
|
|
3. Stockholder Proposal
recommending termination of Rights Plan and
|
|
|
|
Reinstatement of Stockholders right to call Special Meetings
|
o
|
o
|
o
|
|
|
|
|
|
|
|
|
Dated __________________, 2009
|
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Signature of stockholder
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|
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|
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Signature if held jointly
|
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|
|
|
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|
|
|
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Title, if applicable
|
|
|
|
|
|
|
|
|
|
Please sign exactly as your name appears on this proxy card. All joint owners should sign. If you are signing in a fiduciary capacity
|
or as a corporate officer, please also provide your full title.
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|
PLEASE SIGN, DATE AND MAIL THIS PROXY CARD TODAY
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