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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 24, 2004
Transaction Systems Architects, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-25346 47-0772104
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(State or Other (Commission File No.) (I.R.S. Employer
Jurisdiction Identification No.)
of Incorporation)
224 South 108th Avenue, Omaha Nebraska 68154
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(402) 334-5101
N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
-- Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
-- Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
-- Pre-commencement communications pursuant to Rule 14d-2(b)
under the Exchange Act (17 CFR 240.14d-2(b))
-- Pre-commencement communications pursuant to Rule 13e-4(c)
under the Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement.
On September 28, 2004, Transaction Systems Architects, Inc. (the
"Company") entered into a Third Amended and Restated Employment Agreement (the
"Employment Agreement") with Gregory D. Derkacht, pursuant to which Mr. Derkacht
agreed to continue to be employed by the Company and, unless otherwise requested
by the Board of Directors of the Company, to continue to serve as a member of
the Company's Board of Directors (subject to election by the Company's
stockholders), through June 30, 2006 (the "Term"). Under the Employment
Agreement, Mr. Derkacht will continue to serve as the Company's president and
CEO unless the Company appoints a successor president and CEO, in which case Mr.
Derkacht will perform specified transition services for the Company until the
end of the Term or until the Employment Agreement is earlier terminated.
The Employment Agreement provides that Mr. Derkacht will receive a base
salary of $360,000 per year, as well as other compensation, including bonus
opportunities, as set forth in the Employment Agreement attached as Exhibit 10.1
to this Current Report, which is incorporated herein by reference. If a
successor president and CEO is appointed and Mr. Derkacht provides transition
services on a less than full-time basis, Mr. Derkacht's base salary will be
reduced to $180,000 per year and Mr. Derkacht will no longer participate in the
Company's annual management incentive compensation program. If Mr. Derkacht
performs the duties contemplated by the Employment Agreement through the end of
the Term, including the transition services described above, the Employment
Agreement provides that Mr. Derkacht will be entitled to a one-time bonus of
$500,000 and certain other benefits as provided in the Employment Agreement.
Under the Employment Agreement, Mr. Derkacht will be entitled to
receive a severance payment of $500,000 in the event that the Company terminates
Mr. Derkacht's employment without cause prior to the end of the Term.
On September 28, 2004, the Company issued a press release relating to
Mr. Derkacht's intention to retire from the Company not later than June 30, 2006
and the entry into the Employment Agreement. A copy of the press release is
attached to this Current Report as Exhibit 99.1.
On September 28, 2004, in connection with the entry into the Employment
Agreement, the Company amended and restated the Severance Compensation Agreement
dated April 28, 2003 between the Company and Mr. Derkacht (the "Severance
Agreement") to provide, in pertinent part, that the Severance Agreement shall
terminate upon the appointment of a successor president and CEO. The form of the
Severance Agreement was originally attached as Exhibit 10.02 to the Company's
quarterly report on Form 10-Q for the period ended March 31, 2003. The form of
the amended and restated severance agreement is attached as Exhibit E to the
Employment Agreement attached as Exhibit 10.1 to this Current Report.
On September 24, 2004, the Compensation Committee of the Board of
Directors of the Company approved the 2005 Fiscal Year Management Incentive
Compensation Plan (the "2005 MIC Plan"). There is no formally adopted plan
document and attached as Exhibit 10.2 to this Current Report is a description of
the 2005 MIC Plan.
On September 29, 2004, the Company entered into a Severance
Compensation Agreement (Change in Control) with Donald P. Newman, the Company's
controller and an executive officer of the Company (the "Newman Agreement"),
which generally provides that if there is a "change in control" of the Company
(as defined in the Newman Agreement, the form of which is filed as Exhibit 10.3
to this Current Report and incorporated herein by reference to Exhibit 10.16 to
the Company's Form 10-K for the fiscal year ended September 30, 2003) and Mr.
Newman's employment with the Company is subsequently terminated within two years
after the change in control, other than as a result of death, retirement,
termination by the Company for cause or Mr. Newman's decision to terminate
employment other than for good reason, Mr. Newman will be entitled to receive
from the Company certain payments and benefits.
These payments and benefits include (i) a lump-sum payment (the
"Lump-Sum Payment") equal to one times Mr. Newman's average fiscal-year
compensation (generally, compensation included in Mr. Newman's gross income
without regard to any deferral election, but excluding amounts realized on the
exercise of non-qualified stock options, from the sale of stock acquired under
an incentive stock option or under an employee stock purchase plan) for the two
most recent fiscal years of the Company ending prior to the date of termination;
(ii) earned but unpaid base salary through the date of termination; (iii) a
quarterly incentive award for the current fiscal quarter prorated through the
date of termination equal to the greater of the quarterly incentive award made
to Mr. Newman for the most recent fiscal quarter ending prior to the date of
termination or the average quarterly incentive award made to Mr. Newman for the
most recent three fiscal years ending prior to the date of termination; (iv)
interest on the amounts described in (i), (ii) and (iii); and (v) unless Mr.
Newman's termination of employment is the result of Mr. Newman's disability,
continued participation at the Company's cost in employee benefit plans
available to Company employees generally in which Mr. Newman was participating,
until the earlier of receiving equivalent benefits from a subsequent employer,
or one year from the date of termination. The Lump-Sum Payment will not be less
than one times Mr. Newman's annual rate of base salary at the higher of the
annual rate in effect (i) immediately prior to the date of termination or (ii)
on the date six months prior to the date of termination.
Under the Newman Agreement, in the event of a change in control,
unvested awards, units and benefits (other than stock options or awards of
securities) allocated to Mr. Newman under incentive plans shall fully vest and
become payable in cash. The Newman Agreement also provides that in the event any
payment by the Company would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended, or any interest or
penalties are incurred by Mr. Newman with respect to such excise tax, then Mr.
Newman will be entitled to an additional payment in an amount such that, after
payment by Mr. Newman of all taxes, he is in the same after-tax position as if
no excise tax had been imposed. The Newman Agreement provides that it will
terminate upon the earlier of (i) termination of Mr. Newman's employment for any
reason prior to a change in control, and (ii) three years after the date of a
change in control.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
No. Description
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10.1 Third Amended and Restated Employment Agreement dated as of
September 28, 2004 between Transaction Systems Architects, Inc.
and Gregory D. Derkacht (with exhibits, including the form of
Amended and Restated Severance Compensation Agreement).
10.2 Description of the 2005 Fiscal Year Management Incentive
Compensation Plan.
10.3 Severance Compensation Agreement (Change in Control), dated
September 29, 2004, between Donald P. Newman and the Company
(the form of which is filed as Exhibit 10.16 to the Company's
Form 10-K for the fiscal year ended September 30, 2003 and
incorporated herein by reference).
99.1 Press Release.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 29, 2004 TRANSACTION SYSTEMS ARCHITECTS, INC.
By: /s/ Dennis P. Byrnes
Name: Dennis P. Byrnes
Title: Senior Vice President
EXHIBIT INDEX
Exhibit
No. Description
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10.1 Third Amended and Restated Employment Agreement dated as of
September 28, 2004 between Transaction Systems Architects, Inc.
and Gregory D. Derkacht (with exhibits, including the form of
Amended and Restated Severance Compensation Agreement).
10.2 Description of the 2005 Fiscal Year Management Incentive
Compensation Plan.
10.3 Severance Compensation Agreement (Change in Control), dated
September 29, 2004, between Donald P. Newman and the Company
(the form of which is filed as Exhibit 10.16 to the Company's
Form 10-K for the fiscal year ended September 30, 2003 and
incorporated herein by reference).
99.1 Press Release.
Exhibit 10.1
THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Third Amended and Restated Employment Agreement ("Agreement") is
made as of September 28, 2004, by and between Transaction Systems Architects,
Inc., a Delaware corporation, ("Employer") and Gregory D. Derkacht ("Employee").
PRELIMINARY STATEMENTS
A. Employer and Employee have entered into that certain employment agreement
dated as of December 3, 2001 pertaining to the terms of the employment of
Employee by Employer, which agreement was amended and restated as of April 28,
2003 and December 15, 2003 (as amended and restated, the "Second Amended and
Restated Employment Agreement").
B. Employer and Employee desire to amend and restate the Second Amended and
Restated Employment Agreement as provided herein.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as follows:
1. Employment. Subject to the terms and conditions of this Agreement,
Employer hereby agrees to employ Employee, and Employee hereby accepts and
agrees to such employment, upon the terms and conditions set forth herein and
with such duties attendant to Employee's position as a senior executive officer
of Employer and such other duties as shall be determined by the Board of
Directors of Employer (the "Board").
2. Term. The term of this Agreement, and Employee's employment
hereunder, shall commence on September 28, 2004 and, unless earlier terminated,
continue through June 30, 2006 (the "Term").
3. Duties. Employee shall, during the Term:
(a) Execute Duties. Execute the duties attendant to his
position as president and CEO of Employer, or such other position as the Board
shall designate, and such additional duties as shall be determined and directed
by the Board from time to time.
(b) Board Service. Unless otherwise requested by the Board, serve as
a member of the Board, subject to nomination by the Board and election by
Employer's stockholders.
(c) Full Efforts and Time. Consistent with the foregoing, Employee
shall devote full business time, energy, and skill to the businesses of
Employer, and to the promotion of Employer's best interests; provided, however,
that this Agreement shall not preclude Employee from participating in the
affairs of any governmental, educational or other charitable institution, from
engaging in professional speaking and writing activities, and from serving as a
member of the board of directors of other corporations or entities (subject to
the approval by the Chairman of the Board) so long as such activities do not
unreasonably interfere with the businesses of Employer or conflict with
Employee's obligations under this Agreement.
(d) Successor Planning; Transition Services. Without limiting the
foregoing, as directed by the Board from time to time, Employee shall execute
certain duties related to CEO successor planning. Nothing in this Agreement
shall be construed to prohibit or otherwise limit Employer's ability to appoint
a successor president or CEO (in each case, a "successor CEO") during the Term,
and Employee acknowledges that he may be replaced as president and CEO of
Employer at any time during the Term or thereafter. If Employer appoints a
successor CEO, Employee acknowledges that he will thereafter no longer serve in
the capacity of president and CEO of Employer but will continue to perform
specified transition services for Employer as may be determined by the Board.
A change in Employee's title or offices, or a significant diminution of
Employee's duties and responsibilities, position or status with Employer shall
not constitute a termination, actual or constructive, of Employee's employment.
4. Compensation.
(a) Base. Effective January 1, 2003, Employer shall pay Employee for
all services to be performed by Employee during the Term a base salary (the
"Base Salary") at the rate of $360,000 per year, payable in substantially equal
semi-monthly payments in accordance with Employer's customary practice for
other employees, as such practice may be determined from time to time. The
Board may increase such Base Salary in its reasonable business judgment. The
Board may decrease such Base Salary (i) as a result of a pro-rata
across-the-board salary reduction for all executive level management employees
of Employer, or (ii) to a rate of $180,000 per year if Employer appoints a
successor CEO during the Term and the Board directs Employee to provide
transition services on less than a full-time basis.
(b) Management Incentive Compensation. In addition to the Base
Salary, Employee shall be entitled to participate in Employer's annual
Management Incentive Compensation Program approved by the Board ("MICP"),
subject to the provisions of this Agreement. Employee's "on target" incentive
compensation will be $150,000 per fiscal year prorated over the number of
periods established under the MICP. The amount of incentive compensation
payable to Employee with respect to a particular period will depend upon the
achievement of (i) the financial results set forth in the MICP with respect to
the fiscal period and (ii) such additional objectives as the Board may
reasonably establish from time to time. The Board may increase or decrease the
incentive compensation payable to Employee. In the event that Employer hires a
successor CEO during the Term, Employee's participation in the MICP shall cease
commencing with the fiscal quarter immediately succeeding the fiscal quarter in
which a successor CEO is appointed.
(c) Transition Services Bonus. If Employee performs the duties
contemplated under this Agreement through June 30, 2006, including without
limitation transition services contemplated under Section 3(d), Employer will
pay Employee a one-time bonus (a "Transition Bonus") in the amount of $500,000
and, except as provided in Section 5(b), Employee shall not be entitled to any
other compensation under this Agreement. The Transition Bonus will be paid in a
lump sum in accordance with Employer's payroll practices in effect on June 30,
2006.
(d) Business Expenses. In addition to the Base Salary set forth
above, Employer agrees that during the Term Employee shall be entitled to
reimbursement by Employer for all reasonable and documented business expenses
incurred by him on Employer's behalf in the course of his employment hereunder
in accordance with Employer's policy concerning the same.
(e) Board Service. No separate or additional compensation will
be paid to Employee with respect to service on the Board.
(f) Stock Options. Employee has received three stock option
grants from the Employer's existing stock option plans. The first grant was in
the amount of 100,000 shares and was made on January 2, 2002. The second and
third grants were in the amount of 200,000 shares each and were made February
19, 2002. The terms and conditions for each of the grants are set forth in
separate stock option agreements. The stock option agreements for each of the
grants are attached hereto as Exhibits B, C and D, respectively.
(g) Legal Fees. Employer shall reimburse Employee for reasonable and
documented fees incurred by Employee for legal advice and counsel obtained in
connection with entering into this Agreement; provided, however, Employer's
reimbursements hereunder shall be limited to an aggregate amount of $10,000.
5. Additional Benefits.
(a) Participation in Benefit Plans. During the Term, Employee
and his dependents shall be entitled to participate in and receive health
insurance and other benefits ("Benefit Plans") under Employer's Benefit Plans,
whether qualified plans or non-qualified plans, subject to and on a basis
consistent with the terms, conditions, including eligibility requirements, and
overall administration of such Benefit Plans as provided to similarly situated
employees of Employer, as changed from time to time. Employee shall be entitled
to a minimum of four weeks of paid vacation and holidays in accordance with
Employer's policies in effect from time to time for its employees.
(b) Continuation of Certain Benefits. If Employee performs the
duties contemplated under this Agreement through June 30, 2006, Employee will be
entitled to continued participation in Employer's group health plan until the
earlier of (A) the date he becomes eligible to receive coverage and benefits
under the health plan of a subsequent employer, or (B) June 30 2011; provided
(1) if Employee is precluded from continuing his participation in Employer's
group health plan as provided herein, he shall be paid, in a lump sum cash
payment, within 30 days following the date it is determined he is unable to
participate in the group health plan, an amount equal to the after-tax economic
equivalent of the benefits (net of Employee's contribution) provided under the
plan; (2) the economic equivalent of any benefit foregone shall be deemed to be
an amount equal to (i) the lowest cost that would be incurred by Employee in
obtaining such benefit for himself (including family or dependent coverage, if
applicable) on an individual basis, minus (ii) the amount Employee would
reasonably have been expected to contribute under Employer's group health plan;
and (3) in no event shall the lump sum cash payment contemplated by this Section
5(b) exceed $30,000. Employee shall be eligible for group health plan
continuation coverage under, and in accordance with, the Consolidated Omnibus
Budget Reconciliation Act of 1965, as amended, when he ceases to be eligible for
continued participation in Employer's group health plan.
6. Termination.
(a) Types of Termination.
(i) For Cause by Employer. Any termination of Employee's
employment by Employer for Cause (as defined in Exhibit A attached hereto)
shall be authorized by a vote of at least a majority of the non-employee
members of the Board within 12 months of a majority of such non-employee members
of the Board having actual knowledge of the event or circumstances providing a
basis for such termination. In the case of clause (4) of the definition of
Cause, Employee shall be given notice by the Board specifying in detail the
particular act or failure to act on which the Board is relying in proposing to
terminate him for Cause and offering Employee an opportunity, on a date at least
14 days after receipt of such notice, to have a hearing, with counsel, before a
majority of the non-employee members of the Board, including each of the members
of the Board who authorized the termination for Cause. Employee shall not be
terminated for Cause if, within 30 days after the date of Employee's hearing
before the Board (or if Employee waives a hearing, within 30 days after
receiving notice of the proposed termination), he has corrected the particular
act or failure to act specified in the notice and by so correcting such act or
failure to act he has reduced the economic damage his act or failure to act has
allegedly caused Employer to a level which is no longer material or has
eliminated the probability that such act or failure to act is likely to result
in material economic damage to Employer. No termination for Cause shall take
effect until the expiration of the correction period described in the preceding
sentence and the determination by a majority of the non-employee members of the
Board that Employee has failed to correct the act or failure to act in
accordance with the terms of the preceding sentence.
Anything herein to the contrary notwithstanding, if, following a
termination of Employee's employment by Employer for Cause based upon the
conviction of Employee for a felony involving moral turpitude such conviction
is finally overturned on appeal, Employee shall be entitled to the compensation
provided in Sections 4(a) and 4(c) of the Severance Compensation Agreement. In
lieu of the interest provided in clause (iv) of the first sentence of Section
4(a) of the Severance Compensation Agreement and the interest provided in the
second sentence of Section 4(c) of the Severance Compensation Agreement,
however, the compensation provided in Sections 4(a) and 4(c) of the Severance
Compensation Agreement shall be increased by a 10% rate of interest, compounded
annually, calculated from the date such compensation would have been paid if
Employee's employment had been terminated without Cause.
(ii) Death, Disability or Retirement of Employee. If Employee's
employment is terminated during the Term due to the death, Disability (as
defined below) or Retirement (as defined in Exhibit A) of Employee, then an
amount equal to Employee's Base Salary (at the rate most recently in effect)
shall be paid through the date of his death, Disability or Retirement, plus an
amount in respect of any accrued but unused vacation days; provided, however,
that if Employee's employment is terminated due to death, Disability or
Retirement subsequent to a Change in Control, then the applicable provisions
of the Severance Compensation Agreement shall govern, provided the Severance
Compensation Agreement has not been earlier terminated.
In addition to any other compensation provided for under this
Agreement or the Severance Compensation Agreement, Employee's beneficiaries
shall also receive any insurance benefits under the Benefit Plans to which
Employee or his beneficiaries are entitled on the date of his death or
Disability. Furthermore, if Employee's employment is terminated during the Term
due to Disability, then Employee will be entitled to continued participation in
all Benefit Plans or programs available to Employer's employees generally, until
the earlier of (A) the date, or dates, he becomes eligible to receive coverage
and benefits under the plans and programs of a subsequent employer (such
coverages and benefits to be determined on a coverage-by-coverage or
benefit-by-benefit basis) or (B) two years from the Termination Date; provided
(1) if Employee is precluded from continuing his participation in any Benefit
Plan or program as provided in the preceding sentence, he shall be paid, in a
lump sum cash payment, within 30 days following the date it is determined he is
unable to participate in any Benefit Plan or program, the after-tax economic
equivalent of the benefits (net of Employee's contribution) provided under the
plan or program in which he is unable to participate for the period specified in
the preceding sentence; and (2) the economic equivalent of any benefit foregone
shall be deemed to be an amount equal to (i) the lowest cost that would be
incurred by Employee in obtaining such benefit for himself (including family or
dependent coverage, if applicable) on an individual basis, minus (ii) the amount
Employee would reasonably have been expected to contribute under Employer's
group health plan. Employee shall be eligible for group health plan continuation
coverage under and in accordance with the Consolidated Omnibus Budget
Reconciliation Act of 1965, as amended, when he ceases to be eligible for
continued participation in Employer's group health plan under this Section
6(a)(ii).
As used in this Agreement, the term "Disability" shall mean the
inability of Employee, due to physical or mental illness, with or without a
reasonable accommodation, to perform his duties with Employer on a full-time
basis for six months and, within 30 days after a notice of termination is
thereafter given by Employer, Employee's failure to return to the full-time
performance of Employee's duties as set forth in Section 3.
In the case of the Disability or Retirement of Employee, the
Noncompetition and Confidentiality and other provisions of Sections 7 and 8
hereof shall remain in effect.
(iii) Without Cause by Employer. Employer may terminate the
employment of Employee at any time without Cause after providing Employee with
30 days' prior written notice setting forth its intention to do so.
(iv) Expiration of Term. The expiration of this Agreement is by
its own term, as set forth in Section 2.
(b) Compensation on Termination. Except as otherwise provided
in the Severance Compensation Agreement, if Employee is terminated for Cause,
death, Disability, Retirement, or voluntarily terminates his employment,
Employee shall not be entitled to any compensation following the date of
termination as defined below (the "Termination Date"):
(i) for Cause by Employer - immediately upon the vote of a
majority of the non-employee Board members as provided in Section 6(a)(i);
(ii) for death, Disability or Retirement - for death or
Retirement, immediately upon the date of such occurrence; for Disability,
immediately upon expiration of the notice period described in Section 6(a)(ii)
if Employee fails to return to the full-time performance of Employee's duties
as set forth in Section 3; and
(iv) by its own term - on the date set forth in Section 2.
(c) Compensation for Termination Without Cause. Subject to the
provisions of this Agreement, in the event Employee is terminated by Employer
without Cause prior to June 30, 2006, Employer shall pay to Employee $500,000.
(d) Change in Control Compensation. Subject to the provisions
of this Agreement, including without limitation Section 6(g), Employee shall be
entitled to the compensation provided in the Severance Compensation Agreement
pursuant to the terms stated in such agreement.
(e) Expiration of Term. Subject to the provisions of this
Agreement, including without limitation Sections 4(b), 5(b) and 6(g), if this
Agreement remains in effect through the Term, Employee shall be entitled to the
Transition Bonus and compensation provided under Section 5(b).
(f) Notice of Termination. Any termination of Employee's employment
by Employer pursuant to Section 6(a)(i) or 6(a)(iii) above shall be communicated
by a written notice of termination to Employee.
(g) Conflict in Benefits. To the extent that Employee is entitled to
severance compensation pursuant to the terms of that certain amended and
restated severance compensation agreement (the "Severance Compensation
Agreement") dated as of the date hereof, a copy of which is attached hereto as
Exhibit E, Employee's entitlement to any severance compensation (including the
Transition Bonus) shall be determined under the Severance Compensation
Agreement. Without limiting the foregoing, the parties expressly understand and
agree that, if Employee is entitled to compensation under the Severance
Compensation Agreement, Employee shall in no event be entitled to compensation
pursuant to Section 4(c), 5(b) , 6(c) or 6(e) of this Agreement.
7. Noncompetition, Noninducement, Nonsolicitation, Release.
(a) Employee hereby agrees that commencing on the date of this
Agreement and continuing through 180 days after the termination date (the
"Non-Compete Period"), he shall not singly, jointly, or as a member, employee,
or agent of any partnership or as an officer, agent, employee, director or
stockholder, or investor of any other corporation or entity, or in any other
capacity, which is engaged in a similar business to that of Employer during the
period of non-competition:
(i) solicit, contact and/or service any person, firm,
corporation, partnership, or entity of any kind whatsoever for purposes which
are competitive to that of Employer, and for purposes similar to those performed
by Employee for Employer, a client of Employer for which Employee performed
service or had personal contact with on behalf of Employer during the last one
year of Employee's employment with Employer; provided, that Employee shall be
able to acquire and hold up to 1% of the outstanding shares of any publicly
traded stock of any company, and an unlimited percentage of outstanding shares
in the Employer, its parent, affiliates, or subsidiaries; and
(ii) directly or indirectly induce or attempt to induce any
person who, during the term of Employee's employment hereunder, was an employee,
representative or agent of Employer or any of its affiliates to terminate his
employment with Employer or any of its affiliates, or to violate the terms of
any agreement between said employee, representative or agent and Employer or
any of its affiliates.
(b) It is understood and agreed by Employer and Employee that the time
periods of the restrictions set forth in Section 7(a) of this Agreement are
intended by Employer and Employee to be extended by any time period during
which Employee violates the terms and conditions of Section 7(a).
Notwithstanding anything which could be construed to the contrary, this Section
7(b) is not intended to and shall not be deemed to permit Employee to violate
any term or condition of Section 7(a).
(c) Prior to Employer providing any compensation under Section 4(c),
5(b) or 6(c) of this Agreement or under the Severance Compensation Agreement,
Employee shall execute and deliver to Employer a release and waiver (the
"Release") in substantially the form attached hereto as Exhibit F, with such
changes therein and modifications thereto as Employer, in the exercise of its
reasonable judgment, may determine to be required by applicable law or rule in
any jurisdiction. Employer's obligation to provide any compensation under
Section 4(c), 5(b) or 6(c) under this Agreement, or under the Severance
Compensation Agreement is expressly conditioned on Employee's prior execution
and delivery of the Release.
(d) In the event any of the provisions of this Agreement shall be
held to be invalid or unenforceable, the remaining portions thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included herein.
(e) Employer and Employee specifically agree that the provisions of
Sections 7, 8, 9 ,10 and 15 shall survive the termination of this Agreement.
(f) Employer and Employee agree that the provisions of this Section 7
may be waived in whole or in part by mutual agreement in writing by Employer and
Employee.
8. Confidentiality. Without the consent of Employer, Employee will not,
during his Employment or after termination of this Agreement, (a) disclose any
trade secret or proprietary or confidential knowledge or information of Employer
or any affiliate of Employer to any person or entity (other than to Employer or
stockholders, directors, officers or employees of Employer or representatives
thereof), or (b) otherwise make use of any such secret, knowledge or information
for other than Employers purposes, unless in the case of (a) or (b) above such
secret, knowledge or information is readily ascertainable from publicly
available information. Employee will hold confidential, on behalf of Employer as
the property of Employer, all memoranda, manuals, books, papers, letters,
documents, computer software and other similar property obtained during the
course of performing duties under this Agreement, and will return such property
to Employer at any time upon demand by Employer and, in any event, within three
calendar days after termination of his employment under this Agreement or after
the end of the Term.
9. Developments.
(a) As used in this Agreement, the term "Employee Developments" shall
mean all technological, financial, operating and training ideas, processes,
methods and materials, specifically including, but not limited to, all
inventions, discoveries, improvements, devices, apparatus, designs, practices,
processes, methods, formulas, know-how, products, enhancements and all software,
computer programs (including source code, object code, documentation and
programmer's notes) and other works of authorship, whether or not patentable or
copyrightable, developed, written, conceived or reduced to practice during
Employee's employment by Employer or within a period of 90 days thereafter
(i) which result from any work performed by Employee for the Employer, or
(ii) which relate to the Employer's business or research or development of the
Employer at the time Employee develops, writes, conceives or reduces to practice
any of the foregoing, alone or with others.
(b) Employee shall promptly disclose all Employee Developments
to the Employer and make available to the Employer any work papers, drawings,
designs, schematics, specifications, descriptions, models, diskettes, computer
tapes, source codes or other tangible incidents of Employee Developments.
Employee agrees that all Employee Developments shall be considered work made by
Employee for the Employer and prepared within the scope of Employee's employment
and that all right, title and ownership interest in and to Employee
Developments, including, without limitation, copyright, trade secret, patent or
other intellectual property rights, shall exclusively vest in and be retained by
the Employer, both during and following the term of employment. Employee agrees
to perform upon request of the Employer any acts that may be necessary or
convenient during his term of employment or thereafter to establish, perfect,
evidence, register, transfer, assign or convey ownership of Employee
Developments in or to the Employer, to the fullest extent possible, including
without limitation, assignment to the Employer of all ownership, copyright,
trade secret, patent and other intellectual property rights without any further
consideration.
10. Remedies.
(a) Employer shall be entitled, if it elects, to enjoin any breach or
threatened breach of, or enforce the specific performance of, the obligations
of Employee under Sections 7 and 8, without showing any actual damage or that
monetary damages would be inadequate. Any such equitable remedy will not be the
sole and exclusive remedy for any such breach, and Employer may pursue other
remedies for such a breach.
(b) Any court proceeding to enforce the specific performance
provisions of this Agreement may be commenced in the federal courts located in
the State of Nebraska, or in the absence of federal jurisdiction, the state
courts of Nebraska having jurisdiction. Employer and Employee submit to the
jurisdiction of such courts and waive any objection which they may have to the
pursuit of any such proceeding in any such court for purposes of specific
performance only.
11. Employer Assignment. Employer may assign this Agreement, provided,
however, that in the event of such assignment by the Employer, Employer's
obligations hereunder shall be binding legal obligations and shall inure to the
benefit of any successor.
12. Location. Employee agrees to reside in Omaha, Nebraska during the
Term. In the event that a successor CEO is appointed during the Term, Employee's
obligation to reside in Omaha, Nebraska shall terminate upon the earlier of (i)
120 days after the appointment of the successor CEO, or such longer period as
the Board may request, and (ii) June 30, 2006.
13. Benefits Unfunded. All rights of Employee and his spouse or other
beneficiary under this Agreement shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating any assets of
Employer for payment of any amounts due hereunder. Neither Employee nor his
spouse or other beneficiary shall have any interest in or rights against any
specific assets of Employer.
14. Waiver. No waiver by any party at any time of any breach by any
other party of, or compliance with, any condition or provision of this Agreement
to be performed by any other party shall be deemed a waiver of any other
provisions or conditions at the same time or at any prior or subsequent time.
15. Applicable Law. This Agreement shall be construed and interpreted
pursuant to the laws of the State of Nebraska without giving effect to the
conflict of laws provisions thereof.
16. Entire Agreement. This Agreement and the Severance Compensation
Agreement contain the entire agreement between Employer and Employee and
supersede any and all previous agreements, written or oral, between the parties
relating to the subject matter hereof and thereof including, without limitation,
the Second Amended and Restated Employment Agreement. In the event of a conflict
between the provisions of this Agreement and the provisions contained in the
Severance Compensation Agreement, the provisions of this Agreement shall govern.
No amendment or modification of the terms of this Agreement shall be binding
upon the parties hereto unless reduced to writing and signed by Employer and
Employee.
17. Counterparts. This Agreement may be executed in counterparts and by
facsimile signatures, each of which shall be deemed an original, and all of
which taken together shall constitute one instrument.
18. Severability. In the event any provision of this Agreement is held
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.
19. Notice. Notices under this Agreement shall be in writing and sent
by registered mail, return receipt requested, to the following addresses or to
such other addresses as the party being notified may have previously furnished
to the others by written notice.
If to Employer or its Board of Directors:
Transaction Systems Architects, Inc.
Attn: Chairman of the Board
224 South 108th Avenue
Omaha, NE 68154
with a copy to:
Transaction Systems Architects, Inc.
Attn: General Counsel
224 South 108th Avenue
Omaha, Nebraska 68154
If to Employee:
Gregory D. Derkacht
[Address]
Such notices shall be deemed received three business days after they are so
sent.
IN WITNESS WHEREOF, the parties have executed this Agreement, on the
day and year first above written.
Transaction Systems Architects, Inc.
("Employer")
By: /s/ Dennis P. Byrnes
---------------------------------
Its: Senior Vice President
Gregory D. Derkacht
("Employee")
/s/ Gregory D. Derkacht
------------------------------------
Exhibit A - Certain Definitions
Exhibit B - Stock Option Agreement (January 2, 2002)
Exhibit C - Stock Option Agreement (February 19, 2002)
Exhibit D - Stock Option Agreement (February 19, 2002)
Exhibit E - Severance Compensation Agreement
Exhibit F - General Release
EXHIBIT A
CERTAIN DEFINITIONS
Change in Control
For purposes of this Agreement, "Change in Control" shall have the meaning
ascribed to that term in the Severance Compensation Agreement.
Retirement
For purposes of this Agreement, "Retirement" shall mean termination by Employer
or Employee of Employee's employment based on Employee's having reached age 65
or such other age as shall have been fixed in any arrangement established
pursuant to this Agreement with Employee's consent with respect to Employee.
Cause
For purposes of this Agreement, "Cause" shall mean: (1) Employee's conviction of
a felony involving moral turpitude; (2) Employee's breach of this Agreement; (3)
Employees breach of Employer's Code of Business Conduct and Ethics or Code of
Ethics for the Chief Executive Officer and Senior Financial Officers, as the
same may be amended from time to time; or (4) Employee's serious, willful gross
misconduct or willful gross neglect of duties (other than any such neglect
resulting from Employee's incapacity due to physical or mental illness) which
has resulted, or in all probability is likely to result, in material economic
damage to the Employer. Notwithstanding the foregoing, no act or failure to act
by Employee will constitute "Cause" under clause (4) of this definition if
Employee reasonably believed in good faith that such act or failure to act was
in the best interest of the Employer.
EXHIBIT B
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AMENDED AND RESTATED
STOCK OPTION AGREEMENT
UNDER
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 STOCK OPTION PLAN
as amended by
the Stockholders on February 22, 2000,
the Board of Directors on May 5, 2000,
the Stockholders on February 20, 2001, and
the Stockholders on February 19, 2002
US MASTER
================================================================================
- --------------------------------------------------------------------------------
GREGORY D. DERKACHT
TABLE OF CONTENTS
Page
1. GRANT OF NON-QUALIFIED STOCK OPTION...................................... 1
2. TERMS OF PLAN............................................................ 1
3. EXERCISE PRICE........................................................... 2
4. EXERCISE OF OPTION....................................................... 2
4.1 Time of Exercise of Option...................................... 2
4.2 Acceleration of Option.......................................... 2
4.3 Termination of Option........................................... 5
4.4 Effect of Optionee's Disability or Death........................ 5
4.5 Limitations on Exercise of Option............................... 5
4.6 Method of Exercise of Option
Cash Exercise................................................... 6
Same-Day-Sale Exercise.......................................... 6
Sell-to-Cover Exercise.......................................... 6
4.7 Parachute Limitations........................................... 7
5. TRANSFERABILITY OF OPTIONS............................................... 8
6. RIGHTS AS STOCKHOLDER.................................................... 8
7. WITHHOLDING OF TAXES..................................................... 8
8. DISCLAIMER OF RIGHTS..................................................... 8
9. INTERPRETATION OF THIS OPTION AGREEMENT.................................. 8
10. GOVERNING LAW............................................................ 9
11. BINDING EFFECT........................................................... 9
12. NOTICE................................................................... 9
13. ENTIRE AGREEMENT......................................................... 9
SIGNATURE PAGE (TO BE COMPLETED AND RETURNED)
- --------------------------------------------------------------------------------
================================================================================
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 STOCK OPTION PLAN
as amended by
the Stockholders on February 22, 2000,
the Board of Directors on May 5, 2000,
the Stockholders on February 20, 2001, and
the Stockholders on February 19, 2002
================================================================================
- --------------------------------------------------------------------------------
This Stock Option Agreement (the "Option Agreement"), which was originally made
as of January 2, 2002 (the "Original Date of Grant"), by and between Transaction
Systems Architects, Inc., ("TSA") a Delaware corporation (the "Corporation") and
GREGORY D. DERKACHT, an employee of the Corporation or its subsidiaries (the
"Optionee"), is amended and restated effective as of February 26, 2004.
WHEREAS, the Board of Directors of the Corporation has duly adopted and approved
the 1999 Stock Option Plan (the "Plan"), which Plan authorizes the Corporation
to grant to eligible individuals options for the purchase of shares of the
Corporation's Class A Common Stock (the "Stock"); and
WHEREAS, the Corporation has determined that it is desirable and in its best
interests to grant the Optionee, pursuant to the Plan, an option to purchase a
certain number of shares of Stock, in order to provide the Optionee with an
incentive to advance the interests of the Corporation, all according to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereto do hereby agree as follows:
1. GRANT OF NON-QUALIFIED STOCK OPTION
Subject to the terms of the Plan, the Corporation hereby grants to the Optionee
the right and option (the "Option") to purchase from the Corporation, on the
terms and subject to the conditions set forth in the Plan and in this Agreement,
100,000 (one hundred thousand) shares of Class A Common Stock. This Option shall
not constitute an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
2. TERMS OF PLAN
The Option granted pursuant to this Option Agreement is granted subject to the
terms and conditions set forth in the Plan, a copy of which is attached to this
Option Agreement. All terms and conditions of the Plan, as may be amended from
time to time, are hereby incorporated into this Option Agreement by reference
and shall be deemed to be part of this Option Agreement, without regard to
whether such terms and conditions (including, for example, provisions relating
to certain changes in capitalization of the Corporation) are not otherwise set
forth in this Option Agreement. In the event that there is any inconsistency
between the provisions of this Option Agreement and of the Plan, the provisions
of the Plan shall govern.
3. EXERCISE PRICE
The Exercise Price for the shares of Stock subject to the Option granted by this
Option Agreement is $11.86 per share.
4. EXERCISE OF OPTION
Except as otherwise provided herein, and subject to the provisions of the Plan
(including restrictions on the transferability of the Option and special
provisions relating to exercise or termination of the Option following the
Optionee's termination of employment, disability, death or retirement or certain
changes in capitalization of the Corporation), the Option granted pursuant to
this Option Agreement shall be subject to exercise as follows:
4.1 Time of Exercise of Option
The Optionee may exercise the Option (subject to the limitations on exercise set
forth in this Agreement and in the Plan), in installments as follows:
(i) Subject to Section 4.2, no Option may be exercised during the first
year from the Original Date of Grant;
(ii) Subject to Section 4.2, after one year from the Original Date of
Grant, the Option shall be exercisable in respect of 33 and 1/3
percent of the number of shares specified in Section 1 above; and
(iii) Subject to Section 4.2, after the expiration of each of the second,
and third years from the Original Date of Grant, the Option shall be
exercisable in respect of an additional 33 and 1/3 percent of such
shares specified in Section 1 above.
The foregoing installments, to the extent not exercised, shall accumulate and be
exercisable, in whole or in part, at any time and from time to time, after
becoming exercisable and prior to the termination of the Option; provided, that
no single exercise of the Option shall be for less than 100 shares, unless at
the time of the exercise, the maximum number of shares available for purchase
under this Option is less than 100 shares. In no event shall the Option be
exercised for a fractional share.
4.2 Acceleration of Option.
Notwithstanding any other provision of this Agreement to the
contrary, the Option granted hereby shall become immediately exercisable upon
the occurrence of a Change in Control (as hereinafter defined) of the
Corporation if Optionee is an employee of the Corporation or any of its
subsidiaries on the date of the consummation of such Change in Control.
For purposes of this Section 4.2, a "Change in Control" means
the occurrence of any of the following events:
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") is or becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Corporation; provided, however, that:
(1) for purposes of this paragraph (i), the following
acquisitions shall not constitute a Change in Control: (A) any
acquisition of Voting Stock of the Corporation directly from
the Corporation that is approved by a majority of the
Incumbent Directors, (B) any acquisition of Voting Stock of
the Corporation by the Corporation or any subsidiary of the
Corporation, (C) any acquisition of Voting Stock of the
Corporation by the trustee or other fiduciary holding
securities under any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any subsidiary
of the Corporation, and (D) any acquisition of Voting Stock of
the Corporation by any Person pursuant to a Business
Transaction that complies with clauses (A), (B) and (C) of
subparagraph (i)(3) below;
(2) if any Person is or becomes the beneficial owner
of 20% or more of combined voting power of the
then-outstanding Voting Stock of the Corporation as a result
of a transaction described in clause (A) of subparagraph
(i)(1) above and such Person thereafter becomes the beneficial
owner of any additional shares of Voting Stock of the
Corporation representing 1% or more of the then-outstanding
Voting Stock of the Corporation, other than in an acquisition
directly from the Corporation that is approved by a majority
of the Incumbent Directors or other than as a result of a
stock dividend, stock split or similar transaction effected by
the Corporation in which all holders of Voting Stock are
treated equally, such subsequent acquisition shall be treated
as a Change in Control;
(3) a Change in Control will not be deemed to have
occurred if a Person is or becomes the beneficial owner of 20%
or more of the Voting Stock of the Corporation as a result of
a reduction in the number of shares of Voting Stock of the
Corporation outstanding pursuant to a transaction or series of
transactions that is approved by a majority of the Incumbent
Directors unless and until such Person thereafter becomes the
beneficial owner of any additional shares of Voting Stock of
the Corporation representing 1% or more of the
then-outstanding Voting Stock of the Corporation, other than
as a result of a stock dividend, stock split or similar
transaction effected by the Corporation in which all holders
of Voting Stock are treated equally; and
(4) if at least a majority of the Incumbent Directors
determine in good faith that a Person has acquired beneficial
ownership of 20% or more of the Voting Stock of the
Corporation inadvertently, and such Person divests as promptly
as practicable but no later than the date, if any, set by the
Incumbent Board a sufficient number of shares so that such
Person beneficially owns less than 20% of the Voting Stock of
the Corporation, then no Change in Control shall have occurred
as a result of such Person's acquisition; or
(ii) a majority of the Board ceases to be comprised of Incumbent
Directors; or
(iii) the consummation of a reorganization, merger or consolidation, or
sale or other disposition of all or substantially all of the assets of the
Corporation or the acquisition of the stock or assets of another
corporation, or other transaction (each, a "Business Transaction"), unless,
in each case, immediately following such Business Transaction (A) the
Voting Stock of the Corporation outstanding immediately prior to such
Business Transaction continues to represent (either by remaining outstanding
or by being converted into Voting Stock of the surviving entity or any
parent thereof), more than 60% of the combined voting power of the then
outstanding shares of Voting Stock of the entity resulting from such
Business Transaction (including, without limitation, an entity which as a
result of such transaction owns the Corporation or all or substantially all
of the Corporation's assets either directly or through one or more
subsidiaries), (B) no Person (other than the Corporation, such entity
resulting from such Business Transaction, or any employee benefit plan (or
related trust) sponsored or maintained by the Corporation, any subsidiary
of the Corporation or such entity resulting from such Business Transaction)
beneficially owns, directly or indirectly, 20% or more of the combined
voting power of the then outstanding shares of Voting Stock of the entity
resulting from such Business Transaction, and (C) at least a majority of the
members of the Board of Directors of the entity resulting from such Business
Transaction were Incumbent Directors at the time of the execution of the
initial agreement or of the action of the Board providing for such Business
Transaction; or
(iv) approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation, except pursuant to a Business
Transaction that complies with clauses (A), (B) and (C) of paragraph (iii).
For purposes of this Section 4.2, the term "Exchange Act" means the
Securities Exchange Act of 1934, as amended.
For purposes of this Section 4.2, the term "Incumbent Directors" means the
individuals who, as of the date hereof, are Directors of the Corporation and
any individual becoming a Director subsequent to the date hereof whose election,
nomination for election by the Corporation's shareholders, or appointment, was
approved by a vote of at least two-thirds of the then Incumbent Directors
(either by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee for director, without
objection to such nomination); provided, however, that an individual shall not
be an Incumbent Director if such individual's election or appointment to the
Board occurs as a result of an actual or threatened election contest (as
described in Rule 14a-12(c) of the Exchange Act) with respect to the election or
removal of Directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
For purposes of this Section 4.2, the term "Voting Stock" means securities
entitled to vote generally in the election of directors.
4.3 Termination of Option
The Option shall terminate upon the earlier of the expiration of a period of (i)
ten years from the Original Date of Grant, or (ii) one month from the date of
the Optionee's termination of employment with the Corporation or a subsidiary;
provided, however, that if such termination of employment falls within the scope
of one of the provisions of the Plan providing for an extended exercise period
in excess of one month, the Option shall terminate upon the expiration of the
extended period, as specified in such provision, after the Optionee's
termination of employment with the Corporation or a subsidiary within which the
Option is exercisable.
4.4 Effect of Optionee's Disability or Death
If the Optionee ceases to be an Employee of the Corporation or a Subsidiary of
the Corporation by reason of Disability, the unexercised portion of any Option
held by such Optionee at that time will become immediately vested and will be
exercisable for the shorter of one year from the date on which the Optionee
ceased to be so employed or the remaining Option term. If the Optionee does not
exercise the Option within the time specified, such Option shall terminate. The
Corporation shall have the authority to determine the date an Optionee ceases to
be an Employee by reason of Disability.
If the Optionee dies while employed by the Corporation or a Subsidiary of the
Corporation (or dies within a period of one month after ceasing to be an
Employee for any reason other than Disability or within a period of one year
after ceasing to be an Employee by reason of Disability), the unexercised
portion of any Option held by such Optionee at the time of death will become
immediately vested and will be exercisable for the shorter of one year from the
date of such Optionee's death, or the remaining Option term. Such Option may be
exercised by the executor or administrator of the Optionee's estate or by any
person or persons who shall have acquired the Option directly from the Optionee
by bequest or inheritance. If the Option is not exercised within the time
specified, such Option shall terminate.
4.5 Limitations on Exercise of Option
Notwithstanding the foregoing Subsections, in no event may the Option be
exercised, in whole or in part, after ten years following the Original Date of
Grant, or after the occurrence of an event which results in termination of the
Option under the Plan.
4.6 Method of Exercise of Option
Cash Exercise (to exercise and retain the Shares): Subject to the terms and
conditions of this Option Agreement, the Option may be exercised by delivering
written notice of exercise to the Corporation, at its principal office,
addressed to the attention of Stock Option Administration, or to the
agent/broker designated by the Corporation, which notice shall specify the
number of shares for which the Option is being exercised, and shall be
accompanied by payment in full of the Exercise Price of the shares for which the
Option is being exercised plus the full amount of all applicable withholding
taxes due on the Option exercise. Payment of the Exercise Price for the shares
of Stock purchased pursuant to the exercise of the Option shall be made either
in cash or by certified check payable to the order of the Corporation. If the
person exercising the Option is not the Optionee, such person shall also deliver
with the notice of exercise appropriate proof of his or her right to exercise
the Option, as the Corporation may require in its sole discretion. Promptly
after exercise of the Option as provided for above, the Corporation shall
deliver to the person exercising the Option a certificate or certificates for
the shares of Stock being purchased.
Same-Day-Sale Exercise (to exercise and immediately sell all the Shares):
Subject to the terms and conditions of this Option Agreement, the Option may be
exercised by delivering written notice of exercise to the agent/broker
designated by the Corporation, which notice shall specify the number of shares
for which the Option is being exercised and irrevocable instructions to promptly
(1) sell all of the shares of Stock to be issued upon exercise and (2) remit to
the Corporation the portion of the sale proceeds sufficient to pay the Exercise
Price for the shares of Stock purchased pursuant to the exercise of the Option
and all applicable taxes due on the Option exercise. The agent/broker shall
request issuance of the shares and immediately and concurrently sell the shares
on the Optionee's behalf. Payment of the Exercise Price for the shares of Stock
purchased pursuant to the exercise of the Option, any brokerage fees, transfer
fees, and all applicable taxes due on the Option exercise, shall be deducted
from the proceeds of the sale of the shares. If the person exercising the Option
is not the Optionee, such person shall also deliver with the notice of exercise
appropriate proof of his or her right to exercise the Option, as the Corporation
may require in its sole discretion. Promptly after exercise of the Option as
provided for above, the agent/broker shall deliver to the person exercising the
Option the net proceeds from the sale of the shares of Stock being exercised and
sold.
Sell-to-Cover Exercise (to exercise and immediately sell a portion of the
Shares): Subject to the terms and conditions of this Option Agreement, the
Option may be exercised by delivering written notice of exercise to the
agent/broker designated by the Corporation, which notice shall specify the
number of shares for which the Option is being exercised and irrevocable
instructions to promptly (1) sell the portion (which must be a whole number) of
the shares of Stock to be issued upon exercise sufficient to generate proceeds
to pay the Exercise Price for the shares of Stock purchased pursuant to the
exercise of the Option, any brokerage or transfer fees, and all applicable taxes
due on the Option exercise (collectively the "Exercise Costs") and (2) remit to
the Corporation a sufficient portion of the sale proceeds to pay the Exercise
Price for the shares of Stock purchased pursuant to the exercise of the Option
and all applicable taxes due on the Option exercise. The agent/broker shall
request issuance of the shares and immediately and concurrently sell on the
Optionee's behalf only such number of the Shares as is required to generate
proceeds sufficient to pay the Exercise Costs. Promptly after exercise of the
Option as provided for above, the Corporation shall deliver to the person
exercising the Option a certificate for the shares of Stock issued upon exercise
which are not sold to pay the Exercise Costs. Promptly after exercise of the
Option as provided for above, the agent/broker shall deliver to the person
exercising the Option any net proceeds from the sale of the Shares in excess of
the Exercise Costs. If the person exercising the Option is not the Optionee,
such person shall also deliver with the notice of exercise appropriate proof of
his or her right to exercise the Option, as the Corporation may require in its
sole discretion.
The Option shall not be exercisable if and to the extent the Corporation
determines such exercise or method of exercise would violate applicable
securities laws, the rules and regulations of any securities exchange or
quotation system on which the Stock is listed, or the Company's policies and
procedures. An attempt to exercise the Option granted hereunder other than as
set forth above shall be invalid and of no force and effect.
4.7 Parachute Limitations
Notwithstanding any other provision of this Option Agreement or the Plan or any
other agreement, contract or understanding heretofore or hereafter entered into
by the Optionee with the Corporation (or any subsidiary or affiliate thereof),
except an agreement, contract or understanding hereafter entered into that
expressly modifies or excludes application of this Subsection (the "Other
Agreements"), and notwithstanding any formal or informal plan or other
arrangements heretofore or hereafter adopted by the Corporation (or any such
subsidiary or affiliate) for the direct or indirect compensation of the Optionee
(including groups or classes of participants or beneficiaries of which the
Optionee is a member), whether or not such compensation is deferred, is in cash,
or is in the form of a benefit to or for the Optionee (an "Other Benefit Plan"),
the Optionee shall not have any right to exercise an Option or receive any
payment or other benefit under this Option Agreement, any Other Agreement, or
any Other Benefit Plan if such right to exercise, payment or benefit, taking
into account all other rights, payments or benefits to or for the Optionee under
this Option Agreement, all Other Agreements and all Other Benefit Plans, would
cause any right, payment or benefit to the Optionee under this Option Agreement
to be considered a "parachute payment" within the meaning of Section 280G(b)(2)
of the Code as then in effect (a "Parachute Payment"). In the event that the
receipt of any such right to exercise or any other payment or benefit under this
Option Agreement, any Other Agreement or any Other Benefit Plan would cause the
Optionee to be considered to have received a Parachute Payment under this
Agreement, then the Optionee shall have the right, in the Optionee's sole
discretion, to designate those rights, payments or benefits under this Option
Agreement, any Other Agreements, and/or any Other Benefit Plans, which should be
reduced or eliminated so as to avoid having the right, payment or benefit to the
Optionee under this Option Agreement be deemed to be a Parachute Payment.
5. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee, only such Optionee (or, in the event of
legal incapacity or incompetency, the Optionee's guardian or legal
representative) may exercise the Option. No Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.
6. RIGHTS AS STOCKHOLDER
Neither the Optionee nor any executor, administrator, distributee or legatee of
the Optionee's estate shall be, or have any of the rights or privileges of, a
stockholder of the Corporation in respect of any shares of Stock issuable
hereunder unless and until such shares have been fully paid and certificates
representing such shares have been endorsed, transferred and delivered, and the
name of the Optionee (or of such personal representative, administrator,
distributee or legatee of the Optionee's estate) has been entered as the
stockholder or record on the books of the Corporation.
7. WITHHOLDING OF TAXES
The parties hereto recognize that the Corporation or a subsidiary may be
obligated to withhold federal, state and/or local income taxes and Social
Security taxes to the extent that the Optionee realizes ordinary income in
connection with the exercise of the Option or in connection with a disposition
of any shares of Stock acquired by exercise of the Option. The Optionee agrees
that the Corporation or a subsidiary may withhold amounts needed to cover such
taxes from payments otherwise due and owing to the Optionee, and also agrees
that upon demand the Optionee will promptly pay to the Corporation or a
subsidiary having such obligation any additional amounts as may be necessary to
satisfy such withholding tax obligation. Such payment shall be made in cash or
by check payable to the order of the Corporation or a subsidiary.
8. DISCLAIMER OF RIGHTS
No provision in this Option Agreement shall be construed to confer upon the
Optionee the right to be employed by the Corporation or any subsidiary, or to
interfere in any way with the right and authority of the Corporation or any
subsidiary either to increase or decrease the compensation of the Optionee at
any time, or to terminate any employment or other relationship between the
Optionee and the Corporation or any subsidiary.
9. INTERPRETATION OF THIS OPTION AGREEMENT
All decisions and interpretations made by the Board or the Compensation
Committee thereof with regard to any question arising under the Plan or this
Option Agreement shall be binding and conclusive on the Corporation and the
Optionee and any other person entitled to exercise the Option as provided for
herein.
10. GOVERNING LAW
This Option Agreement shall be governed by the laws of the State of Delaware
(but not including the choice of law rules thereof).
11. BINDING EFFECT
Subject to all restrictions provided for in this Option Agreement, the Plan, and
by applicable law relating to assignment and transfer of this Option Agreement
and the option provided for herein, this Option Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
12. NOTICE
Any notice hereunder by the Optionee to the Corporation shall be in writing and
shall be deemed duly given if mailed or delivered to the Corporation at its
principal office, addressed to the attention of Stock Plan Administration or if
so mailed or delivered to such other address as the Corporation may hereafter
designate by notice to the Optionee. Any notice hereunder by the Corporation to
the Optionee shall be in writing and shall be deemed duly given if mailed or
delivered to the Optionee at the address specified below by the Optionee for
such purpose, or if so mailed or delivered to such other address as the Optionee
may hereafter designate by written notice given to the Corporation.
13. ENTIRE AGREEMENT
This Option Agreement and the Plan together constitute the entire agreement and
supersede all prior understandings and agreements, written or oral (including,
without limitation, the Stock Option Agreement between the Corporation and
Optionee dated January 2, 2002), of the parties hereto with respect to the
subject matter hereof. Except for amendments to the Plan incorporated into this
Option Agreement by reference pursuant to Section 2 above, neither this Option
Agreement nor any term hereof may be amended, waived, discharged or terminated
except by a written instrument signed by the Corporation and the Optionee;
provided, however, that the Corporation unilaterally may waive any provision
hereof in writing to the extent that such waiver does not adversely affect the
interests of the Optionee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Amended and
Restated Option Agreement, or caused this Amended and Restated Option Agreement
to be duly executed on their behalf, as of the day and year first above written.
Transaction Systems Architects, Inc.: Optionee:
By: By:
---------------------------------- -----------------------------------
Dennis P. Byrnes, Secretary Gregory D. Derkacht
ADDRESS FOR NOTICE TO OPTIONEE:
-----------------------------------------
Number Street Apt.
-----------------------------------------
City State Zip Code
-----------------------------------------
SS# Hire Date
DESIGNATED BENEFICIARY:
-----------------------------------------
Please Print Last Name, First Name MI
-----------------------------------------
Beneficiary's Street Address
-----------------------------------------
City State Zip Code
-----------------------------------------
Beneficiary's Social Security Number
I understand that in the event of my death, the above named beneficiary
will have control of any unexercised options remaining in my account at
that time. If no beneficiary is designated or if the named beneficiary
does not survive me, the options will become part of my estate. This
beneficiary designation does NOT apply to stock acquired by the
exercise of options prior to my death.
-----------------------------------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
After completing this page, please make a copy for your records and return it to
Stock Plan Administration, Transaction Systems Architects, Inc., 224 S. 108
Avenue, Omaha, NE 68154
- --------------------------------------------------------------------------------
1999 Stock Option Plan - US Plan
100,000 Shares $11.86/Share Exercise Price January 2, 2002
EXHIBIT C
- --------------------------------------------------------------------------------
================================================================================
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
UNDER
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 STOCK OPTION PLAN
as amended by
the Stockholders on February 22, 2000,
the Board of Directors on May 5, 2000,
the Stockholders on February 20, 2001, and
the Stockholders on February 19, 2002
US MASTER
================================================================================
- --------------------------------------------------------------------------------
GREGORY D. DERKACHT
TABLE OF CONTENTS
Page
1. GRANT OF NON-QUALIFIED STOCK OPTION...................................... 1
2. TERMS OF PLAN............................................................ 1
3. EXERCISE PRICE........................................................... 2
4. EXERCISE OF OPTION....................................................... 2
4.1 Time of Exercise of Option...................................... 2
4.2 Acceleration of Option.......................................... 3
4.3 Termination of Option........................................... 5
4.4 Effect of Optionee's Disability or Death........................ 5
4.5 Limitations on Exercise of Option............................... 6
4.6 Method of Exercise of Option
Cash Exercise................................................... 6
Same-Day-Sale Exercise.......................................... 6
Sell-to-Cover Exercise.......................................... 6
4.7 Parachute Limitations........................................... 7
5. TRANSFERABILITY OF OPTIONS............................................... 8
6. RIGHTS AS STOCKHOLDER.................................................... 8
7. WITHHOLDING OF TAXES..................................................... 8
8. DISCLAIMER OF RIGHTS..................................................... 8
9. INTERPRETATION OF THIS OPTION AGREEMENT.................................. 9
10. GOVERNING LAW............................................................ 9
11. BINDING EFFECT........................................................... 9
12. NOTICE................................................................... 9
13. ENTIRE AGREEMENT......................................................... 9
SIGNATURE PAGE (TO BE COMPLETED AND RETURNED)
2
- --------------------------------------------------------------------------------
================================================================================
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 STOCK OPTION PLAN
as amended by
the Stockholders on February 22, 2000,
the Board of Directors on May 5, 2000,
the Stockholders on February 20, 2001, and
the Stockholders on February 19, 2002
================================================================================
- --------------------------------------------------------------------------------
This Stock Option Agreement (the "Option Agreement"), which was originally made
as of February 19, 2002 (the "Original Date of Grant"), by and between
Transaction Systems Architects, Inc., ("TSA") a Delaware corporation (the
"Corporation") and GREGORY D. DERKACHT, an employee of the Corporation or its
subsidiaries (the "Optionee"), is amended and restated effective as of February
26, 2004.
WHEREAS, the Board of Directors of the Corporation has duly adopted and approved
the 1999 Stock Option Plan (the "Plan"), which Plan authorizes the Corporation
to grant to eligible individuals options for the purchase of shares of the
Corporation's Class A Common Stock (the "Stock"); and
WHEREAS, the Corporation has determined that it is desirable and in its best
interests to grant the Optionee, pursuant to the Plan, an option to purchase a
certain number of shares of Stock, in order to provide the Optionee with an
incentive to advance the interests of the Corporation, all according to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereto do hereby agree as follows:
1. GRANT OF NON-QUALIFIED STOCK OPTION
Subject to the terms of the Plan, the Corporation hereby grants to the Optionee
the right and option (the "Option") to purchase from the Corporation, on the
terms and subject to the conditions set forth in the Plan and in this Agreement,
200,000 shares of Class A Common Stock. This Option shall not constitute an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. TERMS OF PLAN
The Option granted pursuant to this Option Agreement is granted subject to the
terms and conditions set forth in the Plan, a copy of which is attached to this
Option Agreement. All terms and conditions of the Plan, as may be amended from
time to time, are hereby incorporated into this Option Agreement by reference
and shall be deemed to be part of this Option Agreement, without regard to
whether such terms and conditions (including, for example, provisions relating
to certain changes in capitalization of the Corporation) are not otherwise set
forth in this Option Agreement. In the event that there is any inconsistency
between the provisions of this Option Agreement and of the Plan, the provisions
of the Plan shall govern.
3. EXERCISE PRICE
The Exercise Price for the shares of Stock subject to the Option granted by this
Option Agreement is $9.80 per share.
4. EXERCISE OF OPTION
Except as otherwise provided herein, and subject to the provisions of the Plan
(including restrictions on the transferability of the Option and special
provisions relating to exercise or termination of the Option following the
Optionee's termination of employment, disability, death or retirement or certain
changes in capitalization of the Corporation), the Option granted pursuant to
this Option Agreement shall be subject to exercise as follows:
4.1 Time of Exercise of Option
The Optionee may exercise the Option (subject to the limitations on exercise set
forth in this Agreement and in the Plan), in installments as follows:
(i) Subject to Section 4.2, no Option may be exercised during the first
year from the Original Date of Grant;
(ii) Subject to Section 4.2, after one year from the Original Date of
Grant, the Option shall be exercisable in respect of 33 and 1/3
percent of the number of shares specified in Section 1 above; and
(iii) Subject to Section 4.2, after the expiration of each of the second,
and third years from the Original Date of Grant, the Option shall be
exercisable in respect of an additional 33 and 1/3 percent of such
shares specified in Section 1 above.
The foregoing installments, to the extent not exercised, shall accumulate and be
exercisable, in whole or in part, at any time and from time to time, after
becoming exercisable and prior to the termination of the Option; provided, that
no single exercise of the Option shall be for less than 100 shares, unless at
the time of the exercise, the maximum number of shares available for purchase
under this Option is less than 100 shares. In no event shall the Option be
exercised for a fractional share.
4.2 Acceleration of Option.
Notwithstanding any other provision of this Agreement to the
contrary, the Option granted hereby shall become immediately exercisable upon
the occurrence of a Change in Control (as hereinafter defined) of the
Corporation if Optionee is an employee of the Corporation or any of its
subsidiaries on the date of the consummation of such Change in Control.
For purposes of this Section 4.2, a "Change in Control" means
the occurrence of any of the following events:
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") is or becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Corporation; provided, however, that:
(1) for purposes of this paragraph (i), the following
acquisitions shall not constitute a Change in Control: (A) any
acquisition of Voting Stock of the Corporation directly from
the Corporation that is approved by a majority of the
Incumbent Directors, (B) any acquisition of Voting Stock of
the Corporation by the Corporation or any subsidiary of the
Corporation, (C) any acquisition of Voting Stock of the
Corporation by the trustee or other fiduciary holding
securities under any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any subsidiary
of the Corporation, and (D) any acquisition of Voting Stock of
the Corporation by any Person pursuant to a Business
Transaction that complies with clauses (A), (B) and (C) of
subparagraph (i)(3) below;
(2) if any Person is or becomes the beneficial owner
of 20% or more of combined voting power of the
then-outstanding Voting Stock of the Corporation as a result
of a transaction described in clause (A) of subparagraph
(i)(1) above and such Person thereafter becomes the beneficial
owner of any additional shares of Voting Stock of the
Corporation representing 1% or more of the then-outstanding
Voting Stock of the Corporation, other than in an acquisition
directly from the Corporation that is approved by a majority
of the Incumbent Directors or other than as a result of a
stock dividend, stock split or similar transaction effected by
the Corporation in which all holders of Voting Stock are
treated equally, such subsequent acquisition shall be treated
as a Change in Control;
(3) a Change in Control will not be deemed to have
occurred if a Person is or becomes the beneficial owner of 20%
or more of the Voting Stock of the Corporation as a result of
a reduction in the number of shares of Voting Stock of the
Corporation outstanding pursuant to a transaction or series of
transactions that is approved by a majority of the Incumbent
Directors unless and until such Person thereafter becomes the
beneficial owner of any additional shares of Voting Stock of
the Corporation representing 1% or more of the
then-outstanding Voting Stock of the Corporation, other than
as a result of a stock dividend, stock split or similar
transaction effected by the Corporation in which all holders
of Voting Stock are treated equally; and
(4) if at least a majority of the Incumbent Directors
determine in good faith that a Person has acquired beneficial
ownership of 20% or more of the Voting Stock of the
Corporation inadvertently, and such Person divests as promptly
as practicable but no later than the date, if any, set by the
Incumbent Board a sufficient number of shares so that such
Person beneficially owns less than 20% of the Voting Stock of
the Corporation, then no Change in Control shall have occurred
as a result of such Person's acquisition; or
(ii) a majority of the Board ceases to be comprised of Incumbent
Directors; or
(iii) the consummation of a reorganization, merger or consolidation, or
sale or other disposition of all or substantially all of the assets of the
Corporation or the acquisition of the stock or assets of another
corporation, or other transaction (each, a "Business Transaction"), unless,
in each case, immediately following such Business Transaction (A) the Voting
Stock of the Corporation outstanding immediately prior to such Business
Transaction continues to represent (either by remaining outstanding or by
being converted into Voting Stock of the surviving entity or any parent
thereof), more than 60% of the combined voting power of the then outstanding
shares of Voting Stock of the entity resulting from such Business
Transaction (including, without limitation, an entity which as a result of
such transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more subsidiaries),
(B) no Person (other than the Corporation, such entity resulting from such
Business Transaction, or any employee benefit plan (or related trust)
sponsored or maintained by the Corporation, any subsidiary of the
Corporation or such entity resulting from such Business Transaction)
beneficially owns, directly or indirectly, 20% or more of the combined
voting power of the then outstanding shares of Voting Stock of the entity
resulting from such Business Transaction, and (C) at least a majority of
the members of the Board of Directors of the entity resulting from such
Business Transaction were Incumbent Directors at the time of the execution
of the initial agreement or of the action of the Board providing for such
Business Transaction; or
(iv) approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation, except pursuant to a
Business Transaction that complies with clauses (A), (B) and (C) of
paragraph (iii).
For purposes of this Section 4.2, the term "Exchange Act" means the
Securities Exchange Act of 1934, as amended.
For purposes of this Section 4.2, the term "Incumbent Directors" means the
individuals who, as of the date hereof, are Directors of the Corporation and
any individual becoming a Director subsequent to the date hereof whose election,
nomination for election by the Corporation's shareholders, or appointment, was
approved by a vote of at least two-thirds of the then Incumbent Directors
(either by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee for director, without
objection to such nomination); provided, however, that an individual shall not
be an Incumbent Director if such individual's election or appointment to the
Board occurs as a result of an actual or threatened election contest (as
described in Rule 14a-12(c) of the Exchange Act) with respect to the election or
removal of Directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
For purposes of this Section 4.2, the term "Voting Stock" means securities
entitled to vote generally in the election of directors.
4.3 Termination of Option
The Option shall terminate upon the earlier of the expiration of a period of (i)
ten years from the Original Date of Grant, or (ii) one month from the date of
the Optionee's termination of employment with the Corporation or a subsidiary;
provided, however, that if such termination of employment falls within the scope
of one of the provisions of the Plan providing for an extended exercise period
in excess of one month, the Option shall terminate upon the expiration of the
extended period, as specified in such provision, after the Optionee's
termination of employment with the Corporation or a subsidiary within which the
Option is exercisable.
4.4 Effect of Optionee's Disability or Death
If the Optionee ceases to be an Employee of the Corporation or a Subsidiary of
the Corporation by reason of Disability, the unexercised portion of any Option
held by such Optionee at that time will become immediately vested and will be
exercisable for the shorter of one year from the date on which the Optionee
ceased to be so employed or the remaining Option term. If the Optionee does not
exercise the Option within the time specified, such Option shall terminate. The
Corporation shall have the authority to determine the date an Optionee ceases to
be an Employee by reason of Disability.
If the Optionee dies while employed by the Corporation or a Subsidiary of the
Corporation (or dies within a period of one month after ceasing to be an
Employee for any reason other than Disability or within a period of one year
after ceasing to be an Employee by reason of Disability), the unexercised
portion of any Option held by such Optionee at the time of death will become
immediately vested and will be exercisable for the shorter of one year from the
date of such Optionee's death, or the remaining Option term. Such Option may be
exercised by the executor or administrator of the Optionee's estate or by any
person or persons who shall have acquired the Option directly from the Optionee
by bequest or inheritance. If the Option is not exercised within the time
specified, such Option shall terminate.
4.5 Limitations on Exercise of Option
Notwithstanding the foregoing Subsections, in no event may the Option be
exercised, in whole or in part, after ten years following the Original Date of
Grant, or after the occurrence of an event which results in termination of the
Option under the Plan.
4.6 Method of Exercise of Option
Cash Exercise (to exercise and retain the Shares): Subject to the terms and
conditions of this Option Agreement, the Option may be exercised by delivering
written notice of exercise to the Corporation, at its principal office,
addressed to the attention of Stock Option Administration, or to the
agent/broker designated by the Corporation, which notice shall specify the
number of shares for which the Option is being exercised, and shall be
accompanied by payment in full of the Exercise Price of the shares for which the
Option is being exercised plus the full amount of all applicable withholding
taxes due on the Option exercise. Payment of the Exercise Price for the shares
of Stock purchased pursuant to the exercise of the Option shall be made either
in cash or by certified check payable to the order of the Corporation. If the
person exercising the Option is not the Optionee, such person shall also deliver
with the notice of exercise appropriate proof of his or her right to exercise
the Option, as the Corporation may require in its sole discretion. Promptly
after exercise of the Option as provided for above, the Corporation shall
deliver to the person exercising the Option a certificate or certificates for
the shares of Stock being purchased.
Same-Day-Sale Exercise (to exercise and immediately sell all the Shares):
Subject to the terms and conditions of this Option Agreement, the Option may be
exercised by delivering written notice of exercise to the agent/broker
designated by the Corporation, which notice shall specify the number of shares
for which the Option is being exercised and irrevocable instructions to promptly
(1) sell all of the shares of Stock to be issued upon exercise and (2) remit to
the Corporation the portion of the sale proceeds sufficient to pay the Exercise
Price for the shares of Stock purchased pursuant to the exercise of the Option
and all applicable taxes due on the Option exercise. The agent/broker shall
request issuance of the shares and immediately and concurrently sell the shares
on the Optionee's behalf. Payment of the Exercise Price for the shares of Stock
purchased pursuant to the exercise of the Option, any brokerage fees, transfer
fees, and all applicable taxes due on the Option exercise, shall be deducted
from the proceeds of the sale of the shares. If the person exercising the Option
is not the Optionee, such person shall also deliver with the notice of exercise
appropriate proof of his or her right to exercise the Option, as the Corporation
may require in its sole discretion. Promptly after exercise of the Option as
provided for above, the agent/broker shall deliver to the person exercising the
Option the net proceeds from the sale of the shares of Stock being exercised and
sold.
Sell-to-Cover Exercise (to exercise and immediately sell a portion of the
Shares): Subject to the terms and conditions of this Option Agreement, the
Option may be exercised by delivering written notice of exercise to the
agent/broker designated by the Corporation, which notice shall specify the
number of shares for which the Option is being exercised and irrevocable
instructions to promptly (1) sell the portion (which must be a whole number) of
the shares of Stock to be issued upon exercise sufficient to generate proceeds
to pay the Exercise Price for the shares of Stock purchased pursuant to the
exercise of the Option, any brokerage or transfer fees, and all applicable taxes
due on the Option exercise (collectively the "Exercise Costs") and (2) remit to
the Corporation a sufficient portion of the sale proceeds to pay the Exercise
Price for the shares of Stock purchased pursuant to the exercise of the Option
and all applicable taxes due on the Option exercise. The agent/broker shall
request issuance of the shares and immediately and concurrently sell on the
Optionee's behalf only such number of the Shares as is required to generate
proceeds sufficient to pay the Exercise Costs. Promptly after exercise of the
Option as provided for above, the Corporation shall deliver to the person
exercising the Option a certificate for the shares of Stock issued upon exercise
which are not sold to pay the Exercise Costs. Promptly after exercise of the
Option as provided for above, the agent/broker shall deliver to the person
exercising the Option any net proceeds from the sale of the Shares in excess of
the Exercise Costs. If the person exercising the Option is not the Optionee,
such person shall also deliver with the notice of exercise appropriate proof of
his or her right to exercise the Option, as the Corporation may require in its
sole discretion.
The Option shall not be exercisable if and to the extent the Corporation
determines such exercise or method of exercise would violate applicable
securities laws, the rules and regulations of any securities exchange or
quotation system on which the Stock is listed, or the Company's policies and
procedures. An attempt to exercise the Option granted hereunder other than as
set forth above shall be invalid and of no force and effect.
4.7 Parachute Limitations
Notwithstanding any other provision of this Option Agreement or the Plan or any
other agreement, contract or understanding heretofore or hereafter entered into
by the Optionee with the Corporation (or any subsidiary or affiliate thereof),
except an agreement, contract or understanding hereafter entered into that
expressly modifies or excludes application of this Subsection (the "Other
Agreements"), and notwithstanding any formal or informal plan or other
arrangements heretofore or hereafter adopted by the Corporation (or any such
subsidiary or affiliate) for the direct or indirect compensation of the Optionee
(including groups or classes of participants or beneficiaries of which the
Optionee is a member), whether or not such compensation is deferred, is in cash,
or is in the form of a benefit to or for the Optionee (an "Other Benefit Plan"),
the Optionee shall not have any right to exercise an Option or receive any
payment or other benefit under this Option Agreement, any Other Agreement, or
any Other Benefit Plan if such right to exercise, payment or benefit, taking
into account all other rights, payments or benefits to or for the Optionee under
this Option Agreement, all Other Agreements and all Other Benefit Plans, would
cause any right, payment or benefit to the Optionee under this Option Agreement
to be considered a "parachute payment" within the meaning of Section 280G(b)(2)
of the Code as then in effect (a "Parachute Payment"). In the event that the
receipt of any such right to exercise or any other payment or benefit under this
Option Agreement, any Other Agreement or any Other Benefit Plan would cause the
Optionee to be considered to have received a Parachute Payment under this
Agreement, then the Optionee shall have the right, in the Optionee's sole
discretion, to designate those rights, payments or benefits under this Option
Agreement, any Other Agreements, and/or any Other Benefit Plans, which should be
reduced or eliminated so as to avoid having the right, payment or benefit to the
Optionee under this Option Agreement be deemed to be a Parachute Payment.
5. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee, only such Optionee (or, in the event of
legal incapacity or incompetency, the Optionee's guardian or legal
representative) may exercise the Option. No Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.
6. RIGHTS AS STOCKHOLDER
Neither the Optionee nor any executor, administrator, distributee or legatee of
the Optionee's estate shall be, or have any of the rights or privileges of, a
stockholder of the Corporation in respect of any shares of Stock issuable
hereunder unless and until such shares have been fully paid and certificates
representing such shares have been endorsed, transferred and delivered, and the
name of the Optionee (or of such personal representative, administrator,
distributee or legatee of the Optionee's estate) has been entered as the
stockholder or record on the books of the Corporation.
7. WITHHOLDING OF TAXES
The parties hereto recognize that the Corporation or a subsidiary may be
obligated to withhold federal, state and/or local income taxes and Social
Security taxes to the extent that the Optionee realizes ordinary income in
connection with the exercise of the Option or in connection with a disposition
of any shares of Stock acquired by exercise of the Option. The Optionee agrees
that the Corporation or a subsidiary may withhold amounts needed to cover such
taxes from payments otherwise due and owing to the Optionee, and also agrees
that upon demand the Optionee will promptly pay to the Corporation or a
subsidiary having such obligation any additional amounts as may be necessary to
satisfy such withholding tax obligation. Such payment shall be made in cash or
by check payable to the order of the Corporation or a subsidiary.
8. DISCLAIMER OF RIGHTS
No provision in this Option Agreement shall be construed to confer upon the
Optionee the right to be employed by the Corporation or any subsidiary, or to
interfere in any way with the right and authority of the Corporation or any
subsidiary either to increase or decrease the compensation of the Optionee at
any time, or to terminate any employment or other relationship between the
Optionee and the Corporation or any subsidiary.
9. INTERPRETATION OF THIS OPTION AGREEMENT
All decisions and interpretations made by the Board or the Compensation
Committee thereof with regard to any question arising under the Plan or this
Option Agreement shall be binding and conclusive on the Corporation and the
Optionee and any other person entitled to exercise the Option as provided for
herein.
10. GOVERNING LAW
This Option Agreement shall be governed by the laws of the State of Delaware
(but not including the choice of law rules thereof).
11. BINDING EFFECT
Subject to all restrictions provided for in this Option Agreement, the Plan, and
by applicable law relating to assignment and transfer of this Option Agreement
and the option provided for herein, this Option Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
12. NOTICE
Any notice hereunder by the Optionee to the Corporation shall be in writing and
shall be deemed duly given if mailed or delivered to the Corporation at its
principal office, addressed to the attention of Stock Plan Administration or if
so mailed or delivered to such other address as the Corporation may hereafter
designate by notice to the Optionee. Any notice hereunder by the Corporation to
the Optionee shall be in writing and shall be deemed duly given if mailed or
delivered to the Optionee at the address specified below by the Optionee for
such purpose, or if so mailed or delivered to such other address as the Optionee
may hereafter designate by written notice given to the Corporation.
13. ENTIRE AGREEMENT
This Option Agreement and the Plan together constitute the entire agreement and
supersede all prior understandings and agreements, written or oral (including,
without limitation, the Stock Option Agreement between the Corporation and
Optionee dated February 19, 2002), of the parties hereto with respect to the
subject matter hereof. Except for amendments to the Plan incorporated into this
Option Agreement by reference pursuant to Section 2 above, neither this Option
Agreement nor any term hereof may be amended, waived, discharged or terminated
except by a written instrument signed by the Corporation and the Optionee;
provided, however, that the Corporation unilaterally may waive any provision
hereof in writing to the extent that such waiver does not adversely affect the
interests of the Optionee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Amended and
Restated Option Agreement, or caused this Amended and Restated Option Agreement
to be duly executed on their behalf, as of the day and year first above written.
Transaction Systems Architects, Inc.: Optionee:
By: By:
---------------------------------- -----------------------------------
Dennis P. Byrnes, Secretary Gregory D. Derkacht
ADDRESS FOR NOTICE TO OPTIONEE:
-----------------------------------------
Number Street Apt.
-----------------------------------------
City State Zip Code
-----------------------------------------
SS# Hire Date
DESIGNATED BENEFICIARY:
-----------------------------------------
Please Print Last Name, First Name MI
-----------------------------------------
Beneficiary's Street Address
-----------------------------------------
City State Zip Code
-----------------------------------------
Beneficiary's Social Security Number
I understand that in the event of my death, the above named beneficiary
will have control of any unexercised options remaining in my account at
that time. If no beneficiary is designated or if the named beneficiary
does not survive me, the options will become part of my estate. This
beneficiary designation does NOT apply to stock acquired by the
exercise of options prior to my death.
-----------------------------------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
After completing this page, please make a copy for your records and return it to
Stock Plan Administration, Transaction Systems Architects, Inc., 224 S. 108
Avenue, Omaha, NE 68154
- --------------------------------------------------------------------------------
1999 Stock Option Plan - US Plan
200,000 Options $9.80/Share Exercise Price February 19, 2002
EXHIBIT D
- --------------------------------------------------------------------------------
================================================================================
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
UNDER
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 STOCK OPTION PLAN
as amended by
the Stockholders on February 22, 2000,
the Board of Directors on May 5, 2000,
the Stockholders on February 20, 2001, and
the Stockholders on February 19, 2002
US MASTER
================================================================================
- --------------------------------------------------------------------------------
GREGORY D. DERKACHT
TABLE OF CONTENTS
Page
1. GRANT OF NON-QUALIFIED STOCK OPTION...................................... 1
2. TERMS OF PLAN............................................................ 1
3. EXERCISE PRICE........................................................... 2
4. EXERCISE OF OPTION....................................................... 2
4.1 Time of Exercise of Option...................................... 2
4.2 Acceleration of Option.......................................... 3
4.3 Termination of Option........................................... 5
4.4 Effect of Optionee's Disability or Death........................ 6
4.5 Limitations on Exercise of Option............................... 6
4.6 Method of Exercise of Option
Cash Exercise................................................... 6
Same-Day-Sale Exercise.......................................... 7
Sell-to-Cover Exercise.......................................... 7
4.7 Parachute Limitations........................................... 8
5. TRANSFERABILITY OF OPTIONS............................................... 8
6. RIGHTS AS STOCKHOLDER.................................................... 8
7. WITHHOLDING OF TAXES..................................................... 9
8. DISCLAIMER OF RIGHTS..................................................... 9
9. INTERPRETATION OF THIS OPTION AGREEMENT.................................. 9
10. GOVERNING LAW............................................................ 9
11. BINDING EFFECT........................................................... 9
12. NOTICE.................................................................. 10
13. ENTIRE AGREEMENT........................................................ 10
SIGNATURE PAGE (TO BE COMPLETED AND RETURNED)
- --------------------------------------------------------------------------------
================================================================================
AMENDED AND RESTATED
STOCK OPTION AGREEMENT
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 STOCK OPTION PLAN
as amended by
the Stockholders on February 22, 2000,
the Board of Directors on May 5, 2000,
the Stockholders on February 20, 2001, and
the Stockholders on February 19, 2002
================================================================================
- --------------------------------------------------------------------------------
This Stock Option Agreement (the "Option Agreement"), which was originally made
as of February 19, 2002 (the "Original Date of Grant"), by and between
Transaction Systems Architects, Inc., ("TSA") a Delaware corporation (the
"Corporation") and GREGORY D. DERKACHT, an employee of the Corporation or its
subsidiaries (the "Optionee"), is amended and restated effective as of February
26, 2004.
WHEREAS, the Board of Directors of the Corporation has duly adopted and approved
the 1999 Stock Option Plan (the "Plan"), which Plan authorizes the Corporation
to grant to eligible individuals options for the purchase of shares of the
Corporation's Class A Common Stock (the "Stock"); and
WHEREAS, the Corporation has determined that it is desirable and in its best
interests to grant the Optionee, pursuant to the Plan, an option to purchase a
certain number of shares of Stock, in order to provide the Optionee with an
incentive to advance the interests of the Corporation, all according to the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein, the parties hereto do hereby agree as follows:
1. GRANT OF NON-QUALIFIED STOCK OPTION
Subject to the terms of the Plan, the Corporation hereby grants to the Optionee
the right and option (the "Option") to purchase from the Corporation, on the
terms and subject to the conditions set forth in the Plan and in this Agreement,
200,000 shares of Class A Common Stock. This Option shall not constitute an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
2. TERMS OF PLAN
The Option granted pursuant to this Option Agreement is granted subject to the
terms and conditions set forth in the Plan, a copy of which is attached to this
Option Agreement. All terms and conditions of the Plan, as may be amended from
time to time, are hereby incorporated into this Option Agreement by reference
and shall be deemed to be part of this Option Agreement, without regard to
whether such terms and conditions (including, for example, provisions relating
to certain changes in capitalization of the Corporation) are not otherwise set
forth in this Option Agreement. In the event that there is any inconsistency
between the provisions of this Option Agreement and of the Plan, the provisions
of the Plan shall govern.
3. EXERCISE PRICE
The Exercise Price for the shares of Stock subject to the Option granted by this
Option Agreement is $9.80 per share.
4. EXERCISE OF OPTION
Except as otherwise provided herein, and subject to the provisions of the Plan
(including restrictions on the transferability of the Option and special
provisions relating to exercise or termination of the Option following the
Optionee's termination of employment, disability, death or retirement or certain
changes in capitalization of the Corporation), the Option granted pursuant to
this Option Agreement shall be subject to exercise as follows:
4.1 Time of Exercise of Option
The Optionee may exercise the Option (subject to the limitations on exercise set
forth in this Agreement and in the Plan), in installments as follows:
(i) Provided that those shares subject to this Option, or any portion
thereof, do not first become exercisable pursuant to the terms and
conditions of Subsections 4.1(ii), 4.1(iii) or 4.1(iv) herein, or Section
4.2, those shares subject to this Option shall become exercisable as
follows: no Option may be exercised during the first year from the Original
Date of Grant; after one year from the Original Date of Grant, the Option
shall be exercisable in respect of 25 percent of the number of shares
subject to this Option; after the expiration of each of the second, third,
and fourth years from the Original Date of Grant, the Option shall be
exercisable in respect of an additional 25 percent of number of the shares
subject to this Option.
(ii) 100,000 of those shares subject to this Option shall become
exercisable on and after November 15, 2002; provided, however, that the
Company's Revenues, Cash Flow, and Contribution Margin for fiscal year ended
September 30, 2002 either meet or exceed $320,000,000, $42,800,000, and
$25,000,000, respectively, and the Ending Backlog as of fiscal year ended
September 30, 2002 meets or exceeds $218,000,000.
(iii) 100,000 of those shares subject to this Option shall become
exercisable on and after November 15, 2003; provided however that the
Company's Revenues, Cash Flow, Contribution Margin, and Ending Backlog
for/at fiscal year ended September 30, 2003 either meet or exceed the
respective Revenue, Cash-flow, Contribution Margin, and Ending Backlog
targets established by the Board of Directors for the fiscal year ended
September 30, 2003.
(iv) If, within 4 years of the Original Date of Grant, the average
closing bid price of the Company's stock is greater than $30 for any
consecutive 60-day period (calendar days), all shares subject to this
Option will become exercisable on and after the end of such 60-day period.
The foregoing installments, to the extent not exercised, shall accumulate and be
exercisable, in whole or in part, at any time and from time to time, after
becoming exercisable and prior to the termination of the Option; provided, that
no single exercise of the Option shall be for less than 100 shares, unless at
the time of the exercise, the maximum number of shares available for purchase
under this Option is less than 100 shares. In no event shall the Option be
exercised for a fractional share.
4.2 Acceleration of Option.
Notwithstanding any other provision of this Agreement to the contrary, the
Option granted hereby shall become immediately exercisable upon the occurrence
of a Change in Control (as hereinafter defined) of the Corporation if Optionee
is an employee of the Corporation or any of its subsidiaries on the date of the
consummation of such Change in Control.
For purposes of this Section 4.2, a "Change in Control" means
the occurrence of any of the following events:
(i) any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a "Person") is or becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of the combined voting power of the
then-outstanding Voting Stock of the Corporation; provided, however, that:
(1) for purposes of this paragraph (i), the following
acquisitions shall not constitute a Change in Control: (A) any
acquisition of Voting Stock of the Corporation directly from
the Corporation that is approved by a majority of the
Incumbent Directors, (B) any acquisition of Voting Stock of
the Corporation by the Corporation or any subsidiary of the
Corporation, (C) any acquisition of Voting Stock of the
Corporation by the trustee or other fiduciary holding
securities under any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any subsidiary
of the Corporation, and (D) any acquisition of Voting Stock of
the Corporation by any Person pursuant to a Business
Transaction that complies with clauses (A), (B) and (C) of
subparagraph (i)(3) below;
(2) if any Person is or becomes the beneficial owner
of 20% or more of combined voting power of the
then-outstanding Voting Stock of the Corporation as a result
of a transaction described in clause (A) of subparagraph
(i)(1) above and such Person thereafter becomes the beneficial
owner of any additional shares of Voting Stock of the
Corporation representing 1% or more of the then-outstanding
Voting Stock of the Corporation, other than in an acquisition
directly from the Corporation that is approved by a majority
of the Incumbent Directors or other than as a result of a
stock dividend, stock split or similar transaction effected by
the Corporation in which all holders of Voting Stock are
treated equally, such subsequent acquisition shall be treated
as a Change in Control;
(3) a Change in Control will not be deemed to have
occurred if a Person is or becomes the beneficial owner of 20%
or more of the Voting Stock of the Corporation as a result of
a reduction in the number of shares of Voting Stock of the
Corporation outstanding pursuant to a transaction or series of
transactions that is approved by a majority of the Incumbent
Directors unless and until such Person thereafter becomes the
beneficial owner of any additional shares of Voting Stock of
the Corporation representing 1% or more of the
then-outstanding Voting Stock of the Corporation, other than
as a result of a stock dividend, stock split or similar
transaction effected by the Corporation in which all holders
of Voting Stock are treated equally; and
(4) if at least a majority of the Incumbent Directors
determine in good faith that a Person has acquired beneficial
ownership of 20% or more of the Voting Stock of the
Corporation inadvertently, and such Person divests as promptly
as practicable but no later than the date, if any, set by the
Incumbent Board a sufficient number of shares so that such
Person beneficially owns less than 20% of the Voting Stock of
the Corporation, then no Change in Control shall have occurred
as a result of such Person's acquisition; or
(ii) a majority of the Board ceases to be comprised of Incumbent
Directors; or
(iii) the consummation of a reorganization, merger or consolidation, or
sale or other disposition of all or substantially all of the assets of the
Corporation or the acquisition of the stock or assets of another
corporation, or other transaction (each, a "Business Transaction"), unless,
in each case, immediately following such Business Transaction (A) the Voting
Stock of the Corporation outstanding immediately prior to such Business
Transaction continues to represent (either by remaining outstanding or by
being converted into Voting Stock of the surviving entity or any parent
thereof), more than 60% of the combined voting power of the then outstanding
shares of Voting Stock of the entity resulting from such Business
Transaction (including, without limitation, an entity which as a result of
such transaction owns the Corporation or all or substantially all of the
Corporation's assets either directly or through one or more subsidiaries),
(B) no Person (other than the Corporation, such entity resulting from such
Business Transaction, or any employee benefit plan (or related trust)
sponsored or maintained by the Corporation, any subsidiary of the
Corporation or such entity resulting from such Business Transaction)
beneficially owns, directly or indirectly, 20% or more of the combined
voting power of the then outstanding shares of Voting Stock of the entity
resulting from such Business Transaction, and (C) at least a majority of the
members of the Board of Directors of the entity resulting from such Business
Transaction were Incumbent Directors at the time of the execution of the
initial agreement or of the action of the Board providing for such Business
Transaction; or
(iv) approval by the shareholders of the Corporation of a complete
liquidation or dissolution of the Corporation, except pursuant to a Business
Transaction that complies with clauses (A), (B) and (C) of paragraph (iii).
For purposes of this Section 4.2, the term "Exchange Act" means the
Securities Exchange Act of 1934, as amended.
For purposes of this Section 4.2, the term "Incumbent Directors" means the
individuals who, as of the date hereof, are Directors of the Corporation and
any individual becoming a Director subsequent to the date hereof whose election,
nomination for election by the Corporation's shareholders, or appointment, was
approved by a vote of at least two-thirds of the then Incumbent Directors
(either by a specific vote or by approval of the proxy statement of the
Corporation in which such person is named as a nominee for director, without
objection to such nomination); provided, however, that an individual shall not
be an Incumbent Director if such individual's election or appointment to the
Board occurs as a result of an actual or threatened election contest (as
described in Rule 14a-12(c) of the Exchange Act) with respect to the election or
removal of Directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board.
For purposes of this Section 4.2, the term "Voting Stock" means
securities entitled to vote generally in the election of directors.
4.3 Termination of Option
The Option shall terminate upon the earlier of the expiration of a period of (i)
ten years from the Original Date of Grant, or (ii) one month from the date of
the Optionee's termination of employment with the Corporation or a subsidiary;
provided, however, that if such termination of employment falls within the scope
of one of the provisions of the Plan providing for an extended exercise period
in excess of one month, the Option shall terminate upon the expiration of the
extended period, as specified in such provision, after the Optionee's
termination of employment with the Corporation or a subsidiary within which the
Option is exercisable.
4.4 Effect of Optionee's Disability or Death
If the Optionee ceases to be an Employee of the Corporation or a Subsidiary of
the Corporation by reason of Disability, the unexercised portion of any Option
held by such Optionee at that time will become immediately vested and will be
exercisable for the shorter of one year from the date on which the Optionee
ceased to be so employed or the remaining Option term. If the Optionee does not
exercise the Option within the time specified, such Option shall terminate. The
Corporation shall have the authority to determine the date an Optionee ceases to
be an Employee by reason of Disability.
If the Optionee dies while employed by the Corporation or a Subsidiary of the
Corporation (or dies within a period of one month after ceasing to be an
Employee for any reason other than Disability or within a period of one year
after ceasing to be an Employee by reason of Disability), the unexercised
portion of any Option held by such Optionee at the time of death will become
immediately vested and will be exercisable for the shorter of one year from the
date of such Optionee's death, or the remaining Option term. Such Option may be
exercised by the executor or administrator of the Optionee's estate or by any
person or persons who shall have acquired the Option directly from the Optionee
by bequest or inheritance. If the Option is not exercised within the time
specified, such Option shall terminate.
4.5 Limitations on Exercise of Option
Notwithstanding the foregoing Subsections, in no event may the Option be
exercised, in whole or in part, after ten years following the Original Date of
Grant, or after the occurrence of an event which results in termination of the
Option under the Plan.
4.6 Method of Exercise of Option
Cash Exercise (to exercise and retain the Shares): Subject to the terms and
conditions of this Option Agreement, the Option may be exercised by delivering
written notice of exercise to the Corporation, at its principal office,
addressed to the attention of Stock Option Administration, or to the
agent/broker designated by the Corporation, which notice shall specify the
number of shares for which the Option is being exercised, and shall be
accompanied by payment in full of the Exercise Price of the shares for which the
Option is being exercised plus the full amount of all applicable withholding
taxes due on the Option exercise. Payment of the Exercise Price for the shares
of Stock purchased pursuant to the exercise of the Option shall be made either
in cash or by certified check payable to the order of the Corporation. If the
person exercising the Option is not the Optionee, such person shall also deliver
with the notice of exercise appropriate proof of his or her right to exercise
the Option, as the Corporation may require in its sole discretion. Promptly
after exercise of the Option as provided for above, the Corporation shall
deliver to the person exercising the Option a certificate or certificates for
the shares of Stock being purchased.
Same-Day-Sale Exercise (to exercise and immediately sell all the Shares):
Subject to the terms and conditions of this Option Agreement, the Option may be
exercised by delivering written notice of exercise to the agent/broker
designated by the Corporation, which notice shall specify the number of shares
for which the Option is being exercised and irrevocable instructions to promptly
(1) sell all of the shares of Stock to be issued upon exercise and (2) remit to
the Corporation the portion of the sale proceeds sufficient to pay the Exercise
Price for the shares of Stock purchased pursuant to the exercise of the Option
and all applicable taxes due on the Option exercise. The agent/broker shall
request issuance of the shares and immediately and concurrently sell the shares
on the Optionee's behalf. Payment of the Exercise Price for the shares of Stock
purchased pursuant to the exercise of the Option, any brokerage fees, transfer
fees, and all applicable taxes due on the Option exercise, shall be deducted
from the proceeds of the sale of the shares. If the person exercising the Option
is not the Optionee, such person shall also deliver with the notice of exercise
appropriate proof of his or her right to exercise the Option, as the Corporation
may require in its sole discretion. Promptly after exercise of the Option as
provided for above, the agent/broker shall deliver to the person exercising the
Option the net proceeds from the sale of the shares of Stock being exercised and
sold.
Sell-to-Cover Exercise (to exercise and immediately sell a portion of the
Shares): Subject to the terms and conditions of this Option Agreement, the
Option may be exercised by delivering written notice of exercise to the
agent/broker designated by the Corporation, which notice shall specify the
number of shares for which the Option is being exercised and irrevocable
instructions to promptly (1) sell the portion (which must be a whole number) of
the shares of Stock to be issued upon exercise sufficient to generate proceeds
to pay the Exercise Price for the shares of Stock purchased pursuant to the
exercise of the Option, any brokerage or transfer fees, and all applicable taxes
due on the Option exercise (collectively the "Exercise Costs") and (2) remit to
the Corporation a sufficient portion of the sale proceeds to pay the Exercise
Price for the shares of Stock purchased pursuant to the exercise of the Option
and all applicable taxes due on the Option exercise. The agent/broker shall
request issuance of the shares and immediately and concurrently sell on the
Optionee's behalf only such number of the Shares as is required to generate
proceeds sufficient to pay the Exercise Costs. Promptly after exercise of the
Option as provided for above, the Corporation shall deliver to the person
exercising the Option a certificate for the shares of Stock issued upon exercise
which are not sold to pay the Exercise Costs. Promptly after exercise of the
Option as provided for above, the agent/broker shall deliver to the person
exercising the Option any net proceeds from the sale of the Shares in excess of
the Exercise Costs. If the person exercising the Option is not the Optionee,
such person shall also deliver with the notice of exercise appropriate proof of
his or her right to exercise the Option, as the Corporation may require in its
sole discretion.
The Option shall not be exercisable if and to the extent the Corporation
determines such exercise or method of exercise would violate applicable
securities laws, the rules and regulations of any securities exchange or
quotation system on which the Stock is listed, or the Company's policies and
procedures. An attempt to exercise the Option granted hereunder other than as
set forth above shall be invalid and of no force and effect.
4.7 Parachute Limitations
Notwithstanding any other provision of this Option Agreement or the Plan or any
other agreement, contract or understanding heretofore or hereafter entered into
by the Optionee with the Corporation (or any subsidiary or affiliate thereof),
except an agreement, contract or understanding hereafter entered into that
expressly modifies or excludes application of this Subsection (the "Other
Agreements"), and notwithstanding any formal or informal plan or other
arrangements heretofore or hereafter adopted by the Corporation (or any such
subsidiary or affiliate) for the direct or indirect compensation of the Optionee
(including groups or classes of participants or beneficiaries of which the
Optionee is a member), whether or not such compensation is deferred, is in cash,
or is in the form of a benefit to or for the Optionee (an "Other Benefit Plan"),
the Optionee shall not have any right to exercise an Option or receive any
payment or other benefit under this Option Agreement, any Other Agreement, or
any Other Benefit Plan if such right to exercise, payment or benefit, taking
into account all other rights, payments or benefits to or for the Optionee under
this Option Agreement, all Other Agreements and all Other Benefit Plans, would
cause any right, payment or benefit to the Optionee under this Option Agreement
to be considered a "parachute payment" within the meaning of Section 280G(b)(2)
of the Code as then in effect (a "Parachute Payment"). In the event that the
receipt of any such right to exercise or any other payment or benefit under this
Option Agreement, any Other Agreement or any Other Benefit Plan would cause the
Optionee to be considered to have received a Parachute Payment under this
Agreement, then the Optionee shall have the right, in the Optionee's sole
discretion, to designate those rights, payments or benefits under this Option
Agreement, any Other Agreements, and/or any Other Benefit Plans, which should be
reduced or eliminated so as to avoid having the right, payment or benefit to the
Optionee under this Option Agreement be deemed to be a Parachute Payment.
5. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee, only such Optionee (or, in the event of
legal incapacity or incompetency, the Optionee's guardian or legal
representative) may exercise the Option. No Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will or the
laws of descent and distribution.
6. RIGHTS AS STOCKHOLDER
Neither the Optionee nor any executor, administrator, distributee or legatee of
the Optionee's estate shall be, or have any of the rights or privileges of, a
stockholder of the Corporation in respect of any shares of Stock issuable
hereunder unless and until such shares have been fully paid and certificates
representing such shares have been endorsed, transferred and delivered, and the
name of the Optionee (or of such personal representative, administrator,
distributee or legatee of the Optionee's estate) has been entered as the
stockholder or record on the books of the Corporation.
7. WITHHOLDING OF TAXES
The parties hereto recognize that the Corporation or a subsidiary may be
obligated to withhold federal, state and/or local income taxes and Social
Security taxes to the extent that the Optionee realizes ordinary income in
connection with the exercise of the Option or in connection with a disposition
of any shares of Stock acquired by exercise of the Option. The Optionee agrees
that the Corporation or a subsidiary may withhold amounts needed to cover such
taxes from payments otherwise due and owing to the Optionee, and also agrees
that upon demand the Optionee will promptly pay to the Corporation or a
subsidiary having such obligation any additional amounts as may be necessary to
satisfy such withholding tax obligation. Such payment shall be made in cash or
by check payable to the order of the Corporation or a subsidiary.
8. DISCLAIMER OF RIGHTS
No provision in this Option Agreement shall be construed to confer upon the
Optionee the right to be employed by the Corporation or any subsidiary, or to
interfere in any way with the right and authority of the Corporation or any
subsidiary either to increase or decrease the compensation of the Optionee at
any time, or to terminate any employment or other relationship between the
Optionee and the Corporation or any subsidiary.
9. INTERPRETATION OF THIS OPTION AGREEMENT
All decisions and interpretations made by the Board or the Compensation
Committee thereof with regard to any question arising under the Plan or this
Option Agreement shall be binding and conclusive on the Corporation and the
Optionee and any other person entitled to exercise the Option as provided for
herein.
10. GOVERNING LAW
This Option Agreement shall be governed by the laws of the State of Delaware
(but not including the choice of law rules thereof).
11. BINDING EFFECT
Subject to all restrictions provided for in this Option Agreement, the Plan, and
by applicable law relating to assignment and transfer of this Option Agreement
and the option provided for herein, this Option Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
12. NOTICE
Any notice hereunder by the Optionee to the Corporation shall be in writing and
shall be deemed duly given if mailed or delivered to the Corporation at its
principal office, addressed to the attention of Stock Plan Administration or if
so mailed or delivered to such other address as the Corporation may hereafter
designate by notice to the Optionee. Any notice hereunder by the Corporation to
the Optionee shall be in writing and shall be deemed duly given if mailed or
delivered to the Optionee at the address specified below by the Optionee for
such purpose, or if so mailed or delivered to such other address as the Optionee
may hereafter designate by written notice given to the Corporation.
13. ENTIRE AGREEMENT
This Option Agreement and the Plan together constitute the entire agreement and
supersede all prior understandings and agreements, written or oral (including,
without limitation, the Stock Option Agreement between the Corporation and
Optionee dated February 19, 2002), of the parties hereto with respect to the
subject matter hereof. Except for amendments to the Plan incorporated into this
Option Agreement by reference pursuant to Section 2 above, neither this Option
Agreement nor any term hereof may be amended, waived, discharged or terminated
except by a written instrument signed by the Corporation and the Optionee;
provided, however, that the Corporation unilaterally may waive any provision
hereof in writing to the extent that such waiver does not adversely affect the
interests of the Optionee hereunder, but no such waiver shall operate as or be
construed to be a subsequent waiver of the same provision or a waiver of any
other provision hereof.
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Amended and
Restated Option Agreement, or caused this Amended and Restated Option Agreement
to be duly executed on their behalf, as of the day and year first above written.
Transaction Systems Architects, Inc.: Optionee:
By: By:
---------------------------------- -----------------------------------
Dennis P. Byrnes, Secretary Gregory D. Derkacht
ADDRESS FOR NOTICE TO OPTIONEE:
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Number Street Apt.
-----------------------------------------
City State Zip Code
-----------------------------------------
SS# Hire Date
DESIGNATED BENEFICIARY:
-----------------------------------------
Please Print Last Name, First Name MI
-----------------------------------------
Beneficiary's Street Address
-----------------------------------------
City State Zip Code
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Beneficiary's Social Security Number
I understand that in the event of my death, the above named beneficiary
will have control of any unexercised options remaining in my account at that
time. If no beneficiary is designated or if the named beneficiary does not
survive me, the options will become part of my estate. This beneficiary
designation does NOT apply to stock acquired by the exercise of options prior
to my death.
-----------------------------------------
SIGNATURE DATE
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After completing this page, please make a copy for your records and return it to
Stock Plan Administration, Transaction Systems Architects, Inc., 224 S. 108
Avenue, Omaha, NE 68154
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1999 Stock Option Plan - US Plan
200,000 Options $9.80/Share Exercise Price February 19, 2002
EXHIBIT E
AMENDED AND RESTATED
SEVERANCE COMPENSATION AGREEMENT
SEVERANCE COMPENSATION AGREEMENT dated as of September 28, 2004 between
Transaction Systems Architects, Inc., a Delaware corporation (the "Company"),
and Gregory D. Derkacht (the "Executive").
WHEREAS, the Company's Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication of
the Executive to his assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change in control of
the Company;
WHEREAS, the Company and the Executive entered into a severance compensation
agreement dated as of April 28, 2003 (the "Severance Agreement"); and
WHEREAS, the Company and the Executive have entered into that third amended
and restated employment agreement of even date herewith (as amended, the
"Employment Agreement") and wish to amend and restate the Severance Agreement in
connection therewith.
NOW, THEREFORE, this Agreement sets forth the severance compensation which
the Company agrees it will pay to the Executive if the Executive's employment
with the Company terminates under certain circumstances described herein
following a Change in Control (as defined herein) and the other benefits the
Company will provide the Executive following a Change in Control.
1. TERM.
This Agreement shall terminate, except to the extent that any obligation of
the Company hereunder remains unpaid as of such time, upon the earlier of
(i) the appointment of a successor CEO as provided in the Employment Agreement;
(ii) the termination of Executive's employment for any reason prior to a Change
in Control; and (iii) three years after the date of a Change in Control.
2. CHANGE IN CONTROL.
For purposes of this Agreement, Change in Control shall mean:
(a) the acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) (a "Person"), of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
in Control: (A) any acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion privilege), (B) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or
(C) any acquisition by any corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or consolidation, the
conditions described in sub-clauses (i), (ii) and (iii) of clause (c) of this
Section 2 are satisfied; or
(b) if individuals who, as of the date hereof, constitute the Board of
Directors (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least
two-thirds of the directors then constituting the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of either an actual or threatened election contest
subject to Rule 14a-11 of Regulation 14A promulgated under the Exchange Act or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) approval by the stockholders of the Company of a reorganization, merger
or consolidation, unless following such reorganization, merger or consolidation
(i) more than 60% of, respectively, the then-outstanding shares of common stock
of the corporation resulting from such reorganization, merger or consolidation
and the combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting Securities
immediately prior to such reorganization, merger, or consolidation in
substantially the same proportions as their ownership, immediately prior to
such reorganization, merger or consolidation, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be (for
purposes of determining whether such percentage test is satisfied, there shall
be excluded from the number of shares and voting securities of the resulting
corporation owned by the Company's stockholders, but not from the total number
of outstanding shares and voting securities of the resulting corporation, any
shares or voting securities received by any such stockholder in respect of any
consideration other than shares or voting securities of the Company), (ii) no
Person (excluding the Company, any employee benefit plan (or related trust) of
the Company, any qualified employee benefit plan of such corporation resulting
from such reorganization, merger or consolidation and any Person beneficially
owning, immediately prior to such reorganization, merger or consolidation,
directly or indirectly, 20% or more of the Outstanding Company Common Stock or
Outstanding Company Voting Securities, as the case may be) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then-outstanding
shares of common stock of the corporation resulting from such reorganization,
merger or consolidation or the combined voting power of the then-outstanding
voting securities of such corporation entitled to vote generally in the election
of directors and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at the time of the execution
of the initial agreement providing for such reorganization, merger or
consolidation; or
(d) (i) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company or (ii) the first to occur of (A) the
sale or other disposition (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company, or
(B) the approval by the stockholders of the Company of any such sale or
disposition, other than, in each case, any such sale or disposition to a
corporation, with respect to which immediately thereafter, (1) more than 60%
of, respectively, the then-outstanding shares of common stock of such
corporation and the combined voting power of the then-outstanding voting
securities of such corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the beneficial
owners, respectively, of the outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such sale or other disposition
in substantially the same proportion as their ownership, immediately prior to
such sale or other disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be (for purposes of
determining whether such percentage test is satisfied, there shall be excluded
from the number of shares and voting securities of the transferee corporation
owned by the Company's stockholders, but not from the total number of
outstanding shares and voting securities of the transferee corporation, any
shares or voting securities received by any such stockholder in respect of any
consideration other than shares or voting securities of the Company), (2) no
Person (excluding the Company and any employee benefit plan (or related trust)
of the Company, any qualified employee benefit plan of such transferee
corporation and any Person beneficially owning, immediately prior to such sale
or other disposition, directly or indirectly, 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of such transferee corporation and the
combined voting power of the then-outstanding voting securities of such
transferee corporation entitled to vote generally in the election of directors
and (3) at least a majority of the members of the board of directors of such
transferee corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the board providing for such
sale or other disposition of assets of the Company.
3. TERMINATION FOLLOWING A CHANGE IN CONTROL.
(a) The Executive shall be entitled to the compensation provided in Section
4 of this Agreement if all of the following conditions are satisfied:
(i) there is a Change in Control of the Company while the Executive
is still an employee of the Company;
(ii) the Executive's employment with the Company is terminated within
two years after the Change in Control;
(iii) the Executive's termination of employment is not a result of (A)
the Executive's death; (B) the Executive's Disability (as defined in
section 3(b) below); (C) the Executive's Retirement (as defined in section
3(c) below); (D) the Executive's termination by the Company for Cause (as
defined in Section 3(d) below); or (E) the Executive's decision to terminate
employment other than for Good Reason (as defined in Section 3(e) below);
and
(iv) the Executive executes and delivers to the Company the Release
contemplated under the Employment Agreement.
(b) If, as a result of the Executive's incapacity due to physical or mental
illness, the Executive shall have been unable, with or without a reasonable
accommodation, to perform his duties with the Company on a full-time basis for
six months and within 30 days after a Notice of Termination (as defined in
Section 3(f) below) is thereafter given by the Company, the Executive shall not
have returned to the full-time performance of the Executive's duties, the
Company may terminate the Executive's employment for "Disability". If there is
a Change in Control of the Company while the Executive is still an employee and
if the Executive's employment with the Company is terminated for Disability
within two years after the Change in Control, the Executive shall be entitled
to receive in a lump sum cash payment within five days after his Date of
Termination (as defined in section 3(g) below) the following:
(i) one times the Base Amount (as defined in Section 4(b)(i))
determined with respect to the Base Period (as defined in Section 4(b)(ii));
plus
(ii) his earned but unpaid base salary through his Date of
Termination; plus
(iii) a quarterly incentive award for the current fiscal quarter
prorated through the Date of Termination equal to the greater of (A) the
quarterly incentive award (whether paid or payable in cash or in securities
of the Company) awarded to the Executive with respect to the Company's most
recent fiscal quarter ending prior to the Date of Termination or (B) the
average quarterly incentive award (whether paid or payable in cash or in
securities of the Company) made to the Executive with respect to the
Company's most recent three fiscal years ending prior to the Date of
Termination; plus
(iv) interest on the amounts payable pursuant to clauses (i), (ii)
and (iii) above calculated from the Date of Termination until paid at a rate
equal to the prime rate as published in The Wall Street Journal on the Date
of Termination plus three percentage points.
(c) For purposes of this Agreement only, "Retirement" shall mean
termination by the Company or the Executive of the Executive's employment based
on the Executive's having reached age 65 or such other age as shall have been
fixed in any arrangement established pursuant to this Agreement with the
Executive's consent with respect to the Executive.
(d) For purposes of this Agreement only, "Cause" shall mean: (i) the
Executive's conviction of a felony involving moral turpitude; (ii) the
Executive's serious, willful gross misconduct or willful gross neglect of duties
(other than any such neglect resulting from the Executive's incapacity due to
physical or mental illness or any such neglect after the issuance of a Notice of
Termination by the Executive for Good Reason, as such terms are defined in
subsections (e) and (f) below), which, in either case, has resulted, or in all
probability is likely to result, in material economic damage to the Company;
provided no act or failure to act by the Executive will constitute Cause under
this clause (ii) if the Executive believed in good faith that such act or
failure to act was in the best interest of the Company; or (iii) the Executive's
violation of any provision of the Company's Code of Business Conduct and Ethics
or the Company' Code of Ethics for the Chief Executive Officer and Senior
Financial Officers, as the same may be amended from time to time.
For purposes of this Agreement only, any termination of the Executive's
employment by the Company for Cause shall be authorized by a vote of at least a
majority of the non-employee members of the Board of Directors of the Company
(the "Board") within 12 months of a majority of such non-employee members of the
Board having actual knowledge of the event or circumstances providing a basis
for such termination. In the case of clause (ii) of the second sentence of this
subsection (d), the Executive shall be given notice by the Board specifying in
detail the particular act or failure to act on which the Board is relying in
proposing to terminate him for cause and offering the Executive an opportunity,
on a date at least 14 days after receipt of such notice, to have a hearing, with
counsel, before a majority of the non-employee members of the Board, including
each of the members of the Board who authorized the termination for Cause. The
Executive shall not be terminated for Cause if, within 30 days after the date of
the Executive's hearing before the Board (or if the Executive waives a hearing,
within 30 days after receiving notice of the proposed termination), he has
corrected the particular act or failure to act specified in the notice and by so
correcting such act or failure to act he has reduced the economic damage his act
or failure to act has allegedly caused the Company to a level which is no longer
material or has eliminated the probability that such act or failure to act is
likely to result in material economic damage to the Company. No termination for
Cause shall take effect until the expiration of the correction period described
in the preceding sentence and the determination by a majority of the
non-employee members of the Board that the Executive has failed to correct the
act or failure to act in accordance with the terms of the preceding sentence.
Anything herein to the contrary notwithstanding, if, following a
termination of the Executive's employment by the Company for Cause based upon
the conviction of the Executive for a felony involving moral turpitude such
conviction is finally overturned on appeal, the Executive shall be entitled to
the compensation provided in Sections 4(a) and 4(c). In lieu of the interest
provided in clause (iv) of the first sentence of Section 4(a) and the interest
provided in the second sentence of Section 4(c), however, the compensation
provided in Sections 4(a) and 4(c) shall be increased by a ten percent rate of
interest, compounded annually, calculated from the date such compensation would
have been paid if the Executive's employment had been terminated without Cause.
(e) For purposes of this Agreement, "Good Reason" shall mean, after any
Change in Control and without the Executive's express written consent, any of
the following:
(i) a significant diminution in the Executive's duties and
responsibilities, or the assignment to the Executive by the Company of
duties inconsistent with the Executive's position, duties, responsibilities
or status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive's titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal of
the Executive from or any failure to re-elect the Executive to any of such
positions, except in connection with the termination of his employment for
Disability, Retirement or Cause or as a result of the Executive's death or
by the Executive other than for Good Reason;
(ii) a reduction by the Company in the Executive's annual rate of base
salary as in effect on the date hereof or as the same may be increased from
time to time during the term of this Agreement or the Company's failure to
increase (within 12 months of the Executive's last increase in his annual
rate of base salary) the Executive's annual rate of base salary after a
Change in Control of the Company in an amount which at least equals, on a
percentage basis, the greater of (A) the average percentage increase in the
annual rate of base salary for all officers of the Company effected in the
preceding 12 months; or (B) the Consumer Price Index as published by the
United States Government (or, in the event such index is discontinued, any
similar index published by the United States Government as designated in
good faith by the Executive);
(iii) (A) any failure by the Company to continue in effect any
benefit plan or arrangement (including, without limitation, the life
insurance, medical, dental, accident and disability plans) in which the
Executive is participating at the time of a Change in Control of the
Company, or any other plan or arrangement providing the Executive with
benefits that are no less favorable (hereinafter referred to as "Benefit
Plans"), (B) the taking of any action by the Company which would adversely
affect the Executive's participation in or materially reduce the Executive's
benefits under any such Benefit Plan or deprive the Executive of any
material fringe benefit or perquisite of office enjoyed by the Executive at
the time of a Change in Control of the Company, unless in the case of either
sub-clause (A) or (B) above, there is substituted a comparable plan or
program that is economically equivalent or superior, in terms of the benefit
offered to the Executive, to the Benefit Plan being altered, reduced,
affected or ended;
(iv) (A) any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the Company's
bonus arrangements, the Transaction Systems Architects, Inc. 401(k) Plan,
the sales incentive plans, and the management incentive plans) in which the
Executive is participating at the time of a Change in Control of the
Company, or any other plans or arrangements providing him with substantially
similar benefits, (hereinafter referred to as "Incentive Plans"), (B) the
taking of any action by the Company which would adversely affect the
Executive's participation in any such Incentive Plan or reduce the
Executive's benefits under any such Incentive Plan, unless in the case of
either sub-clause (A) or (B) above, there is substituted a comparable plan
or program that is economically equivalent or superior, in terms of the
benefit offered to the Executive, to the Incentive Plan being altered,
reduced, affected or ended, or (C) any failure by the Company with respect
to any fiscal year to make an award to the Executive pursuant to each such
Incentive Plan or such substituted comparable plan or program equal to or
greater than the greater of (1) the award (whether paid or payable in cash
or in securities of the Company) made to the Executive pursuant to such
Incentive Plan or such substituted comparable plan or program with respect
to the immediately preceding fiscal year or (2) the average annual award
(whether paid or payable in cash or in securities of the Company) made to
the Executive pursuant to such Incentive Plan or such substituted comparable
plan with respect to the prior three fiscal years (or such lesser number of
prior fiscal years that the Executive was employed by the Company or that
the Incentive Plan (together with any substituted comparable plan) was
maintained);
(v) (A) any failure by the Company to continue in effect any
plan or arrangement to receive securities of the Company in which the
Executive is participating at the time of a Change in Control of the
Company, or any other plan or arrangement providing him with substantially
similar benefits, (hereinafter referred to as "Securities Plans"), (B) the
taking of any action by the Company which would adversely affect the
Executive's participation in or materially reduce the Executive's benefits
under any such Securities Plan, unless in the case of either sub-clause
(A) or (B) above, there is substituted a comparable plan or program that is
economically equivalent or superior, in terms of the benefit offered to the
Executive, to the Securities Plan being altered, reduced, affected or ended,
or (C) any failure by the Company in any fiscal year to grant stock options,
stock appreciation rights or securities awards to the Executive pursuant to
such Securities Plans with respect to an aggregate number of securities of
the Company of each kind that is equal to or greater than the greater of
(1) the aggregate number of securities of the Company of that kind covered
by stock options, stock appreciation rights, or securities awards granted
to the Executive pursuant to such Securities Plans in the immediately
preceding fiscal year; or (2) the average annual aggregate number of
securities of the Company of that kind covered by stock options, stock
appreciation rights, or securities awards granted to the Executive pursuant
to such Securities Plans in the prior three fiscal years; and provided
further the material terms and conditions of such stock options, stock
appreciation rights, and securities awards granted to the Executive after
the Change in Control (including, but not limited to, the exercise price,
vesting schedule, period and methods of exercise, expiration date,
forfeiture provisions and other restrictions) are substantially similar to
the material terms and conditions of the stock options, stock appreciation
rights, and securities awards granted to the Executive under the Securities
Plans immediately prior to the Change in Control of the Company;
(vi) the Executive's relocation, at the request of the Company, more
than 50 miles from the location at which the Executive performed the
Executive's duties prior to a Change in Control of the Company, except for
required travel by the Executive on the Company's business to an extent
substantially consistent with the Executive's business travel obligations at
the time of a Change in Control of the Company;
(vii) any failure by the Company to provide the Executive with the
number of annual paid vacation days to which the Executive is entitled for
the year in which a Change in Control of the Company occurs;
(viii) any material breach by the Company of any provision of this
Agreement;
(ix) any failure by the Company to obtain the assumption of this
Agreement by any successor or assign of the Company prior to such succession
or assignment;
(x) any failure by the Company or its successor to enter into an
agreement with the Executive that is substantially similar to this Agreement
with respect to a Change in Control of the Company or its successor
occurring thereafter; or
(xi) any purported termination of the Executive's employment by the
Company pursuant to Section 3(b), 3(c) or 3(d) above which is not effected
pursuant to a Notice of Termination satisfying the requirements of Section
3(f) below (and, if applicable, Section 3(d) above), and for purposes of
this Agreement, no such purported termination shall be effective.
For purposes of this subsection (e), an isolated, immaterial, and inadvertent
action not taken in bad faith by the Company in violation of clause (ii), (iii),
(iv), (v) or (vii) of this subsection that is remedied by the Company promptly
after receipt of notice thereof given by the Executive shall not be considered
Good Reason for the Executive's termination of employment with the Company. In
the event the Executive terminates his employment for Good Reason hereunder,
then notwithstanding that the Executive may also retire for purposes of the
Benefit Plans, Incentive Plans or Securities Plans, the Executive shall be
deemed to have terminated his employment for Good Reason for purposes of this
Agreement.
(f) Any termination of the Executive by the Company pursuant to Section
3(b), 3(c) or 3(d) above, or by the Executive pursuant to Section 3(e) above,
shall be communicated by a Notice of Termination to the other party hereof. For
purposes of this Agreement, a "Notice of Termination" shall mean a written
notice which shall indicate those specific termination provisions in this
Agreement relied upon and which sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated. For purposes of this Agreement, no
such purported termination by the Company shall be effective without such Notice
of Termination.
(g) "Date of Termination" shall mean (i) if the Executive's employment
is terminated by the Company for Disability, 30 days after Notice of Termination
is given to the Executive (provided that the Executive shall not have returned
to the performance of the Executive's duties on a full-time basis during such
30-day period), (ii) if the Executive's employment is terminated by the
Executive for Good Reason, the date specified in the Notice of Termination, and
(iii) if the Executive's employment is terminated by the Company for any other
reason, the date on which a Notice of Termination is given; provided, however,
that if within 30 days after any Notice of Termination is given to the Executive
by the Company, the Executive notifies the Company that a dispute exists
concerning the termination, the Date of Termination shall be the date the
dispute is finally determined, whether by mutual written agreement of the
parties or upon final judgment, order or decree of a court of competent
jurisdiction (the time for appeal therefrom having expired and no appeal having
been perfected).
4. SEVERANCE COMPENSATION UPON TERMINATION OF EMPLOYMENT.
(a) If pursuant to Section 3(a) above the Executive is entitled to the
compensation provided in this Section 4, then the Company shall pay to the
Executive in a lump sum cash payment within five days after the Date of
Termination the following:
(i) the Severance Amount as defined in Section 4(b) below; plus
(ii) his earned but unpaid base salary through his Date of
Termination; plus
(iii) a quarterly incentive award for the current fiscal quarter
prorated through the Date of Termination equal to the greater of (A) the
quarterly incentive award (whether paid or payable in cash or in securities
of the Company) awarded to the Executive with respect to the Company's most
recent fiscal quarter ending prior to the Date of Termination or (B) the
average quarterly incentive award (whether paid or payable in cash or in
securities of the Company) made to the Executive with respect to the
Company's most recent three fiscal years ending prior to the Date of
Termination; plus
(iv) interest on the amounts payable pursuant to clauses (i), (ii) and
(iii) above calculated from the Date of Termination until paid at a rate
equal to the prime rate as published in The Wall Street Journal on the Date
of Termination plus three percentage points, compounded annually.
(b) "Severance Amount" shall mean an amount equal to one times the Base
Amount (as defined below) determined with respect to the Base Period (as defined
below); provided, however, in no event shall the Severance Amount be less than
two times the Executive's annual rate of base salary at the higher of the annual
rate in effect (i) immediately prior to the Date of Termination or (ii) on the
date six months prior to the Date of Termination. For purposes of this
subsection (b):
(i) "Base Amount" means the Executive's average fiscal-year Compensation
(as defined below) for fiscal years of the Company in the Base Period. Such
average shall be computed by dividing the total of the Executive's
Compensation for the Base Period by the number of fiscal years in the Base
Period. If the Executive's Base Period includes a portion of a fiscal year
during which he was not an employee of the Company (or a predecessor entity
or a related entity, as such terms are defined in clause (iii) below), the
Executive's Compensation for such fiscal year shall be annualized before
determining the average fiscal-year Compensation for the Base Period. In
annualizing Compensation, the frequency with which payments are expected to
be made over a fiscal year shall be taken into account; thus, any amount of
Compensation that represents a payment that will not be made more often than
once per fiscal year is not annualized. Set forth on Appendix A, which is
attached hereto and made a part hereof, are three examples illustrating the
calculation of the Base Amount.
(ii) "Base Period" means the most recent two consecutive fiscal years of
the Company ending prior to the Date of Termination. However, if the
Executive was not an employee of the Company (or a predecessor entity or a
related entity, as such terms are defined in clause (iii) below) at any time
during one of such two fiscal years, the Executive's Base Period is the
one fiscal year of such two-fiscal-year period during which the Executive
performed personal services for the Company or a predecessor entity or a
related entity.
(iii) "Compensation" means the compensation which was payable by the
Company, by a predecessor entity, or by a related entity and which was
includible in the gross income of the Executive (or either was excludible
from such gross income as "foreign earned income" within the meaning of
Section 911 of the Internal Revenue Code of 1986, as amended (the "Code"),
or would have been includible in such gross income if the Executive had been
a United States citizen or resident), but excluding the following:
(A) amounts realized from the exercise of a non-qualified stock option; and
(B) amounts realized from the sale, exchange or other disposition of
stock acquired under an incentive stock option described in Code Section
422 (b) or under an employee stock purchase plan described in code Section
423 (b). Notwithstanding the preceding sentence, Compensation shall be
determined without regard to any compensation deferral election under any
plan, program or arrangement, qualified or non-qualified, maintained or
contributed to by the Company, a predecessor entity or a related entity,
including but not limited to a cash-or-deferred arrangement described in
Code Section 401(k), a cafeteria plan described in Code Section 125 or a
non-qualified deferred compensation plan. A "predecessor entity" is any
entity which, as a result of a merger, consolidation, purchase or
acquisition of property or stock, corporate separation, or other similar
business transaction transfers some or all of its employees to the Company
or to a related entity or to a predecessor entity of the Company. The term
"related entity" includes any entity treated as a single employer with the
Company in accordance with subsections (b), (c), (m) and (o) of Code
Section 414.
(c) If pursuant to Section 3(a) above the Executive is entitled to the
compensation provided in this Section 4, then the Executive will be entitled to
continued participation in all employee benefit plans or programs available to
Company employees generally in which the Executive was participating on the
Date of Termination, such continued participation to be at Company cost and
otherwise on the same basis as Company employees generally, until the earlier
of (i) the date, or dates, he receives equivalent coverage and benefits under
the plans and programs of a subsequent employer (such coverages and benefits to
be determined on a coverage-by-coverage or benefit-by-benefit basis) or (ii) two
years from the Date of Termination; provided (A) if the Executive is precluded
from continuing his participation in any employee benefit plan or program as
provided in this sentence, he shall be paid, in a lump sum cash payment, within
30 days following the date it is determined he is unable to participate in any
employee benefit plan or program, the after-tax economic equivalent of the
benefits provided under the plan or program in which he is unable to participate
for the period specified in this sentence, and (B) the economic equivalent of
any benefit foregone shall he deemed to be the lowest cost that would be
incurred by the Executive in obtaining such benefit for himself (including
family or dependent coverage, if applicable) on an individual basis. The
Executive shall be eligible for group health plan continuation coverage under
and in accordance with the Consolidated Omnibus Budget Reconciliation Act of
1965, as amended, when he ceases to be eligible for continued participation in
the Company's group health plan under this subsection (c).
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) The Executive shall not be required to mitigate damages or the amount
of any payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this Agreement
be reduced by any compensation earned by the Executive as the result of
employment by another employer after the Date of Termination or otherwise.
(b) The provisions of this Agreement, and any payment provided for
hereunder, shall not reduce any amounts otherwise payable, or in any way
diminish the Executive's existing rights, or rights which would accrue solely
as a result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or agreement with
or of the Company.
6. INCENTIVE AWARDS.
In the event of a Change in Control of the Company, then notwithstanding
the terms and conditions of any Incentive Plan, the Company agrees (i) to
immediately and fully vest all unvested awards, units, and benefits (other than
options to acquire securities of the Company or awards of securities of the
Company) which have been awarded or allocated to the Executive under the
Incentive Plans; and (ii) upon the exercise of such awards or units or the
distribution of such benefits, to pay all amounts due under the Incentive Plans
solely in cash.
7. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in the event
it shall be determined that any payment or distribution by the Company to or for
the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
7) (a "Payment") would be subject to the excise tax imposed by Section 4999 of
the Code or any interest or penalties are incurred by the Executive with respect
to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the "Excise Tax"), then
the Executive shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) All determinations required to be made under this Section 7, including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by the Accounting Firm which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days after
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. The determination of tax liability
made by the Accounting Firm shall be subject to review by the Executive's tax
advisor, and, if the Executive's tax advisor does not agree with the
determination reached by the Accounting Firm, then the Accounting Firm and the
Executive's tax advisor shall jointly designate a nationally recognized public
accounting firm which shall make the determination. All fees and expenses of the
accountants and tax advisors retained by both the Executive and the Company
shall be borne solely by the Company. Any Gross-Up Payment, as determined
pursuant to this Section 7, shall be paid by the Company to the Executive within
five days after the receipt of the determination. Any determination by such
jointly designated public accounting firm shall be binding upon the Company and
the Executive. As a result of the uncertainty in the application of Section 4999
of the Code at the time of the initial determination hereunder, it is possible
that Gross-Up Payments will not have been made by the Company that should have
been made ("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Executive hereafter is required to make a
payment of any Excise Tax, any such underpayment shall be promptly paid by the
Company to or for the benefit of the Executive. Upon notice by the Executive of
any audit or other proceeding that may result in a liability to the Company
hereunder, the Executive shall promptly notify the Company of such audit or
other proceeding; and the Company may, at its option, but solely with respect to
the item or items that relate to such potential liability, choose to assume the
defense of such audit or other proceeding at its own cost, provided that (i) the
Executive shall cooperate with the Company in such defense and (ii) the Company
will not settle such audit or other proceeding without the consent of the
Executive (such consent not to be unreasonably withheld). The highest effective
marginal tax rate (determined by taking into account any reduction in itemized
deductions and/or exemptions attributable to the inclusion of the additional
amounts payable under this Section 7 in the Executive's adjusted gross or
taxable income) based upon the state and locality where the Executive is
resident at the time of payment of such amounts will be used for purposes of
determining the federal and state income and other taxes with respect thereto.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify the Executive to the fullest extent
permitted by law if the Executive is a party or threatened to be made a party to
any Proceeding (as defined below).
(b) If requested by the Executive, the Company shall advance (within
two business days of such request) any and all Expenses, as defined below,
relating to a Proceeding to the Executive (an "Expense Advance"), upon the
receipt of a written undertaking by or on behalf of the Executive to repay such
Expense Advance if a judgment or other final adjudication adverse to the
Executive (as to which all rights of appeal therefrom have been exhausted or
lapsed) establishes that the Executive is not entitled to indemnification by the
Company. Expenses shall include attorney's fees and all other costs, charges and
expenses paid or incurred in connection with investigating, defending, being a
witness in or participating in (including on appeal), or preparing to defend, be
a witness in or participate in any Proceeding.
(c) The Company agrees to obtain a directors' and officers' liability
insurance policy covering the Executive and to continue and maintain such
policy. The amount of coverage shall be reasonable in relation to the
Executive's position and responsibilities during his employment by the Company.
(d) This Section 8 is a supplement to and in furtherance of the Certificate
of Incorporation and Bylaws of the Company and shall not be deemed a substitute
therefor, or diminish or abrogate any rights of the Executive thereunder.
(e) For purposes of Section 8(a), the meaning of the phrase "to the fullest
extent permitted by law" shall include but not be limited to:
(i) to the fullest extent permitted by the provision of the Delaware
General Corporation Law ("DGCL") that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision of any
amendment to or replacement of the DGCL, and
(ii) to the fullest extent authorized or permitted by any amendments to
or replacements of the DGCL adopted after the date of this Agreement that
increase the extent to which a corporation may indemnify its officers and
directors.
(f) For purposes of Sections 8(a) and 8(b), "Proceeding" shall mean any
threatened, pending or completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether brought in the right
of the Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Executive was, is or will be involved as a
party or otherwise by reason of the fact that the Executive is or was a director
or officer of the Company, by reason of any action taken by him or of any action
on his part while acting as director or officer of the Company, or by reason of
the fact that he is or was serving at the request of the Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, in each case whether or not serving in such capacity
at the time any liability or expense is incurred for which indemnification,
reimbursement, or advancement of expenses can be provided under this Agreement.
9. SUCCESSORS.
(a) The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no
such succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive's employment for Good Reason and receive
the compensation provided for in Section 4 hereof. As used in this Agreement,
"Company" shall mean the Company as hereinbefore defined and any successor or
assign to its business and/or assets as aforesaid which executes and delivers
the agreement provided for in this Section 9 or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of law.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Executive should
die while any amounts are still payable to him hereunder, all such amounts,
unless otherwise provided herein, shall he paid in accordance with the terms of
this Agreement to the Executive's devisee, legatee or other designee or, if
there be no such designee, to the Executive's estate.
10. NOTICE.
For purposes of this Agreement, notices and all other communications
provided for in this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by United States registered mail,
return receipt requested, postage prepaid, as follows:
If to the Company:
Transaction Systems Architects, Inc.
224 South 108th Avenue
Omaha, NE 68154
Attn: General Counsel
If to the Executive:
Gregory D. Derkacht
[Address]
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. MISCELLANEOUS.
No provisions of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing signed by
the Executive and the Company. No waiver by either party hereto at any time of
any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same time or
at any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement or
the Employment Agreement. This Agreement shall be governed by and construed in
accordance with the laws of the State of Nebraska, without giving effect to any
principles of conflicts of law.
12. CONFLICT IN BENEFITS.
Except as otherwise provided in the preceding sentences or the Employment
Agreement, this Agreement is not intended to and shall not limit or terminate
any other agreement or arrangement between the Executive and the Company
presently in effect or hereafter entered into.
13. VALIDITY.
The invalidity or unenforceability of any provisions of this Agreement
shall not affect the validity or enforceability of any other provision of this
Agreement, which shall remain in full force and effect.
14. SURVIVORSHIP.
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations and to the extent that any
performance is required following termination of this Agreement. Without
limiting the foregoing, Sections 7, 8 and 15 shall expressly survive the
termination of this Agreement.
15. LEGAL FEES AND EXPENSES.
If a claim or dispute arises concerning the rights of the Executive under
this Agreement, regardless of the party by whom such claim or dispute is
initiated, the Company shall, upon presentation of appropriate vouchers, pay all
legal expenses, including reasonable attorneys' fees, court costs and ordinary
and necessary out-of-pocket costs of attorneys, billed to and payable by the
Executive or by anyone claiming under or through the Executive, in connection
with the bringing, prosecuting, arbitrating, defending, litigating, negotiating,
or settling such claim or dispute. In no event shall the Executive be required
to reimburse the Company for any of the costs of expenses incurred by the
Company relating to arbitration or litigation. Pending the outcome or resolution
of any claim or dispute, the Company shall continue payment of all amounts due
the Executive without regard to any dispute.
16. EFFECTIVE DATE.
This Agreement shall become effective upon execution.
17. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
18. NO GUARANTEE OF EMPLOYMENT.
Neither this Agreement nor any action taken hereunder shall be construed as
giving the Executive the right to be retained in employment with the Company,
nor shall it interfere with either the Company's right to terminate the
employment of the Executive at any time or the Executive's right to terminate
his employment at any time.
19. NO ASSIGNMENT BY EXECUTIVE.
Except as otherwise provided in Section 9(b), the Executive's rights and
interests under this Agreement shall not be assignable (in law or in equity)
or subject to any manner of alienation, sale, transfer, claims of creditors,
pledge, attachment, garnishment, levy, execution or encumbrances of any kind.
20. WAIVER.
The Executive's or the Company's failure to insist upon strict compliance
with any provision of this Agreement shall not he deemed a waiver of such
provision or any other provision of this Agreement. Any waiver of any provision
of this Agreement shall not be deemed to be a waiver of any other provision,
and any waiver of default in any provision of this Agreement shall not be deemed
to be a waiver of any later default thereof or of any other provision.
21. WITHHOLDING.
All amounts paid pursuant to this Agreement shall be subject to withholding
for taxes (federal, state, local or otherwise) to the extent required by
applicable law.
22. HEADINGS.
The headings of this Agreement have been inserted for convenience of
reference only and are to be ignored in the construction of the provisions
hereof.
23. NUMBERS AND GENDER.
The use of the singular shall be interpreted to include the plural and the
plural the singular, as the context requires. The use of the masculine, feminine
or neuter shall be interpreted to include the masculine, feminine or neuter as
the context shall require.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
TRANSACTION SYSTEMS ARCHITECTS, INC.
By:
---------------------------------
Title:
------------------------------
EXECUTIVE:
------------------------------------
Gregory D. Derkacht
APPENDIX A
EXAMPLE 1 - Executive was employed by the Company for 1-1/3 fiscal years
preceding the fiscal year in which a Change in Control of the Company occurs.
The Executive's Compensation from the Company was $30,000 for the 4-month period
and $120,000 for the full fiscal year. The Executive's Base Amount is $105,000.
Year 1: 3 x $30,000 = $90,000
Year 2: $120,000
[90,000 + 120,000] DIVIDED BY 2 = $105,000
$105,000 is the average fiscal-year Compensation for the Base Period.
EXAMPLE 2 - Assume the same facts as in Example 1, except that the Executive
also received a $70,000 sign-on bonus when his employment with the Company
commenced at the beginning of the 4-month period. The Executive's Base Amount
is $140,000
Year 1: [3 X $30,000] + $70,000 = $160,000
Year 2: $120,000
[160,000 + 120,000] DIVIDED BY 2 = $140,000
Since the sign-on bonus will not be paid more often than once per fiscal year,
the amount of the bonus is not increased in annualizing the Executive's
Compensation for the 4-month period.
EXAMPLE 3 - Executive was employed by the Company for the last 4 months of the
fiscal year preceding the fiscal year in which a Change in Control of the
Company occurs. The Executive's Compensation from the Company was $30,000 for
the 4-month period. The Executive's Base Amount is $90,000.
Year 1: 3 x $30,000 = $90,000
$90,000 DIVIDED BY 1 = $90,000
$90,000 is the average fiscal-year Compensation for the Base Period.
EXHIBIT F
GENERAL RELEASE
This General Release of All Claims (this "Release") is made and entered
into as of __________, ____, by and between Transaction Systems Architects,
Inc., a Delaware corporation ("Employer"), and Gregory D. Derkacht ("Employee").
As used in this Release, the term "Employer" will include Employer, and
Employer's predecessors, parents, subsidiaries, divisions, affiliates, officers,
directors, managers, stockholders, members, employees, successors, assigns,
representatives, agents, accountants, and counsel, unless the context clearly
requires otherwise.
In consideration of the promises set forth in this Release, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Employee and Employer agree as follows:
1. Effectiveness of Release. This Release will be effective on the
eighth (8th) day after it is executed by Employee, provided that Employee has
not revoked Employee's release as provided in Section 5(c) below.
2. Termination of Employment. The parties acknowledge that Employee's
employment relationship with Employer ceased as of ___________, ____ in
accordance with the terms and conditions of the Third Amended and Restated
Employment Agreement, dated as of ___________ (the "Agreement"), by and between
Employer and Employee.
3. Separation Compensation. In consideration of the promises contained
herein, Employer will pay to Employee the payments set forth in, and in
accordance with the terms of, Section 4(c) , 6(c) or 6(d) of the Agreement, as
the case may be. Such compensation will be in full and complete satisfaction of
Employer's obligations under those sections of the Agreement.
4. Compensation and Benefits. Any additional compensation and benefits
described by the Agreement will be provided to Employee in accordance with the
terms of the Agreement.
5. Release.
(a) In accordance with Section 7(c) of the Agreement, in consideration
for the promises contained herein, Employee hereby releases and forever
discharges Employer from any and all charges, complaints, liabilities, claims,
promises, agreements, controversies, damages, causes of action, suits, or
expenses of any kind or nature whatsoever, known or unknown, foreseen or
unforeseen to the date upon which Employee executes this Release (collectively,
"Claims"), including (but not limited to) claims arising in any way from
Employee's employment with Employer, Employee's service as an officer and
manager of Employer, Employee's status as a stockholder of Employer, or
Employee's agreements to resign Employee's employment and other positions as
provided in the Agreement, including, without limitation, any and all alleged
discrimination or acts of discrimination that occurred or may have occurred on
or before the date upon which Employee executes this Release based upon race,
color, sex, creed, national origin, age, disability, or any other violation of
any equal employment opportunity law, ordinance, rule, regulation or order
(including, but not limited to, Title VII of the Civil Rights Act of 1964, as
amended ("Title VII"); the Civil Rights Act of 1991; the Age Discrimination in
Employment Act of 1967, as amended ("ADEA") (as further described in Section
5(c) below); the Americans with Disabilities Act ("ADA"); Claims under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"); or any
other federal, state, or local laws or regulations regarding employment
discrimination or termination of employment) and any Claims for wrongful
discharge, fraud, or misrepresentation under any statute, rule, regulation, or
under the common law.
(b) Employee expressly waives all rights to any and all termination,
severance, and separation compensation and benefits except as may be provided in
this Release and the Agreement.
(c) Employee acknowledges that Employer encouraged Employee to consult
with an attorney of Employee's choosing prior to executing this Release, and
through this Release encourages Employee to consult with Employee's attorney
with respect to possible Claims under the ADEA and that Employee understands
that the ADEA is a federal statute that prohibits discrimination, on the basis
of age, in employment, benefits, and benefit plans. Employee wishes to waive any
and all Claims under the ADEA that Employee may have, as of the date upon which
Employee executes this Release, against Employer, and hereby waives such Claims.
Employee further understands that by signing this Release, Employee is in fact
waiving, releasing and forever giving up any Claim under the ADEA that may have
existed on or prior to the date upon which Employee executes this Release.
Employee acknowledges that Employee is receiving consideration for Employee's
waiver of any and all Claims under the ADEA in addition to anything of value to
which Employee is already entitled. Employee also acknowledges that he has been
given a period of twenty-one (21) days to consider this Release, and, if
executed prior to the expiration of such 21-day period, Employee does hereby
knowingly and voluntarily waive all or part of said 21-day period. Employee also
understands that Employee has seven (7) days following the date upon which
Employee executes this Release within which to revoke the release contained in
this Section 5(c) (the "Revocation Period"), by providing a written notice of
Employee's revocation of the release and waiver contained in this Section 5(c)
to Employer. The release of Claims under the ADEA contained in this Section 5(c)
does not become effective or enforceable until the Revocation Period has
expired.
(d) Notwithstanding the foregoing, Employee does not, and will not,
release, discharge or waive any rights to indemnification that Employee may have
under the Articles of Incorporation, Bylaws or similar constituent documents of
Employer, the laws of the State of Delaware, any indemnification agreement
between Employee and Employer or any insurance coverage maintained by or on
behalf of Employer, nor will Employer take any action, directly or indirectly,
to encumber or adversely affect Employee's rights under any such indemnification
arrangement. Further, the release contained in this Section 5 will not affect
any rights granted to Employee, or obligations of Employer, under the terms of
this Release, except to the extent such rights have previously been satisfied or
are satisfied pursuant to this Release, under the terms of the Agreement.
(e) Nothing contained in this Release will be deemed or construed as an
admission of wrongdoing or liability on the part of Employee.
6. Miscellaneous Provisions.
(a) Binding on Successors; Assignment. This Release will be binding
upon and inure to the benefit of Employer and Employee and each of their
respective successors, assigns, personal and legal representatives, executors,
administrators, heirs, distributees, devisees, and legatees, as applicable;
provided, however, that neither this Release nor any rights or obligations
hereunder will be assignable or otherwise subject to hypothecation by Employee
(except by will or by operation of the laws of intestate succession) or by
Employer, except that Employer may assign this Release to any successor (whether
by merger, purchase, or otherwise) to all or substantially all of the stock,
assets, or businesses of Employer, if such successor expressly agrees to assume
the obligations of Employer hereunder.
(b) Governing Law. This Release will be governed, construed,
interpreted, and enforced in accordance with the substantive laws of the State
of Nebraska, without regard to conflicts of law principles.
(c) Severability. Whenever possible, each provision of this Release
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Release is held to be invalid,
illegal, or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality, or unenforceability shall not affect
any other provision or any other jurisdiction, but this Release shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal, or unenforceable provision had never been contained herein.
(d) Notices. All communications and notices provided for in this
Release will be given in accordance with Section 19 of the Agreement.
(e) Counterparts. This Release may be executed in several counterparts,
each of which will be deemed to be an original, but all of which together will
constitute one and the same Release. Facsimile signatures to this Release shall
have the same legal effect as manual signatures.
(f) Entire Agreement. The terms of this Release and the Agreement are
intended by the parties to be the final expression of their agreement with
respect to the matters addressed herein and therein and may not be contradicted
by evidence of any prior or contemporaneous agreement. The parties further
intend that this Release and the Agreement will constitute the complete and
exclusive statement of their terms and that no extrinsic evidence whatsoever may
be introduced in any judicial, administrative, or other legal proceeding to vary
the terms of this Release or the Agreement.
(g) Amendments; Waivers. This Release may not be modified, amended, or
terminated except by an instrument in writing, signed by Employee and Employer.
Failure on the part of either party to complain of any action or omission,
breach, or default on the part of the other party, no matter how long the same
may continue, will never be deemed to be a waiver of any rights or remedies
hereunder, at law or in equity. Employee or Employer may waive compliance by the
other party with any provision of this Release that such other party was or is
obligated to comply with or perform only through an executed writing; provided,
however, that such waiver will not operate as a waiver of, or estoppel with
respect to, any other or subsequent failure.
(h) No Inconsistent Actions; Enforcement. The Employer and Employee
will not voluntarily undertake or fail to undertake any action or course of
action that is inconsistent with the provisions or essential intent of this
Release. Furthermore, it is the intent of the parties hereto to act in a fair
and reasonable manner with respect to the interpretation and application of the
provisions of this Release. Employee acknowledges and agrees that the remedy at
law available to Employer for breach of any of Employee's obligations under
Section 5 would be inadequate and that damages flowing from such a breach may
not readily be susceptible to being measured in monetary terms.
(i) Headings and Section References. The headings used in this Release
are intended for convenience of reference only and will not in any manner
amplify, limit, modify, or otherwise be used in the construction or
interpretation of any provision of this Release. All section references are to
sections of this Release, unless otherwise noted.
(j) Authority. The Employer represents and warrants that it and its
signatory hereto are duly authorized and empowered to execute and enter into
this Release without any further action or approval.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, THIS RELEASE INCLUDES A COMPLETE
AND PERMANENT RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS. EMPLOYEE ACKNOWLEDGES
THAT EMPLOYEE HAS READ THIS RELEASE AND THAT EMPLOYEE FULLY KNOWS, UNDERSTANDS,
AND APPRECIATES ITS CONTENTS, AND THAT EMPLOYEE HEREBY EXECUTES THE SAME AND
MAKES THIS RELEASE AND THE AGREEMENTS PROVIDED FOR HEREIN VOLUNTARILY AND OF
EMPLOYEE'S OWN FREE WILL.
IN WITNESS WHEREOF, the parties have executed and delivered this Release as of
the date first set forth above.
EMPLOYER EMPLOYEE
By:
------------------------------- ---------------------------------
Gregory D. Derkacht
Name:
-----------------------------
Title:
----------------------------
Exhibit 10.2
2005 FISCAL YEAR MANAGEMENT INCENTIVE COMPENSATION PLAN
On September 24, 2004, the Compensation Committee of the Board of
Directors of Transaction Systems Architects, Inc. (the "Company") approved the
2005 Fiscal Year Management Incentive Compensation Plan (the "2005 MIC Plan").
The 2005 MIC Plan will be implemented in the Company's 2005 fiscal year
beginning October 1, 2004 and will apply to all of the Company's employees
eligible for a management incentive bonus ("MIC Bonus"). All of the Company's
named executive officers will participate in the 2005 MIC Plan.
The objective of the 2005 MIC Plan is to incent certain management
level personnel to contribute toward the attainment of the consolidated
financial goals for fiscal year 2005 based on corporate, segment and/or channel
specific targets, or specific individual performance attainment requirements.
The MIC Bonus opportunity is based on targets for five periods comprised of the
Company's four fiscal quarters and its fiscal year end. If the minimum targets
are not achieved for a target period, no MIC Bonus is paid for that period.
Earned MIC Bonuses are paid quarterly, with the annual MIC Bonus paid at the
same time as the fourth quarter payout. MIC Bonuses are paid in cash. A MIC
Bonus payout may be more or less than 100% (up to a maximum of 200%) depending
on the level of attainment as set forth in the table below:
------------------------------------ -------------------------------------
Target Attainment MIC Bonus
Percentage Payout Percentage
------------------------------------ -------------------------------------
95% Attainment 50%
100% Attainment 100%
105% Attainment 125%
110% Attainment 150%
120% Attainment 200%
------------------------------------ -------------------------------------
A participant in the 2005 MIC Plan must be employed by the Company on
the last day of the target period to be eligible to receive the MIC Bonus payout
for the target period. If a participant's employment is terminated for any
reason prior to the end of any target period, the participant will not be
eligible for to receive a MIC Bonus for that particular period or any subsequent
target period.
The Company reserves the right at any time during the 2005 MIC Plan
year to: (a) amend or terminate the plan in whole or in part, (b) revoke any
eligible employee's right to participate in the 2005 MIC Plan, and (c) make
adjustments to targets at any time during the 2005 MIC Plan year.
Under the 2005 MIC Plan, the annual bonus compensation for the senior
corporate executives will be based on certain Company-level financial
performance measures, and for the senior corporate executives of the Company's
business segments, certain segment-level financial performance measures. MIC
Bonus amounts for segment-level corporate executives will be determined by a
combination of segment-level financial performance (or channel-level performance
for senior corporate executives of business segment channels) and Company-level
performance.
The table below summarizes the fiscal year 2005 Company-level and
segment-level financial performance measures and the range of weighting for such
performance measures:
- --------------------------------------------------------------------------------
Senior Corporate Executives
- --------------------------------------------------------------------------------
Performance Measure Performance Measure
Weighting Range
- ------------------------------------------------------------ -------------------
Company-Level Performance Measures:
- Operating Margin........................................ 40% - 55%
- Revenue................................................. 15% - 30%
- Cash Flow............................................... 15%
Segment-Level Performance Measures:
- Segment/Channel Revenue................................. 15%
- Segment/Channel Contribution Margin..................... 15%
- --------------------------------------------------------------------------------
For the other participants in the 2005 MIC Plan (excluding senior
corporate executives), the annual bonus compensation will be based on a
combination of some or all of the following: Company-level financial performance
measures, segment-level (or channel-level) financial performance measures and
specific targets for the individual which will be set by their direct managers.
The weighting of the performance measures will vary for the other 2005 MIC Plan
participants depending on the respective business segment in which they are
employed; however, 25% of their MIC Bonus will be tied to individual targets set
for such participant by their direct manager.
Evaluating performance against Company-level and segment-level
objectives along with specific individual objectives provides the Company with
the ability to set goals and reward managers and executives for performance
beyond purely financial measures, including, for example, exceptional
leadership, creativity, collaboration, diversity initiatives, crisis management
and other activities that are critical to driving long-term value for the
shareholders of the Company.
The Compensation Committee will set specific target performance
measures at the beginning of each year. These targets will be based upon a
review of the annual operating plan of the Company as a whole and any relevant
business segment, considered in the context of prior years' results and other
factors.
Exhibit 99.1
News Release
TRANSACTION SYSTEMS ARCHITECTS, INC.
224 SOUTH 108 AVENUE
OMAHA, NEBRASKA 68154
402.334.5101
FAX 402.390.8077
For more information contact:
William J. Hoelting
Vice President, Investor Relations
402.390.8990
FOR IMMEDIATE RELEASE
Transaction Systems Architects' CEO Announces his Intentions
to Retire by June 2006
(OMAHA, Neb.-- September 28, 2004) -- Transaction Systems Architects, Inc.
(Nasdaq:TSAI), a leading global provider of enterprise e-payments and e-commerce
software, announced today that Gregory D. Derkacht, its president and chief
executive officer, plans to retire from the Company not later than June 30,
2006.
"It has been an honor to serve as TSA's president and CEO and I look forward to
continuing to serve while the Company seeks my successor and during a successful
transition period," Mr. Derkacht said. "TSA has achieved significant
accomplishments over the last couple of years and I want to make sure that we
continue to build on those accomplishments while planning for my successor."
The Company also announced today that it has entered into a revised employment
agreement with Mr. Derkacht providing for his continued service while his
successor is sought and for an appropriate transition period.
The Company's Board of Directors is commencing a search for an experienced
leader with a proven record of performance to succeed Mr. Derkacht. The revised
employment agreement allows sufficient time to select a successor and provide
for a smooth transition.
About Transaction Systems Architects, Inc.
The Company's software facilitates electronic payments by providing consumers
and companies access to their money. Its products are used to process
transactions involving credit cards, debit cards, secure electronic commerce,
mobile commerce, smart cards, secure electronic document delivery and payment,
checks, high-value money transfers, bulk payment clearing and settlement, and
enterprise e-infrastructure. The Company's solutions are used on more than 1,700
product systems in 76 countries on six continents.
Forward-Looking Statements
Statements included in this press release may contain forward-looking
statements. Such forward-looking statements are made pursuant to the safe-harbor
provisions of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements in this press release are subject to a variety of
risks and uncertainties. Actual results could differ materially.
For a detailed discussion of these and other risk factors, interested parties
should review the Company's filings with the Securities and Exchange Commission,
including the Company's Form 10-K filed on December 23, 2003, the Company's
Form 10-Q filed on February 17, 2004, the Company's form 10-Q filed on May 17,
2004, and the Company's Form 10-Q filed on August 11, 2004.