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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: March 7, 2005
(Date of earliest event reported)
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TRANSACTION SYSTEMS ARCHITECTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-25346 47-0772104
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
224 South 108th Avenue
Omaha, Nebraska 68154
(Address of principal executive offices, including zip code)
(402) 334-5101
(Registrant's telephone number, including area code)
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:
[ ] 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.
1. Employment Agreement.
On March 8, 2005, Transaction Systems Architects, Inc. (the "Company")
entered into an Employment Agreement (the "Employment Agreement") with Philip G.
Heasley, pursuant to which Mr. Heasley agreed to serve as the Company's
President and Chief Executive Officer for an initial term of four years. Under
the Employment Agreement, Mr. Heasley will be employed through March 8, 2009
(the "Employment Period"), after which the Employment Period will be extended
for successive one-year periods, unless the Company gives 30 days written notice
to Mr. Heasley that the Employment Period will not be extended for an additional
year or unless the Employment Period otherwise terminates. So long as Mr.
Heasley continues to serve as President and Chief Executive Officer, the Board
will nominate Mr. Heasley to serve as a member of the Company's Board of
Directors. The Employment Agreement provides that Mr. Heasley will receive an
initial base salary of $500,000 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 and incorporated herein by reference. For
the remainder of fiscal year 2005, Mr. Heasley's bonus will be based on (i) the
achievement of the financial performance objectives set forth in the Company's
2005 Fiscal Year Management Incentive Compensation Plan, a description of which
was filed as Exhibit 10.2 to the Form 8-K filed by the Company with the
Securities and Exchange Commission on September 29, 2004, and (ii) the
attainment of certain internal planning objectives.
The Employment Agreement also provides that, within six months of
entering into the Employment Agreement (or within such longer time period as may
be determined by the Board under compelling circumstances), Mr. Heasley will
acquire through purchase on the NASDAQ National Market System at least 100,000
shares of the Company's common stock. Once Mr. Heasley acquires the 100,000
shares, he is required to continue to own 100,000 shares at all times during his
initial term of employment.
Pursuant to the Employment Agreement, if Mr. Heasley's employment is
terminated by the Company without cause or by Mr. Heasley for good reason, Mr.
Heasley will be entitled to (i) a lump sum payment equal to his bonus for the
quarter in which his employment is terminated (unless termination occurs during
fiscal year 2005); (ii) a lump sum payment equal to two times the sum of (A) his
base salary at the time of termination and (B) his average annual bonus amount
received during the two most recent fiscal years of the Company ending prior to
the date of termination; and (iii) continued participation in the Company's
medical and dental plans for two years or until he is covered under the plans of
another employer. Mr. Heasley will also be subject to non-competition
obligations for a period of one year following termination of his employment.
The Employment Agreement also provides that if payments by the Company to Mr.
Heasley would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, then Mr. Heasley will be entitled to a gross up payment
such that he will be in the same after-tax position as if no excise tax had been
imposed. If Mr. Heasley is entitled to payments under the Change in Control
Severance Compensation Agreement (as described below), no payment will be made
to Mr. Heasley under the Employment Agreement.
Further, in connection with his entry into employment with the Company,
Mr. Heasley entered into the Company's standard Indemnification Agreement for
executive officers, the form of which was filed as Exhibit 10.17 to the
Company's annual report on Form 10-K for the fiscal year ended September 30,
2003.
2. Stock Option Agreement.
On March 9, 2005, in connection with the entry into the Employment
Agreement, the Company entered into a Stock Option Agreement with Mr. Heasley
(attached as Exhibit 10.2 to this Current Report and incorporated herein by
reference) under the Company's 2005 Equity and Performance Incentive Plan (the
"2005 Incentive Plan"), pursuant to which the Company granted Mr. Heasley an
option to purchase 1,000,000 shares of Class A Common Stock of the Company
(reclassified as Common Stock) ("Common Stock") with an exercise price of $22.65
per share. 600,000 of the option shares are time-vested and will vest 25% per
year beginning with the first anniversary of the date of grant. The agreement
provides for accelerated vesting of these time-vested option shares if, during
the term of the option, Mr. Heasley's employment is terminated by the Company
without cause or by Mr. Heasley with good reason. 400,000 of the option shares
are performance-vested and will vest, if at all, upon the attainment by the
Company, at any time following the second anniversary of the date of grant of
the option, of a market price per share of the Company's Common Stock of at
least $50 for 60 consecutive trading days. The agreement provides for
accelerated vesting of these performance-vested option shares if, within two
years from the date of grant, Mr. Heasley's employment is terminated by the
Company without cause or by Mr. Heasley with good reason and if, prior to his
termination of employment, the Company has attained a market price per share of
the Company's Common Stock of at least $50 for 60 consecutive trading days.
3. Change in Control Severance Compensation Agreement.
On March 8, 2005, in connection with the entry into the Employment
Agreement, the Company entered into a Change in Control Severance Compensation
Agreement (the "Change in Control Agreement") with Mr. Heasley. The Change in
Control Agreement provides for a severance payment if Mr. Heasley's employment
is terminated by the Company without cause or by Mr. Heasley with good reason
within two years after a change in control of the Company. As set forth in more
detail in the Change in Control Agreement attached as Exhibit 10.3 to this
Current Report and incorporated herein by reference, this severance payment will
be a lump sum cash payment and will include (i) a lump sum payment equal to two
times the sum of (A) his base salary at the time of termination and (B) his
average annual bonus amount received during the two most recent fiscal years of
the Company ending prior to the date of termination; (ii) his earned but unpaid
base salary through the date of termination of employment; (iii) a quarterly
incentive award for the current fiscal quarter, prorated through the date of
termination of employment (unless termination occurs during fiscal year 2005);
and (iv) interest on the amounts described in (i), (ii) and (iii). Additionally,
Mr. Heasley will be entitled to continued participation in employee benefit
plans and programs of the Company for two years or until he receives equivalent
coverage and benefits under the plans or programs of a subsequent employer. The
Change in Control Agreement also provides that if payments by the Company to Mr.
Heasley would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code, then Mr. Heasley will be entitled to a gross up payment
such that he will be in the same after-tax position as if no excise tax had been
imposed.
4. 2005 Equity and Performance Incentive Plan.
On December 1, 2004, the Board of Directors of the Company approved the
Company's 2005 Incentive Plan, subject to stockholder approval. On March 8,
2005, at the Company's annual meeting of stockholders, the stockholders of the
Company approved the 2005 Incentive Plan. The 2005 Incentive Plan is listed as
Exhibit 10.4 to this Current Report and is incorporated herein by reference to
Annex B to the Company's Proxy Statement for its 2005 annual meeting of
stockholders, filed on January 26, 2005.
The purpose of the 2005 Incentive Plan is to attract and retain
directors, officers and other employees of the Company and to provide such
persons incentives and rewards for superior performance. Officers, other key
employees and non-employee directors of the Company are eligible to participate.
The maximum number of shares that may be issued in connection with awards
granted under the 2005 Incentive Plan is 3,000,000 shares of Common Stock plus
certain shares of Common Stock underlying outstanding awards that are forfeited,
expire or are canceled, are settled in cash without delivery of Common Stock, or
that result in the forfeiture or relinquishment of Common Stock back to the
Company. Awards that may be granted under the 2005 Incentive Plan include stock
options, stock appreciation rights, restricted stock, restricted stock units,
performance shares and performance units, awards to non-employee directors and
other cash awards and awards based on the Company's shares.
5. Form of Director Option Agreement.
On March 9, 2005, the Board of Directors of the Company approved a
grant of 8,000 non-qualified stock options to each of the duly elected
non-employee directors under the 2005 Incentive Plan, using the form of
Nonqualified Stock Option Agreement - Non-Employee Director under the 2005
Incentive Plan attached as Exhibit 10.5 to this Current Report and incorporated
herein by reference. The stock options granted to the non-employee directors
were granted with an exercise price equal to $22.65 per share, the closing sale
price (price for last trade) of the Common Stock as reported by the Nasdaq
National Market System for the day preceding the date of grant. Further, the
options provide, and the form of agreement attached hereto provides, that the
options granted to the non-employee directors of the Company will vest with
respect to 100% of the option shares on the earlier to occur of (i) the date
which is one year following the date of grant and (ii) the day immediately prior
to the date of the next annual meeting of the Company's stockholders occurring
following the date of grant. The options provide for accelerated vesting upon
the death or disability of the optionee or upon a change in control of the
Company.
6. Amendment to 2002 Non-Employee Director Stock Option Plan and Related
Stock Option Agreements.
On March 7, 2005, the Company amended its 2002 Non-Employee Director
Stock Option Plan (the "2002 Director Plan") with respect to Frank R. Sanchez
and amended certain Stock Option Agreements, dated May 8, 2002 and March 9, 2004
(the "Option Agreements"), pursuant to which Mr. Sanchez was granted options. As
a result of his not standing for re-election to the Board of Directors of the
Company, Mr. Sanchez would have forfeited certain options granted to him under
the 2002 Director Plan, notwithstanding the fact that Mr. Sanchez substantially
served the term for which the options were granted. The 2002 Director Plan and
the Option Agreements were amended to accelerate the vesting of Mr. Sanchez's
options to avoid this unintended result. Other unvested options held by Mr.
Sanchez were forfeited as a result of his not standing for re-election to the
Board. The amendments to the 2002 Director Plan and Option Agreements are
attached as Exhibit 10.6 to this Current Report and incorporated herein by
reference.
Item 1.02. Termination of a Material Definitive Agreement.
On March 9, 2005, in connection with the approval of the 2005 Incentive
Plan by the Company's stockholders, the Board of Directors of the Company
approved the termination of the following existing stock option plans of the
Company:
(i) the 1994 Stock Option Plan, as amended (provides for the grant of
stock options to employees, including employees who are also
officers or directors, of the Company);
(ii) the 1996 Stock Option Plan (provides for the grant of stock
options to employees and directors of the Company);
(iii) the 1997 Management Stock Option Plan (provides for the grant of
stock options to management employees of the Company);
(iv) the MessagingDirect Ltd. Amended and Restated Employee Share
Option Plan (provides for the grant of stock options to employees,
officers, directors and consultants of the Company);
(v) the 2000 Non-Employee Director Stock Option Plan (provides for the
grant of stock options to non-employee directors of the Company);
and
(vi) the 2002 Non-Employee Director Stock Option Plan, as amended
(provides for the grant of stock options to non-employee directors
of the Company).
Termination of these plans will not affect any options outstanding under these
plans immediately prior to termination thereof.
Item 5.02. Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.
Effective as of March 8, 2005, Gregory D. Derkacht resigned from his
position as President and Chief Executive Officer of the Company. On March 9,
2005, the Company appointed Mr. Derkacht to serve as its Executive Vice
President.
Effective as of March 8, 2005, Philip G. Heasley was appointed to serve
as President and Chief Executive Officer of the Company, replacing Mr. Derkacht.
Additionally, on March 9, 2005, to fill the vacancy created as a result of the
creation of a new position on the Board of Directors, the Company's Board of
Directors elected Mr. Heasley to serve as a director of the Company until the
Company's 2006 annual meeting of stockholders and until his successor is elected
and qualified. Pursuant to the terms of Mr. Heasley's Employment Agreement, so
long as he serves as President and Chief Executive Officer of the Company, the
Board of Directors will nominate him to serve as a member of the Company's Board
of Directors.
Mr. Heasley has a comprehensive background in payment systems and
financial services. From 2003 to the present, Mr. Heasley served as Chairman and
CEO of PayPower LLC, an acquisition and consulting firm specializing in
financial services and payment services. Previously, Mr. Heasley was Chairman
and CEO of First USA Bank, from 2000 to 2003. Prior to joining First USA Bank,
from 1987 until 2000, Mr. Heasley served in various capacities for U.S.
Bankcorp, including Executive Vice President, and President and Chief Operating
Officer. Mr. Heasley is 55 years old.
See the disclosure under Item 1.01 above for the material terms of Mr.
Heasley's Employment Agreement and the other material terms of his employment
with the Company.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number Description
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10.1 Employment Agreement by and between the Company and Philip G.
Heasley, dated March 8, 2005.
10.2 Stock Option Agreement (under the Company's 2005 Equity and
Performance Incentive Plan) by and between the Company and
Philip G. Heasley, dated March 9, 2005.
10.3 Change in Control Severance Compensation Agreement by and
between the Company and Philip G. Heasley, dated March 8,
2005.
10.4 2005 Equity and Performance Incentive Plan (filed, on January
26, 2005, as Annex B to the Company's Proxy Statement for its
2005 Annual Meeting (File No. 000-25346), and incorporated
herein by reference).
10.5 Form of Nonqualified Stock Option Agreement - Non-Employee
Director (under the Company's 2005 Equity and Performance
Incentive Plan).
10.6 Amendment to 2002 Non-Employee Director Stock Option Plan,
Amendment No. 1 to Stock Option Agreement (dated as of May 8,
2002) and Amendment No. 1 to Stock Option Agreement (dated as
of March 9, 2004).
SIGNATURE
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.
TRANSACTION SYSTEMS ARCHITECTS, INC.
Date: March 9, 2005 By: /s/ Dennis P. Byrnes
---------------------------------
Dennis P. Byrnes
Senior Vice President,
General Counsel and Secretary
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
10.1 Employment Agreement by and between the Company and Philip G.
Heasley, dated March 8, 2005.
10.2 Stock Option Agreement (under the Company's 2005 Equity and
Performance Incentive Plan) by and between the Company and
Philip G. Heasley, dated March 9, 2005.
10.3 Change in Control Severance Compensation Agreement by and
between the Company and Philip G. Heasley, dated March 8,
2005.
10.4 2005 Equity and Performance Incentive Plan (filed, on January
26, 2005, as Annex B to the Company's Proxy Statement for its
2005 Annual Meeting (File No. 000-25346), and incorporated
herein by reference).
10.5 Form of Nonqualified Stock Option Agreement - Non-Employee
Director (under the Company's 2005 Equity and Performance
Incentive Plan).
10.6 Amendment to 2002 Non-Employee Director Stock Option Plan,
Amendment No. 1 to Stock Option Agreement (dated as of May 8,
2002) and Amendment No. 1 to Stock Option Agreement (dated as
of March 9, 2004).
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT ("Agreement") is entered into as of March 8,
2005 (the "Effective Date") between Transaction Systems Architects, Inc., a
Delaware corporation (the "Company"), and Philip G. Heasley ("Executive").
RECITALS:
WHEREAS, the Company desires to employ Executive as the President and
Chief Executive Officer of the Company, and Executive desires to accept
employment as the President and Chief Executive Officer of the Company;
WHEREAS, as of the Effective Date, the Company shall employ Executive
on the terms and conditions set forth in this Agreement, and Executive shall be
retained and employed by the Company to perform such services under the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions. Certain words or phrases with initial capital
letters not otherwise defined herein shall have the meanings set forth
in Section 8 hereof.
2. Employment. The Company shall employ Executive, and Executive accepts
employment with the Company as of the Effective Date, upon the terms
and conditions set forth in this Agreement for the period beginning on
the Effective Date and ending as provided in Section 5 hereof (the
"Employment Period").
3. Position and Duties.
(a) During the Employment Period, Executive shall serve as the
President and Chief Executive Officer of the Company and shall
have the normal duties, responsibilities and authority of an
executive serving in such position, subject to the power of the
Board of Directors of the Company (the "Board") to provide
oversight and direction with respect to such duties,
responsibilities and authority, either generally or in specific
instances and consistent with such position. So long as Executive
is the President and Chief Executive Officer of the Company, the
Board will nominate Executive to serve as a member of the Board.
(b) Executive shall report to the Board.
(c) During the Employment Period, Executive shall devote Executive's
best efforts and Executive's full business time and attention
(except for permitted vacation periods and reasonable periods of
illness or other incapacity) to the business and affairs of the
Company, its subsidiaries and affiliates. Executive shall perform
Executive's duties and responsibilities to the best of
Executive's abilities in a diligent, trustworthy, business-like
and efficient manner. During the Employment Period, Executive may
not serve as a director or a principal of another company
without the Board's prior consent.
(d) Executive shall perform Executive's duties and responsibilities
principally in the metropolitan area of the Company's
headquarters.
(e) Within six months of entering into this Agreement (or within such
longer time period as may be determined by the Board under
compelling circumstances), Executive shall acquire through
purchase on the NASDAQ National Market System at least 100,000
shares (the "Threshold Ownership") of the Company's common
stock. Once Executive meets the Threshold Ownership, he shall at
all times during the Initial Employment Period (as defined in
Section 5 below) continue to meet the Threshold Ownership.
4. Compensation and Benefits.
(a) Salary. The Company agrees to pay Executive a salary during the
Employment Period in installments based on the Company's payroll
practices as may be in effect from time to time. Executive's
salary during the Initial Employment Period (as defined in
Section 5) shall be at the rate of $500,000 per year ("Base
Salary"). For any renewal periods as set forth in Section 5(b)
below, the amount of the Executive's Base Salary will be mutually
agreed to by the Board and Executive. Notwithstanding the
foregoing, the Board may decrease Executive's Base Salary only
if, as a result of a reasonable business judgement of the Board,
there is an across-the-board salary reduction for all executive
level management employees of the Company. If there is any
modification to the Base Salary as defined herein, "Base Salary"
in this Agreement will refer to such modified Base Salary.
(b) Bonus.
(i) Executive will be entitled to an annual targeted bonus of
$500,000, based on the achievement of performance criteria
to be mutually determined by Executive and the Board. This
bonus will be pro-rated based on the number of full fiscal
quarters that the Executive is employed with the Company
during fiscal year 2005 (i.e., Executive will be entitled
to a targeted bonus for fiscal year 2005 of $250,000) and
any earned bonus will be payable to Executive in a lump
sum after the end of the fiscal year.
(ii) Following fiscal year 2005 and during the Initial
Employment Period, Executive will be eligible for a bonus
under the Company's Management Incentive Compensation Plan
(or any successor plan), with a targeted annual bonus of
$500,000 and with such performance criteria as are
approved by the Board for each fiscal year. During any
renewal period as set forth in Section 5(b) below,
Executive's bonus will be mutually agreed to by the Board
and Executive.
(c) Stock Options. In connection with Executive's entering into
employment with the Company, Executive will receive a stock
option grant with respect to 1,000,000 shares of the Company's
common stock under the Company's 2005 Equity and Performance
Incentive Plan. The terms and conditions for the grant shall be
as set forth in the stock option agreement attached hereto as
Exhibit A.
(d) Prior Equity Awards. To the extent that Executive is required to
forfeit unvested equity awards (the "Prior Awards") granted to
him by Fidelity National Financial, Inc. ("FNF") as a result of
his resignation from the Board of Directors of FNF, the
Company shall pay to Executive the lost economic value of such
Prior Awards, as such value is mutually agreed to by the parties,
but in no event shall the payment under this Section 4(d) exceed
$150,000.
(e) Expense Reimbursement. The Company shall reimburse Executive for
all reasonable expenses incurred by Executive during the
Employment Period in the course of performing Executive's duties
under this Agreement that are consistent with the Company's
policies in effect from time to time with respect to travel,
entertainment and other business expenses, subject to the
Company's requirements applicable generally with respect to
reporting and documentation of such expenses.
(f) Relocation. Executive agrees to relocate his residence to a
location reasonably proximate to the Company's headquarters in
Omaha, Nebraska as soon as reasonably practicable following the
Effective Date. In connection with the relocation, Executive will
be entitled to the relocation benefits available to senior
executives of the Company, but no event will reimbursement of
real estate commissions on the sale of Executive's home be in
excess of $160,000.
(g) Standard Executive Benefits Package. Executive shall be entitled
during the Employment Period to participate, on the same basis as
other executives of the Company, in the Company's Standard
Executive Benefits Package. The Company's "Standard Executive
Benefits Package" means those benefits (including insurance and
other benefits, but excluding, except as hereinafter provided in
Section 6, any severance pay program or policy of the Company)
for which substantially all of the executives of the Company
are from time to time generally eligible, as determined from time
to time by the Board. Notwithstanding the foregoing, Executive
shall be entitled to four weeks of paid vacation per calendar
year.
(h) Professional Fees. The Company shall be responsible for the
payment of Executive's legal fees and costs (and related
disbursements) incurred in connection with Executive's initial
employment and matters relating to the negotiation and execution
of this Agreement, in an amount not to exceed $15,000.
(i) Change in Control Compensation. Notwithstanding anything to the
contrary contained herein, Executive shall be entitled to the
compensation provided in the Change in Control Severance
Compensation Agreement, attached hereto as Exhibit B (the "Change
in Control Agreement"), pursuant to the terms stated in such
agreement.
(j) Additional Compensation/Benefits. Any compensation or benefits to
be provided to Executive during the Employment Period other than
as set forth in this Agreement, including, without limitation,
any future grant of stock options or other equity awards, shall
be determined by the Board in its sole discretion.
5. Employment Period.
(a) Except as hereinafter provided, the Employment Period shall
commence on the Effective Date and shall continue until, and
shall end upon, the fourth anniversary of the Effective Date
(the "Initial Employment Period").
(b) On the fourth anniversary of the Effective Date and on each
anniversary thereafter, unless the Employment Period shall have
ended pursuant to Section 5(c) below or the Company shall have
given Executive 30 days written notice that the extension
provision in this sentence shall not apply, the Employment Period
shall be extended for an additional year.
(c) Notwithstanding (a) or (b) above, the Employment Period shall end
early upon the first to occur of any of the following events:
(i) Executive's death;
(ii) the Company's termination of Executive's employment on
account of Disability;
(iii) the Company's termination of Executive's employment for
Cause (a "Termination for Cause");
(iv) the Company's termination of Executive's employment
without Cause (a "Termination without Cause");
(v) Executive's termination of Executive's employment for
Good Reason (a "Termination for Good Reason"); or
(vi) Executive's termination of Executive's employment for any
reason other than Good Reason (a "Voluntary Termination").
6. Post-Employment Period Payments.
(a) At the end of the Employment Period for any reason, Executive
shall cease to have any rights to salary, bonus, expense
reimbursements or other benefits and Executive shall be entitled
to (i) any Base Salary which has accrued but is unpaid, any
reimbursable expenses which have been incurred but are unpaid,
and any unexpired vacation days which have accrued under the
Company's vacation policy but are unused, as of the end of the
Employment Period, (ii) any plan benefits which by their terms
extend beyond termination of Executive's employment (but only to
the extent provided in any such benefit plan in which Executive
has participated as an employee of the Company and excluding,
except as hereinafter provided in Section 6, any severance pay
program or policy of the Company) and (iii) any benefits to which
Executive is entitled under Part 6 of Subtitle B of Title I of
the Employee Retirement Income Security Act of 1974, as amended
("COBRA"). In addition, Executive shall be entitled to the
additional benefits and amounts described in the succeeding
subsections of this Section 6, in the circumstances described in
such subsections.
(b) If the Employment Period ends pursuant to Section 5 hereof on
account of Executive's death, Disability or Voluntary
Termination, or on account of a Termination for Cause, the
Company shall make no further payments to Executive except as
contemplated in subsection (a) above.
(c) If the Employment Period ends early pursuant to Section 5 hereof
on account of a Termination without Cause or a Termination for
Good Reason, Executive shall be entitled to the following:
(i) a lump sum payment equal to Executive's bonus for the
quarter in which the Employment Period ends; provided,
however, that if such Termination without Cause or
Termination for Good Reason occurs at any time during
fiscal year 2005, this Section 6(c) shall not apply and
Executive shall not be entitled to any portion of the
bonus for fiscal year 2005;
(ii) a lump sum payment equal to two times the sum of (A)
Executive's Base Salary at the time of such termination,
plus (B) the Bonus Amount in effect at the time of such
termination; and
(iii) Executive shall be entitled to continue to participate, on
the same basis as active employees participate in such
plans, in the Company's medical and dental plans until the
earlier of (A) Executive's eligibility for any such
coverage under another employer's or any other medical or
dental insurance plans or (B) two years from the date of
termination of Executive's employment. In the event that
participation in any such plan is barred, the Company
shall reimburse Executive on a monthly basis for any
premiums paid by Executive to obtain benefits (for
Executive and his dependents) equivalent to the benefits
he is entitled to receive under the Company's benefit
plans. Executive agrees that the period of coverage under
such plans (or the period of reimbursement if
participation is barred) shall count against the plans'
obligation to provide continuation coverage pursuant to
COBRA.
(d) Notwithstanding the provisions of Section 6(c), no payments shall
be made under Section 6(c) if Executive declines to sign and
return a Release Agreement or revokes such Release Agreement
within the time provided therein. The Company shall make all
payments required to be made under Section 6(c) within 30 days
of the end of any revocation period relating to such Release
Agreement.
(e) Except as provided in Section 6(c)(iii) above, Executive shall
not be required to mitigate the amount of any payment or benefit
provided for in this Agreement by seeking other employment or
otherwise.
(f) Notwithstanding any other provision of this Agreement, no payment
will be made pursuant to this Agreement if Executive is entitled
to, and receives, payments or other benefits pursuant to the
Change in Control Agreement.
7. Competitive Activity; Confidentiality; Nonsolicitation.
(a) Acknowledgements and Agreements. Executive hereby acknowledges
and agrees that in the performance of Executive's duties to the
Company during the Employment Period, Executive will be brought
into frequent contact, either in person, by telephone or through
the mails, with existing and potential customers of the Company.
Executive also agrees that trade secrets and confidential
information of the Company, more fully described in Section 7(j)
of this Agreement, gained by Executive during Executive's
association with the Company, have been developed by the Company
through substantial expenditures of time, effort and money and
constitute valuable and unique property of the Company. Executive
further understands and agrees that the foregoing makes it
necessary for the protection of the business of the Company that
Executive not compete with the Company during the Employment
Period and not compete with the Company for a reasonable period
thereafter, as further provided in the following subsections.
(b) Covenants During the Employment Period. During the Employment
Period, Executive will not compete with the Company anywhere
within the United States. In accordance with this restriction,
but without limiting its terms, during the Employment Period,
Executive will not:
(i) enter into or engage in any business which competes with
the business of the Company;
(ii) solicit customers, business, patronage or orders for, or
sell, any products and services in competition with, or
for any business that competes with, the business of the
Company;
(iii) divert, entice or otherwise take away any customers,
business, patronage or orders of the Company or attempt to
do so; or
(iv) promote or assist, financially or otherwise, any person,
firm, association, partnership, corporation or other
entity engaged in any business which competes with the
business of the Company.
(c) Covenants Following Termination. For a period of one year
following the termination of Executive's employment for any
reason, Executive will not:
(i) enter into or engage in any business which competes with
the Company's business within the Restricted Territory
(as defined in Section 7(g));
(ii) solicit customers, business, patronage or orders for, or
sell, any products and services in competition with, or
for any business, wherever located, that competes with,
the Company's business within the Restricted Territory;
(iii) divert, entice or otherwise take away any customers,
business, patronage or orders of the Company within the
Restricted Territory, or attempt to do so; or
(iv) promote or assist, financially or otherwise, any person,
firm, association, partnership, corporation or other
entity engaged in any business which competes with the
Company's business within the Restricted Territory.
(d) Indirect Competition. For the purposes of Sections 7(b) and 7(c),
but without limitation thereof, Executive will be in violation
thereof if Executive engages in any or all of the activities set
forth therein directly as an individual on Executive's own
account, or indirectly as a partner, joint venturer, employee,
agent, salesperson, consultant, officer and/or director of any
firm, association, partnership, corporation or other entity, or
as a stockholder of any corporation or the owner of the interests
in any other entity, in which Executive or Executive's spouse,
child or parent owns, directly or indirectly, individually or in
the aggregate, more than five percent (5%) of the outstanding
stock or other ownership interests.
(e) The Company. For purposes of this Section 7, the Company shall
include any and all direct and indirect subsidiary, parent,
affiliated, or related companies of the Company.
(f) The Company's Business. For the purposes of Sections 7(b), 7(c),
7(k) and 7(l), the Company's business is defined to be the
development and sale of software products that facilitate
electronic payments, as further described in any and all
manufacturing, marketing and sales manuals and materials of the
Company as the same may be altered, amended, supplemented or
otherwise changed from time to time, or of any other products or
services substantially similar to or readily suitable for any
such described products and services.
(g) Restricted Territory. For the purposes of Section 7(c), the
Restricted Territory shall be defined as and limited to:
(i) the geographic area(s) within a 100 mile radius of any and
all Company location(s) in, to, or for which Executive
worked, to which Executive was assigned or had any
responsibility (either direct or supervisory) at the time
of termination of Executive's employment and at any time
during the one (1) year period prior to such termination;
and
(ii) all of the specific customer accounts, whether within or
outside of the geographic area described in (i) above,
with which Executive had any contact or for which
Executive had any responsibility (either direct or
supervisory) at the time of termination of Executive's
employment and at any time during the one (1) year period
prior to such termination.
(h) Extension. If it shall be judicially determined that Executive
has violated any of Executive's obligations under Section 7(c),
then the period applicable to each obligation that Executive
shall have been determined to have violated shall automatically
be extended by a period of time equal in length to the period
during which such violation(s) occurred.
(i) Non-Solicitation. For a period of two years following the
termination of Executive's employment for any reason, Executive
will not directly or indirectly solicit or induce or attempt to
solicit or induce any employee(s), sales representative(s),
agent(s) or consultant(s) of the Company and/or of its parent, or
its other subsidiary, affiliated or related companies to
terminate their employment, representation or other association
with the Company and/or its parent or its other subsidiary,
affiliated or related companies.
(j) Further Covenants.
(i) Executive will keep in strict confidence, and will not,
directly or indirectly, at any time during or after
Executive's employment with the Company, disclose,
furnish, disseminate, make available or, except in the
course of performing Executive's duties of employment, use
any trade secrets or confidential business and technical
information of the Company or its customers or vendors,
including without limitation as to when or how Executive
may have acquired such information. Such confidential
information shall include, without limitation, the
Company's unique selling, manufacturing and servicing
methods and business techniques, training, service and
business manuals, promotional materials, training courses
and other training and instructional materials, vendor and
product information, customer and prospective customer
lists, other customer and prospective customer information
and other business information. Executive specifically
acknowledges that all such confidential information,
whether reduced to writing, maintained on any form of
electronic media, or maintained in Executive's mind or
memory and whether compiled by the Company, and/or
Executive, derives independent economic value from not
being readily known to or ascertainable by proper means by
others who can obtain economic value from its disclosure
or use, that reasonable efforts have been made by the
Company to maintain the secrecy of such information, that
such information is the sole property of the Company and
that any retention and use of such information by
Executive during Executive's employment with the Company
(except in the course of performing Executive's duties and
obligations to the Company) or after the termination of
Executive's employment shall constitute a misappropriation
of the Company's trade secrets.
(ii) Executive agrees that upon termination of Executive's
employment with the Company, for any reason, Executive
shall return to the Company, in good condition, all
property of the Company, including without limitation, the
originals and all copies of any materials which contain,
reflect, summarize, describe, analyze or refer or relate
to any items of information listed in Section 7(j)(i) of
this Agreement. In the event that such items are not so
returned, the Company will have the right to charge
Executive for all reasonable damages, costs, attorneys'
fees and other expenses incurred in searching for, taking,
removing and/or recovering such property.
(k) Discoveries and Inventions; Work Made for Hire.
(i) Executive hereby assigns and agrees to assign to the
Company, its successors, assigns or nominees, all of
Executive's rights to any discoveries, inventions and
improvements, whether patentable or not, made, conceived
or suggested, either solely or jointly with others, by
Executive while in the Company's employ, whether in the
course of Executive's employment with the use of the
Company's time, material or facilities or that is in any
way within or related to the existing or contemplated
scope of the Company's business. Any discovery, invention
or improvement relating to any subject matter with which
the Company was concerned during Executive's employment
and made, conceived or suggested by Executive, either
solely or jointly with others, within one (1) year
following termination of Executive's employment under this
Agreement or any successor agreements shall be
irrebuttably presumed to have been so made, conceived or
suggested in the course of such employment with the use of
the Company's time, materials or facilities. Upon request
by the Company with respect to any such discoveries,
inventions or improvements, Executive will execute and
deliver to the Company, at any time during or after
Executive's employment, all appropriate documents for use
in applying for, obtaining and maintaining such domestic
and foreign patents as the Company may desire, and all
proper assignments therefor, when so requested, at the
expense of the Company, but without further or additional
consideration.
(ii) Executive acknowledges that, to the extent permitted by
law, all work papers, reports, documentation, drawings,
photographs, negatives, tapes and masters therefor,
prototypes and other materials (hereinafter, "items"),
including without limitation, any and all such items
generated and maintained on any form of electronic media,
generated by Executive during Executive's employment with
the Company shall be considered a "work made for hire" and
that ownership of any and all copyrights in any and all
such items shall belong to the Company. The item will
recognize the Company as the copyright owner, will contain
all proper copyright notices, e.g., "(creation date)
[Company Name], All Rights Reserved," and will be in
condition to be registered or otherwise placed in
compliance with registration or other statutory
requirements throughout the world.
(l) Communication of Contents of Agreement. During Executive's
employment and for one (1) year thereafter, Executive will
communicate the contents of this Agreement to any person, firm,
association, partnership, corporation or other entity which
Executive intends to be employed by, associated with, or
represent.
(m) Relief. Executive acknowledges and agrees that the remedy at law
available to the Company for breach of any of Executive's
obligations under this Agreement would be inadequate. Executive
therefore agrees that, in addition to any other rights or
remedies that the Company may have at law or in equity, temporary
and permanent injunctive relief may be granted in any proceeding
which may be brought to enforce any provision contained in
Sections 7(b), 7(c), 7(d), 7(h), 7(i), 7(j), 7(k) and 7(l) of
this Agreement, without the necessity of proof of actual damage.
(n) Reasonableness. Executive acknowledges that Executive's
obligations under this Section 7 are reasonable in the context of
the nature of the Company's business and the competitive injuries
likely to be sustained by the Company if Executive was to violate
such obligations. Executive further acknowledges that this
Agreement is made in consideration of, and is adequately
supported by the agreement of the Company to perform its
obligations under this Agreement and by other consideration,
which Executive acknowledges constitutes good, valuable and
sufficient consideration.
8. Definitions.
(a) "Base Period" means the two most recent fiscal years of the
Company ending prior to the date of Executive's termination of
employment; provided, however that if Executive was not an
employee of the Company (or a Predecessor Entity or a Related
Entity, as such terms are defined in Section 8 hereof) at any
time during one of such two fiscal years, the Base Period is the
one fiscal year of such two-fiscal year period during which
Executive performed personal services for the Company or a
Predecessor Entity or a Related Entity.
(b) "Bonus Amount" means the quotient of (i) the total of the annual
bonus amounts described in Section 4(b) of this Agreement
received by Executive during the fiscal year or years comprising
the Base Period, divided by (ii) the number of the Company's
fiscal years in the Base Period.
(c) "Cause" means the occurrence of any of the following events prior
to the termination of the Employment Period:
(i) Executive's conviction of a felony involving moral
turpitude;
(ii) Executive's serious, willful gross misconduct or
Executive's repeated failure or refusal to perform or
observe Executive's material duties, responsibilities and
obligations as an employee or officer of the Company for
reasons other than Disability, if such misconduct, failure
or refusal continues ten days following written notice
thereof by the Company to Executive identifying the same
and specifying that Executive's employment may be
terminated if the same continues;
(iii) Executive's breach of any provision of Section 7 of this
Agreement, which is not cured within three days after
written notice thereof to Executive; or
(iv) 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, any termination of 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.
No termination for Cause shall take effect until the expiration
of the correction period, if any, described above and the
determination by a majority of the non-employee members of the
Board that Executive has failed to correct the act or failure to
act.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Disability" means, as a result of Executive's incapacity due to
physical or mental illness, 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 written notice of termination of
employment is thereafter given by the Company, Executive shall
not have returned to the full-time performance of Executive's
duties.
(f) "Good Reason" means a material adverse change in Executive's
title, duties, authority or reporting relationship, without
Executive's consent, excluding any inadvertent change that is
remedied by the Company promptly after receipt of a written
notice thereof from Executive or any other material breach of
this Agreement that is not remedied by the Company promptly after
receipt of a written notice thereof from Executive; provided,
however, that during the two year period following a Change in
Control (as such phrase is defined in the Change in Control
Agreement), no Good Reason for termination shall have occurred
under this Agreement unless Good Reason for termination exists
under the terms of the Change in Control Agreement.
(g) "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.
(h) "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.
(i) "Release Agreement" means an agreement, substantially in a form
approved by the Company, pursuant to which Executive releases all
current or future claims, known or unknown, arising on or before
the date of the release against the Company, its subsidiaries and
its officers.
9. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event that this Agreement becomes operative and it is
determined (as hereafter provided) that any payment (other than
the Gross-Up payments provided for in this Section 9 and Annex A)
or distribution by the Company or any of its affiliates to or for
the benefit of Executive, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or
otherwise pursuant to or by reason of any other agreement,
policy, plan, program or arrangement, including without
limitation any stock option, performance share, performance unit,
stock appreciation right or similar right, or the lapse or
termination of any restriction on or the vesting or
exercisability of any of the foregoing (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Code
(or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control" of
the Company, within the meaning of Section 280G of the Code (or
any successor provision thereto) or to any similar tax imposed by
state or local law, or any interest or penalties with respect to
such tax (such tax or taxes, together with any such interest and
penalties, being hereafter collectively referred to as the
"Excise Tax"), then Executive will be entitled to receive an
additional payment or payments (collectively, a "Gross-Up
Payment"). The Gross-Up Payment will be in an amount such that,
after payment by Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including any
Excise Tax imposed upon the Gross-Up Payment, Executive retains
an amount of the Gross-Up Payment equal to the Excise Tax imposed
upon the Payment. For purposes of determining the amount of the
Gross-Up Payment, Executive will be considered to pay (x) federal
income taxes at the highest rate in effect in the year in which
the Gross-Up Payment will be made and (y) state and local income
taxes at the highest rate in effect in the state or locality in
which the Gross-Up Payment would be subject to state or local
tax, net of the maximum reduction in federal income tax that
could be obtained from deduction of such state and local taxes.
(b) The obligations set forth in Section 9(a) will be subject to the
procedural provisions described in Annex A.
10. Executive Representations. Executive represents and warrants to the
Company that (a) the execution, delivery and performance of this
Agreement by Executive does not and will not conflict with, breach,
violate or cause a default under any contract, agreement, instrument,
order, judgment or decree to which Executive is a party or by which
Executive is bound, (b) Executive is not a party to or bound by any
employment agreement, noncompete agreement or confidentiality agreement
with any other person or entity and (c) upon the execution and delivery
of this Agreement by the Company, this Agreement shall be the valid and
binding obligation of Executive, enforceable in accordance with its
terms.
11. Survival. Subject to any limits on applicability contained therein,
Section 7 hereof shall survive and continue in full force in accordance
with its terms notwithstanding any termination of the Employment
Period.
12. Withholding of Taxes. The Company may withhold from any amounts payable
under this Agreement all federal, state, city or other taxes as the
Company is required to withhold pursuant to any applicable law,
regulation or ruling.
13. Notices. Any notice provided for in this Agreement shall be in writing
and shall be either personally delivered, sent by reputable overnight
carrier or mailed by first class mail, return receipt requested, to the
recipient at the address below indicated:
Notices to Executive:
Philip G. Heasley
c/o Transaction Systems Architects, Inc.
224 South 108th Avenue
Omaha, NE 68154
Notices to the Company:
Transaction Systems Architects, Inc.
224 South 108th Avenue
Omaha, NE 68154
Attn: General Counsel
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the
sending party. Any notice under this Agreement will be deemed to have
been given when so delivered, sent or mailed.
14. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement 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 Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or
unenforceable provision had never been contained herein.
15. Complete Agreement. This Agreement embodies the complete agreement and
understanding between the parties with respect to the subject matter
hereof and effective as of its date supersedes and preempts any prior
understandings, agreements or representations by or between the
parties, written or oral, which may have related to the subject matter
hereof in any way.
16. Counterparts. This Agreement may be executed in separate counterparts,
each of which shall be deemed to be an original and both of which taken
together shall constitute one and the same agreement.
17. Successors and Assigns. This Agreement shall bind and inure to the
benefit of and be enforceable by Executive, the Company and their
respective heirs, executors, personal representatives, successors and
assigns, except that neither party may assign any rights or delegate
any obligations hereunder without the prior written consent of the
other party. Executive hereby consents to the assignment by the Company
of all of its rights and obligations hereunder to any successor to the
Company by merger or consolidation or purchase of all or substantially
all of the Company's assets, provided such transferee or successor
assumes the liabilities of the Company hereunder.
18. Choice of Law. This Agreement shall be governed by the internal law,
and not the laws of conflicts, of the State of Nebraska.
19. Amendment and Waiver. The provisions of this Agreement may be amended
or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing
the provisions of this Agreement shall affect the validity, binding
effect or enforceability of this Agreement.
20. American Jobs Creation Act. Notwithstanding anything to the contrary in
this Agreement, in the event that it is determined that any payment to
be made under this Agreement is considered "nonqualified deferred
compensation" subject to Section 409A of the American Jobs Creation Act
of 2004, payment under this Agreement will be delayed for six months
following termination of employment.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
Transaction Systems Architects, Inc.
By: /s/ Dennis P. Byrnes
------------------------------------
Name: Dennis P. Byrnes
Title: Senior Vice President and
General Counsel
/s/ Philip G. Heasley
---------------------------------------
Executive
Annex A - Procedural provisions regarding the Gross Up Payment
Exhibit A - Stock Option Agreement (2005 Equity and Performance Incentive Plan)
Exhibit B - Change in Control Severance Compensation Agreement
Annex A
Excise Tax Gross-Up Procedural Provisions
(1) Subject to the provisions of Paragraph 5, all determinations required to be
made under Section 9 and Annex A, including whether an Excise Tax is
payable by Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to Executive and the
amount of such Gross-Up Payment, if any, will be made by a nationally
recognized accounting firm (the "National Firm") selected by Executive in
Executive's sole discretion. Executive will direct the National Firm to
submit its determination and detailed supporting calculations to both the
Company and Executive within 30 calendar days after the date of termination
of Executive's employment, if applicable, and any such other time or times
as may be requested by the Company or Executive. If the National Firm
determines that any Excise Tax is payable by Executive, the Company will
pay the required Gross-Up Payment to Executive within five business days
after receipt of such determination and calculations with respect to any
Payment to Executive. If the National Firm determines that no Excise Tax is
payable by Executive with respect to any material benefit or amount (or
portion thereof), it will, at the same time as it makes such determination,
furnish the Company and Executive with an opinion that Executive has
substantial authority not to report any Excise Tax on Executive's federal,
state or local income or other tax return with respect to such benefit or
amount. As a result of the uncertainty in the application of Section 4999
of the Code and the possibility of similar uncertainty regarding applicable
state or local tax law at the time of any determination by the National
Firm hereunder, it is possible that Gross-Up Payments that will not have
been made by the Company should have been made (an "Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that the Company exhausts or fails to pursue its remedies pursuant to
Paragraph 5 and Executive thereafter is required to make a payment of any
Excise Tax, Executive will direct the National Firm to determine the amount
of the Underpayment that has occurred and to submit its determination and
detailed supporting calculations to both the Company and Executive as
promptly as possible. Any such Underpayment will be promptly paid by the
Company to, or for the benefit of, Executive within five business days
after receipt of such determination and calculations.
(2) The Company and Executive will each provide the National Firm access to and
copies of any books, records and documents in the possession of the Company
or Executive, as the case may be, reasonably requested by the National
Firm, and otherwise cooperate with the National Firm in connection with the
preparation and issuance of the determinations and calculations
contemplated by Paragraph 1. Any determination by the National Firm as to
the amount of the Gross-Up Payment will be binding upon the Company and
Executive.
(3) The federal, state and local income or other tax returns filed by Executive
will be prepared and filed on a consistent basis with the determination of
the National Firm with respect to the Excise Tax payable by Executive.
Executive will report and make proper payment of the amount of any Excise
Tax, and at the request of the Company, provide to the Company true and
correct copies (with any amendments) of Executive's federal income tax
return as filed with the Internal Revenue Service and corresponding state
and local tax returns, if relevant, as filed with the applicable taxing
authority, and such other documents reasonably requested by the Company,
evidencing such payment. If prior to the filing of Executive's federal
income tax return, or corresponding state or local tax return, if
relevant, the National Firm determines that the amount of the Gross-Up
Payment should be reduced, Executive will within five business days pay to
the Company the amount of such reduction.
(4) The fees and expenses of the National Firm for its services in connection
with the determinations and calculations contemplated by Paragraph 1 will
be borne by the Company. If such fees and expenses are initially paid by
Executive, the Company will reimburse Executive the full amount of such
fees and expenses within five business days after receipt from Executive of
a statement therefor and reasonable evidence of Executive's payment
thereof.
(5) Executive will notify the Company in writing of any claim by the Internal
Revenue Service or any other taxing authority that, if successful, would
require the payment by the Company of a Gross-Up Payment. Such notification
will be given as promptly as practicable but no later than 10 business days
after Executive actually receives notice of such claim and Executive will
further apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid (in each case, to the extent
known by Executive). Executive will not pay such claim prior to the
expiration of the 30-calendar-day period following the date on which
Executive gives such notice to the Company or, if earlier, the date that
any payment of amount with respect to such claim is due. If the Company
notifies Executive in writing prior to the expiration of such period that
it desires to contest such claim, Executive will:
(a) provide the Company with any written records or documents in
Executive's possession relating to such claim reasonably requested by
the Company;
(b) take such action in connection with contesting such claim as the
Company reasonably requests in writing from time to time, including
without limitation accepting legal representation with respect to such
claim by an attorney competent in respect of the subject matter and
reasonably selected by the Company;
(c) cooperate with the Company in good faith in order effectively to
contest such claim; and
(d) permit the Company to participate in any proceedings relating to such
claim;
provided, however, that the Company will bear and pay directly all costs
and expenses (including interest and penalties) incurred in connection with
such contest and will indemnify and hold harmless Executive, on an
after-tax basis, for and against any Excise Tax or income or other tax,
including interest and penalties with respect thereto, imposed as a result
of such representation and payment of costs and expenses. Without limiting
the foregoing provisions of this Paragraph 5, the Company will control all
proceedings taken in connection with the contest of any claim contemplated
by this Paragraph 5 and, at its sole option, may pursue or forego any and
all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim (provided, however, that
Executive may participate therein at Executive's own cost and expense) and
may, at its option, either direct Executive to pay the tax claimed and sue
for a refund or contest the claim in any permissible manner, and Executive
agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or
more appellate courts, as the Company determines; provided, however, that
if the Company directs Executive to pay the tax claimed and sue for a
refund, the Company will advance the amount of such payment to Executive
on an interest-free basis and will indemnify and hold Executive harmless,
on an after-tax basis, from any Excise Tax or income or other tax,
including interest or penalties with respect thereto, imposed with respect
to such advance; and provided further, however, that any extension of the
statute of limitations relating to payment of taxes for the taxable year
of Executive with respect to which the contested amount is claimed to be
due is limited solely to such contested amount. Furthermore, the Company's
control of any such contested claim will be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and Executive will
be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.
(6) If, after the receipt by Executive of an amount advanced by the Company
pursuant to Paragraph 5, Executive receives any refund with respect to such
claim, Executive will (subject to the Company's complying with the
requirements of Paragraph 5) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by Executive of an amount
advanced by the Company pursuant to Paragraph 5, a determination is made
that Executive is not entitled to any refund with respect to such claim and
the Company does not notify Executive in writing of its intent to contest
such denial or refund prior to the expiration of 30 calendar days after
such determination, then such advance will be forgiven and will not be
required to be repaid and the amount of any such advance will offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid by
the Company to Executive pursuant to Section 9 and this Annex A.
Exhibit A
Stock Option Agreement (2005 Equity and Performance Incentive Plan)
[Intentionally omitted -- filed as Exhibit 10.2
to the Current Report on Form 8-K filed March 10, 2005]
Exhibit B
Change in Control Severance Compensation Agreement
[Intentionally omitted -- filed as Exhibit 10.3
to the Current Report on Form 8-K filed March 10, 2005]
EXHIBIT 10.2
TRANSACTION SYSTEMS ARCHITECTS, INC.
Nonqualified Stock Option Agreement
(2005 Equity and Performance Incentive Plan)
This Stock Option Agreement (the "Option Agreement") is made as of March 9,
2005, by and between Transaction Systems Architects, Inc., a Delaware
corporation (the "Corporation"), and Philip G. Heasley, an employee of the
Corporation or its subsidiaries (the "Optionee").
WHEREAS, the Board of Directors of the Corporation has duly adopted, and the
stockholders of the Corporation have approved, the 2005 Equity and Performance
Incentive 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 (reclassified as Common Stock) (the "Stock"); and
WHEREAS, the Board of Directors of the Corporation has determined that it is
desirable and in the best interests of the Corporation and its stockholders to
grant the Optionee 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 this Option Agreement,
1,000,000 shares of Stock (the "Option Shares"). The Date of Grant of this
Option is March 9, 2005. 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 has been delivered
to the Optionee. 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 a 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 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 $22.65 per share, the closing price of the Stock on the day
preceding the Date of Grant (the "Exercise Price").
4. EXERCISE OF OPTION
Subject to the provisions of the Plan and subject to the earlier expiration or
termination of this Option in accordance with its terms, the Option granted
pursuant to this Option Agreement shall be exercisable only as follows:
4.1. Time of Exercise of Option (Time Vested Option Shares)
4.1.1. The Option shall become exercisable with respect to 600,000
Option Shares (the "Time Vested Option Shares") only as
follows: One-quarter of the Time Vested Option Shares (150,000
Option Shares) shall become exercisable on each of the first
four anniversaries of the Date of Grant if the Optionee shall
have remained in the continuous employ of the Corporation or
any of its subsidiaries as of each such date.
4.1.2. Notwithstanding Section 4.1.1, if, during the term of this
Option, the Optionee's employment is terminated by the
Corporation without "Cause" or by the Optionee for "Good
Reason," all of the unvested Time Vested Option Shares shall
become immediately exercisable.
4.2. Time of Exercise of Option (Performance Vested Option Shares)
4.2.1. The Option shall become exercisable with respect to the
remaining 400,000 Option Shares (the "Performance Vested
Option Shares") only as follows: all of the Performance
Vested Option Shares will vest, if at all, upon the attainment
by the Corporation, at any time following the second
anniversary of the Date of Grant, of a market price per
share of the Stock of at least $50 for sixty (60)
consecutive trading days. For purposes of this Section 4.2,
"market price" shall mean the closing price as reported by
the National Association of Securities Dealers on the Nasdaq
National Market or any successor system for a share of Stock.
4.2.2. Notwithstanding Section 4.2.1, if, within two years from the
Date of Grant, the Optionee's employment is terminated by the
Corporation without "Cause" or by the Optionee for "Good
Reason," all of the Performance Vested Option Shares shall
become immediately exercisable if, prior to such termination
of employment, the Corporation has attained a market price
per share of the Stock of at least $50 for sixty (60)
consecutive trading days.
4.3. Certain Definitions
For purposes of Sections 4.1.2 and 4.2.2, if (a) the Optionee's termination of
employment does not occur within two years following a Change in Control, the
terms "Cause" and "Good Reason" shall have the meanings set forth in the
Employment Agreement between the Optionee and the Corporation (the "Employment
Agreement"); and (b) if Optionee's termination of employment occurs within two
years following a Change in Control, the terms "Cause" and "Good Reason" shall
have the meanings set forth in the Change in Control Severance Compensation
Agreement between the Optionee and the Corporation (the "Change in Control
Agreement"). For purposes of this Section 4.3, "Change in Control" shall have
the meaning set forth in the Change in Control Agreement.
4.4. Limitations
The portion of the Option that has not become exercisable as of the date of the
Optionee's termination of employment with the Corporation or any of its
subsidiaries for any reason shall automatically terminate as of the date of the
Optionee's termination of employment with the Corporation or its subsidiaries
and shall not become exercisable after such termination. To the extent the
Option is exercisable, it may be exercised in whole or in part; 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.
4.5. Termination of Option
This Agreement and the Option granted hereby shall terminate automatically and
without further notice on the earliest of the following dates:
4.5.1. 90 calendar days from the date of the Optionee's termination
of employment with the Corporation or a subsidiary for any
reason other than death or Disability (as defined in the
Employment Agreement);
4.5.2. one year after the Optionee's Disability (as defined in the
Employment Agreement);
4.5.3. one year after the Optionee's death, if such death occurs (i)
while the Optionee is employed by the Corporation or a
subsidiary of the Corporation, (ii) within the 90-day period
following the Optionee's termination of employment for any
reason other than Disability; or (iii) within the one-year
period following the Optionee's termination of employment by
reason of the Optionee's Disability; or
4.5.4. ten years from the Date of Grant.
The Corporation shall have the authority to determine the date an Optionee
ceases to be an employee by reason of Disability. In the case of death, the
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. The Optionee shall be deemed to be
an employee of the Corporation or any subsidiary if on a leave of absence
approved by the Board of Directors of the Corporation and the continuous
employment of the Optionee with the Corporation or any of its subsidiaries will
not be deemed to have been interrupted, and the Optionee shall not be deemed to
have ceased to be an employee of the Corporation or its subsidiaries, by reason
of the transfer of the Optionee's employment among the Corporation and its
subsidiaries.
4.6. Limitations on Exercise of Option
In no event may the Option be exercised, in whole or in part, after the
occurrence of an event which results in termination of the Option, as set forth
in Section 4.5 above.
4.7. Method of Exercise of Option
4.7.1. To the extent then exercisable, the Option may be exercised in
whole or in part by written notice to the Corporation stating
the number of shares for which the Option is being exercised
and the intended manner of payment. The date of such notice
shall be the exercise date. Payment equal to the aggregate
Exercise Price of the shares shall be payable (i) in cash in
the form of currency or check or other cash equivalent
acceptable to the Corporation, (ii) by actual or
constructive transfer to the Corporation of nonforfeitable,
outstanding shares of Stock that have been owned by the
Optionee for at least six months prior to the date of
exercise or (iii) by any combination of the foregoing
methods of payment. In no event shall the Option be
exercised for a fractional share.
4.7.2. As soon as practicable upon the Corporation's receipt of the
Optionee's notice of exercise and payment, the Corporation
shall direct the due issuance of the shares so purchased.
4.7.3. As a further condition precedent to the exercise of this
Option in whole or in part, the Optionee shall comply with all
regulations and the requirements of any regulatory authority
having control of, or supervision over, the issuance of the
shares of Stock and in connection therewith shall execute any
documents which the Board shall in its sole discretion deem
necessary or advisable.
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. COMPLIANCE WITH LAW
The Corporation shall make reasonable efforts to comply with all applicable
federal and state securities laws; provided, however, that notwithstanding any
other provision of this Option Agreement, the Option shall not be exercisable if
the exercise thereof would result in a violation of any such law.
7. 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 of record on the books of the Corporation.
8. WITHHOLDING OF TAXES
If the Corporation shall be required to withhold any federal, state, local or
foreign tax in connection with exercise of this Option, it shall be a condition
to such exercise that the Optionee pay or make provision satisfactory to the
Corporation for payment of all such taxes. The Optionee may elect that all or
any part of such withholding requirement be satisfied by retention by the
Corporation of a portion of the shares purchased upon exercise of this Option.
If such election is made, the shares so retained shall be credited against such
withholding requirement at the fair market value on the date of exercise.
9. 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.
10. 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.
11. COMPLIANCE WITH SECTION 409A OF THE CODE
To the extent applicable, it is intended that this Agreement and the Plan comply
with the provisions of Section 409A of the Code, so that the income inclusion
provisions of Section 409A(a)(1) do not apply to Optionee. This Agreement and
the Plan shall be administered in a manner consistent with this intent, and any
provision that would cause the Agreement or the Plan to fail to satisfy Section
409A of the Code shall have no force and effect until amended to comply with
Section 409A of the Code (which amendment may be retroactive to the extent
permitted by Section 409A of the Code and may be made by the Company without the
consent of the Optionee).
12. 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).
13. 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.
14. 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.
15. SEVERABILITY
If one or more of the provisions of this Option Agreement is invalidated for any
reason by a court of competent jurisdiction, any provision so invalidated shall
be deemed to be separable from the other provisions hereof, and the remaining
provisions hereof shall continue to be valid and fully enforceable.
16. ENTIRE AGREEMENT; ELIGIBILITY
This Option Agreement and the Plan together constitute the entire agreement and
supersedes all prior understandings and agreements, written or oral, 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. In the event that it
is determined that the Optionee was not eligible to receive this Option, the
Option and this Option Agreement shall be null and void and of no further
effect.
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Option Agreement,
or caused this Option Agreement to be duly executed on their behalf, as of the
day and year first above written.
Transaction Systems Architects, Inc. Optionee:
By: /s/ Dennis P. Byrnes By: /s/ Philip G. Heasley
----------------------------- -----------------------------
Dennis P. Byrnes Philip G. Heasley
Senior Vice President and
General Counsel
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., 330 S. 108
Avenue, Omaha, NE 68154
- --------------------------------------------------------------------------------
2005 Equity and Performance Incentive Plan - US Plan
_________ Options $________/Share Exercise Price _______ Date
EXHIBIT 10.3
CHANGE IN CONTROL
SEVERANCE COMPENSATION AGREEMENT
This CHANGE IN CONTROL SEVERANCE COMPENSATION AGREEMENT (this "Agreement")
is dated as of March 8, 2005 between Transaction Systems Architects, Inc., a
Delaware corporation (the "Company"), and Philip G. Heasley (the "Executive").
WHEREAS, the Company's Board of Directors (the "Board") has determined
that it is appropriate to reinforce and encourage the continued attention and
dedication of the Executive to his assigned duties without distraction arising
from the possibility of a change in control of the Company; and
WHEREAS, the Company and the Executive have entered into an employment
agreement dated as of March 8, 2005 (the "Employment Agreement").
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 termination of Executive's employment for any reason prior to
a Change in Control; and (ii) two 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) consummation 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) Entitlement to Compensation. 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
Agreement contemplated under the Employment Agreement.
(b) Disability. For purposes of this Agreement only, "Disability" shall
mean that, 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.
(c) Retirement. 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) Cause. For purposes of this Agreement only, "Cause" shall mean the
occurrence of any of the following events: (i) the Executive's conviction of a
felony involving moral turpitude; (ii) the Executive's serious, willful gross
misconduct or the Executive's repeated failure or refusal to perform or observe
the Executive's material duties, responsibilities and obligations as an employee
or officer of the Company for reasons other than Disability, if such misconduct,
failure or refusal continues ten days following written notice thereof by the
Company to the Executive identifying the same and specifying that the
Executive's employment may be terminated if the same continues; (iii) the
Executive's breach of any provision of Section 7 of the Employment Agreement,
which is not cured within three days after written notice thereof to the
Executive; or (iv) the Executive's violation of any provision of the Company's
Code of Business Conduct and Ethics or the Company's 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, 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. No termination for Cause
shall take effect until the expiration of the correction period, if any,
described above 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.
(e) Good Reason. 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) except in connection with the termination of the Executive's
employment for Disability, Retirement or Cause, the assignment to the
Executive of any material duties inconsistent with the Executive's
status or position with the Company, or any other action by the
Company that results in a substantial diminution in such status or
position, excluding any isolated, insubstantial, or inadvertent
action not taken in bad faith and which is remedied by the Company
promptly after receipt of notice thereof from the Executive;
provided, however, that any change in the Executive's title or
reporting relationship as a consequence of the Change in Control
shall not be considered Good Reason, and any determination of Good
Reason, to the extent such determination relates to Executive's title
or reporting relationship, shall be made by reference to Executive's
title or reporting relationship that exists as a consequence of the
Change in Control;
(ii) a material reduction by the Company in the Executive's annual
base salary or target incentive in effect immediately prior to the
Change in Control;
(iii) the failure by the Company to continue to provide the Executive
with benefits at least as favorable in the aggregate to those enjoyed
by the Executive under the Company's life insurance, medical, health
and accident, disability, deferred compensation, or savings plans in
which Executive was participating at the time of the Change in
Control, the taking of any action by the Company that would directly
or indirectly materially reduce any such benefits or deprive the
Executive of any material fringe benefit enjoyed at the time of the
Change in Control, or the failure of the Company to provide the
Executive with the number of paid vacation days to which the
Executive is entitled at the time of the Change in Control, but
excluding any failure or action by the Company that is not taken in
bad faith and which is remedied by the Company promptly after receipt
of notice thereof from the Executive;
(iv) the Company requiring the Executive to relocate to any place
other than a location within 40 miles of the location at which
Executive performed his primary duties immediately prior to the Change
in Control or, if the Executive is based at the Company's principal
executive offices, the relocation of the Company's principal
executive offices to a location more than 40 miles from its location
immediately prior to the Change in Control, except for required
travel on the Company's business to an extent substantially
consistent with the Executive's prior business travel obligations;
(v) any material breach of this Agreement that is not remedied by
the Company promptly after receipt of a written notice thereof from
the Executive; or
(vi) the failure of the Company to obtain agreement from any
successor to assume and agree to perform the Agreement.
(f) Notice of Termination. 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. "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) Severance Compensation. 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; provided, however,
that if the Executive's termination of employment occurs at any time
during fiscal year 2005, this Section 4(a)(iii) shall not apply and
the Executive shall not be entitled to any portion of the bonus for
fiscal year 2005; 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. "Severance Amount" shall mean a lump sum payment
equal to two times the sum of (A) Executive's Base Salary at the time of such
termination, plus (B) the Bonus Amount in effect at the time of such
termination. For purposes of this subsection (b):
(i) "Base Salary" shall have the meaning set forth in the Employment
Agreement;
(ii) "Bonus Amount" means the quotient of (i) the total of the annual
bonus amounts described in Section 4(b) of the Employment Agreement
received by Executive during the fiscal year or years comprising the
Base Period, divided by (ii) the number of the Company's fiscal years
in the Base Period. "Base Period" means the two most recent fiscal
years of the Company ending prior to the date of Executive's
termination of employment; provided, however that if Executive was
not an employee of the Company (or a Predecessor Entity or a Related
Entity) at any time during one of such two fiscal years, the Base
Period is the one fiscal year of such two-fiscal year period during
which Executive performed personal services for the Company or a
Predecessor Entity or a Related Entity.
(iii) "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.
(iv) "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) Continued Participation in Employee Benefits. 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 agrees that the period of
coverage under such plans shall count against the plans' obligation to provide
continuation coverage pursuant to the Consolidated Omnibus Budget Reconciliation
Act of 1965, as amended (COBRA).
5. NO OBLIGATION TO MITIGATE DAMAGES; NO EFFECT ON OTHER CONTRACTUAL RIGHTS.
(a) No Mitigation. 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, except as provided in Section 4(c) above, 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) Effect on Other Rights. Except as otherwise provided in Section 11
hereof, 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,
stock option agreement, employment agreement or other contract, plan or
agreement with or of the Company.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
Anything in this Agreement to the contrary notwithstanding, in the
event that this Agreement becomes operative and it is determined (as hereafter
provided) that any payment (other than the Gross-Up payments provided for in
this Section 6 and Appendix A) or distribution by the Company or any of its
affiliates 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 pursuant to or by reason of any other agreement, policy, plan, program
or arrangement, including without limitation any stock option, performance
share, performance unit, stock appreciation right or similar right, or the lapse
or termination of any restriction on or the vesting or exercisability of any of
the foregoing (a "Payment"), would be subject to the excise tax imposed by
Section 4999 of the Code (or any successor provision thereto) by reason of being
considered "contingent on a change in ownership or control" of the Company,
within the meaning of Section 280G of the Code (or any successor provision
thereto) or to any similar tax imposed by state or local law, or any interest or
penalties with respect to such tax (such tax or taxes, together with any such
interest and penalties, being hereafter collectively referred to as the "Excise
Tax"), then the Executive will be entitled to receive an additional payment or
payments (collectively, a "Gross-Up Payment"). The Gross-Up Payment will be 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 any 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 Payment. For purposes
of determining the amount of the Gross-Up Payment, the Executive will be
considered to pay (x) federal income taxes at the highest rate in effect in the
year in which the Gross-Up Payment will be made and (y) state and local income
taxes at the highest rate in effect in the state or locality in which the
Gross-Up Payment would be subject to state or local tax, net of the maximum
reduction in federal income tax that could be obtained from deduction of such
state and local taxes. The obligations set forth in this Section 6 will be
subject to the procedural provisions described in Appendix A.
7. SUCCESSORS.
(a) The Company's Successors. 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 7 or which otherwise
becomes bound by all the terms and provisions of this Agreement by operation of
law.
(b) Executive's Successors. 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 be 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.
8. AMERICAN JOBS CREATION ACT.
Notwithstanding anything to the contrary in this Agreement, in the
event that it is determined that any payment to be made under this Agreement is
considered "nonqualified deferred compensation" subject to Section 409A of the
American Jobs Creation Act of 2004, payment under this Agreement will be delayed
for six months following termination of employment.
9. 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:
Philip G. Heasley
c/o Transaction Systems Architects, Inc.
224 South 108th Avenue
Omaha, NE 68154
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.
10. 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.
11. CONFLICT IN BENEFITS.
The provisions of this Agreement will not affect any rights that the
Executive may have pursuant to any agreement, policy, plan, program or
arrangement of the Company (or any subsidiary or affiliate thereof) providing
employee benefits, which rights will be governed by the terms thereof, except
for any rights to severance compensation to which Executive may be entitled upon
termination of employment, including under the Employment Agreement between the
Executive and the Company, which rights will be deemed to have been satisfied to
the extent and only to the extent comparable benefits are provided under this
Agreement.
12. 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.
13. 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 14 shall expressly survive the
termination of this Agreement.
14. 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.
15. EFFECTIVE DATE.
This Agreement shall become effective upon execution.
16. 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.
17. 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.
18. NO ASSIGNMENT BY EXECUTIVE.
Except as otherwise provided in Section 7(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.
19. WAIVER.
The Executive's or the Company's failure to insist upon strict
compliance with any provision of this Agreement shall not be 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.
20. 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.
21. 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.
22. 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: /s/ Dennis P. Byrnes
---------------------------------
Title: Senior Vice President and
General Counsel
EXECUTIVE:
/s/ Philip G. Heasley
------------------------------------
Philip G. Heasley
APPENDIX A
Excise Tax Gross-Up Procedural Provisions
(1) Subject to the provisions of Paragraph 5, all determinations required to be
made under Section 6 and Appendix A, including whether an Excise Tax is
payable by the Executive and the amount of such Excise Tax and whether a
Gross-Up Payment is required to be paid by the Company to the Executive and
the amount of such Gross-Up Payment, if any, will be made by a nationally
recognized accounting firm (the "National Firm") selected by the Executive
in the Executive's sole discretion. The Executive will direct the National
Firm to submit its determination and detailed supporting calculations to
both the Company and the Executive within 30 calendar days after the date
of termination of the Executive's employment, if applicable, and any such
other time or times as may be requested by the Company or the Executive. If
the National Firm determines that any Excise Tax is payable by the
Executive, the Company will pay the required Gross-Up Payment to the
Executive within five business days after receipt of such determination and
calculations with respect to any Payment to the Executive. If the National
Firm determines that no Excise Tax is payable by the Executive with respect
to any material benefit or amount (or portion thereof), it will, at the
same time as it makes such determination, furnish the Company and the
Executive with an opinion that the Executive has substantial authority not
to report any Excise Tax on the Executive's federal, state or local income
or other tax return with respect to such benefit or amount. As a result of
the uncertainty in the application of Section 4999 of the Code and the
possibility of similar uncertainty regarding applicable state or local tax
law at the time of any determination by the National Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by the Company
should have been made (an "Underpayment"), consistent with the calculations
required to be made hereunder. In the event that the Company exhausts or
fails to pursue its remedies pursuant to Paragraph 5 and the Executive
thereafter is required to make a payment of any Excise Tax, the Executive
will direct the National Firm to determine the amount of the Underpayment
that has occurred and to submit its determination and detailed supporting
calculations to both the Company and the Executive as promptly as possible.
Any such Underpayment will be promptly paid by the Company to, or for the
benefit of, the Executive within five business days after receipt of such
determination and calculations.
(2) The Company and the Executive will each provide the National Firm access to
and copies of any books, records and documents in the possession of the
Company or the Executive, as the case may be, reasonably requested by the
National Firm, and otherwise cooperate with the National Firm in connection
with the preparation and issuance of the determinations and calculations
contemplated by Paragraph 1. Any determination by the National Firm as to
the amount of the Gross-Up Payment will be binding upon the Company and the
Executive.
(3) The federal, state and local income or other tax returns filed by the
Executive will be prepared and filed on a consistent basis with the
determination of the National Firm with respect to the Excise Tax payable
by the Executive. The Executive will report and make proper payment of the
amount of any Excise Tax, and at the request of the Company, provide to the
Company true and correct copies (with any amendments) of the Executive's
federal income tax return as filed with the Internal Revenue Service and
corresponding state and local tax returns, if relevant, as filed with the
applicable taxing authority, and such other documents reasonably requested
by the Company, evidencing such payment. If prior to the filing of the
Executive's federal income tax return, or corresponding state or local tax
return, if relevant, the National Firm determines that the amount of the
Gross-Up Payment should be reduced, the Executive will within five business
days pay to the Company the amount of such reduction.
(4) The fees and expenses of the National Firm for its services in connection
with the determinations and calculations contemplated by Paragraph 1 will
be borne by the Company. If such fees and expenses are initially paid by
the Executive, the Company will reimburse the Executive the full amount of
such fees and expenses within five business days after receipt from the
Executive of a statement therefor and reasonable evidence of the
Executive's payment thereof.
(5) The Executive will notify the Company in writing of any claim by the
Internal Revenue Service or any other taxing authority that, if successful,
would require the payment by the Company of a Gross-Up Payment. Such
notification will be given as promptly as practicable but no later than 10
business days after the Executive actually receives notice of such claim
and the Executive will further apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid (in each
case, to the extent known by the Executive). The Executive will not pay
such claim prior to the expiration of the 30-calendar-day period following
the date on which the Executive gives such notice to the Company or, if
earlier, the date that any payment of amount with respect to such claim is
due. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the
Executive will:
(a) provide the Company with any written records or documents
in the Executive's possession relating to such claim reasonably
requested by the Company;
(b) take such action in connection with contesting such claim
as the Company reasonably requests in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim; and
(d) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company will bear and pay directly all
costs and expenses (including interest and penalties) incurred in
connection with such contest and will indemnify and hold harmless the
Executive, on an after-tax basis, for and against any Excise Tax or
income or other tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of
costs and expenses. Without limiting the foregoing provisions of this
Paragraph 5, the Company will control all proceedings taken in
connection with the contest of any claim contemplated by this Paragraph
5 and, at its sole option, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim (provided, however, that the
Executive may participate therein at the Executive's own cost and
expense) and may, at its option, either direct the Executive to pay the
tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest
to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the
Company determines; provided, however, that if the Company directs the
Executive to pay the tax claimed and sue for a refund, the Company will
advance the amount of such payment to the Executive on an interest-free
basis and will indemnify and hold the Executive harmless, on an
after-tax basis, from any Excise Tax or income or other tax, including
interest or penalties with respect thereto, imposed with respect to
such advance; and provided further, however, that any extension of the
statute of limitations relating to payment of taxes for the taxable
year of the Executive with respect to which the contested amount is
claimed to be due is limited solely to such contested amount.
Furthermore, the Company's control of any such contested claim will be
limited to issues with respect to which a Gross-Up Payment would be
payable hereunder and the Executive will be entitled to settle or
contest, as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(6) If, after the receipt by the Executive of an amount advanced by the Company
pursuant to Paragraph 5, the Executive receives any refund with respect to
such claim, the Executive will (subject to the Company's complying with the
requirements of Paragraph 5) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after any taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Paragraph 5, a determination is made
that the Executive is not entitled to any refund with respect to such claim
and the Company does not notify the Executive in writing of its intent to
contest such denial or refund prior to the expiration of 30 calendar days
after such determination, then such advance will be forgiven and will not
be required to be repaid and the amount of any such advance will offset, to
the extent thereof, the amount of Gross-Up Payment required to be paid by
the Company to the Executive pursuant to Section 6 and this Appendix A.
EXHIBIT 10.5
TRANSACTION SYSTEMS ARCHITECTS, INC.
Nonqualified Stock Option Agreement - Non-Employee Director
(2005 Equity and Performance Incentive Plan)
This Stock Option Agreement (the "Option Agreement") is made as of __________,
by and between Transaction Systems Architects, Inc., a Delaware corporation (the
"Corporation"), and [_____________], a Non-Employee Director of the Corporation
or its Subsidiaries (the "Optionee").
WHEREAS, the Board of Directors of the Corporation has duly adopted, and the
stockholders of the Corporation have approved, the 2005 Equity and Performance
Incentive 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 (reclassified as Common Stock) (the "Stock"); and
WHEREAS, the Corporation has determined that it is desirable and in the best
interests of the Corporation and its stockholders to grant the Optionee 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 this Option Agreement,
[_____________] shares of Stock (the "Option Shares"). The Date of Grant of this
Option is _____________. 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 has been delivered
to the Optionee. 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 a 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 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. Capitalized terms used herein that are not otherwise defined
shall have the meaning ascribed to them in the Plan.
3. EXERCISE PRICE
The exercise price for the shares of Stock subject to the Option granted by
this Option Agreement is $_______ per share (the "Exercise Price").
4. EXERCISE OF OPTION
Subject to the provisions of the Plan and subject to the earlier expiration or
termination of this Option in accordance with its terms, the Option granted
pursuant to this Option Agreement shall be exercisable only as follows:
4.1. Time of Exercise of Option
4.1.1. The Option shall become exercisable with respect to 100% of
the Option Shares on the earlier to occur of (i) the date
which is one year following the Date of Grant and (ii) the day
immediately prior to the date of the next annual meeting of
the stockholders of the Corporation occurring following the
Date of Grant.
4.1.2. Notwithstanding Section 4.1.1 above, in accordance with the
provisions of the Plan, the Option granted under this Option
Agreement shall become immediately exercisable upon the
occurrence of a Change in Control (as defined in Section 9
below) if the Optionee holding such Option is a Non-Employee
Director of the Corporation or a Subsidiary of the
Corporation on the date of the consummation of such Change
in Control.
4.1.3 Notwithstanding Section 4.1.1 above, in accordance with the
provisions of the Plan, if the Optionee ceases to be a
Non-Employee Director of the Corporation or a Subsidiary of
the Corporation by reason of Disability (as defined in
Section 4.3.2 below), the unexercised portion of any Option
held by such Optionee at that time will become immediately
vested and will be exercisable until terminated in
accordance with Section 4.3 below.
4.1.4 Notwithstanding Section 4.1.1 above, in accordance with the
provisions of the Plan, if the Optionee dies while serving
as a Non-Employee Director of the Corporation or a
Subsidiary of the Corporation (or dies within a period of
one month after termination of his service as a Non-Employee
Director for any reason other than Disability or within a
period of one year after termination of his service as
Non-Employee Director 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 until terminated in accordance with Section 4.3
below.
4.2. Limitations
The portion of the Option that has not become exercisable as of the date of the
Optionee's termination of service as a Non-Employee Director of the Corporation
or any of its Subsidiaries for any reason shall automatically terminate as of
the date of the Optionee's termination of service as a Non-Employee Director of
the Corporation or its Subsidiaries and shall not become exercisable after such
termination. To the extent the Option is exercisable, it may be exercised, in
whole or in part; 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.
4.3. Termination of Option
This Agreement and the Option granted hereby shall terminate automatically and
without further notice on the earliest of the following dates:
4.3.1. 90 calendar days from the date of the Optionee's termination
of service as a Non-Employee Director of the Corporation or a
Subsidiary of the Corporation for any reason other than death
or Disability (as defined below);
4.3.2. one year after the Optionee's permanent and total disability
as defined in Section 22(e)(3) of the Code ("Disability");
4.3.3. one year after the Optionee's death, if such death occurs
(i) while the Optionee is serving as a Non-Employee Director
of the Corporation or a Subsidiary of the Corporation, (ii)
within the 90-day period following the Optionee's termination
of service as a Non-Employee Director for any reason other
than Disability; or (iii) within the one-year period following
the Optionee's termination of service as a Non-Employee
Director by reason of the Optionee's Disability; or
4.3.4. ten years from the Date of Grant.
The Corporation shall have the authority to determine the date an Optionee
ceases to serve as a Non-Employee Director by reason of Disability. In the case
of death, the 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.
4.4. Limitations on Exercise of Option
In no event may the Option be exercised, in whole or in part, after the
occurrence of an event which results in termination of the Option, as set forth
in Section 4.3 above. 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 Corporation's policies
and procedures.
4.5. Method of Exercise of Option
4.5.1. To the extent then exercisable, the Option may be exercised in
whole or in part by written notice to the Corporation stating
the number of shares for which the Option is being exercised
and the intended manner of payment. The date of such notice
shall be the exercise date. Payment equal to the aggregate
Exercise Price of the shares shall be payable (i) in cash in
the form of currency or check or other cash equivalent
acceptable to the Corporation, (ii) by actual or
constructive transfer to the Corporation of nonforfeitable,
outstanding shares of Stock that have been owned by the
Optionee for at least six months prior to the date of
exercise, (iii) by any combination of the foregoing methods
of payment, or (iv) in accordance with such other method or
manner as set forth below.
(A) Cash Exercise (to exercise and retain the Option
Shares): Subject to the terms and conditions of this Option
Agreement and the Plan, the Option may be exercised by
delivering written notice of exercise to the Corporation, at
its principal office, addressed to the attention of Stock Plan
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.
(B) Same-Day-Sale Exercise (to exercise and
immediately sell all the Option Shares): Subject to the terms
and conditions of this Option Agreement and the Plan, 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.
(C) Sell-to-Cover Exercise (to exercise and
immediately sell a portion of the Option Shares): Subject to
the terms and conditions of this Option Agreement and the
Plan, 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.
4.5.2. As soon as practicable upon the Corporation's receipt of the
Optionee's notice of exercise and payment, the Corporation
shall direct the due issuance of the shares so purchased.
4.5.3. As a further condition precedent to the exercise of this
Option in whole or in part, the Optionee shall comply with all
regulations and the requirements of any regulatory authority
having control of, or supervision over, the issuance of the
shares of Stock and in connection therewith shall execute any
documents which the Board shall in its sole discretion deem
necessary or advisable.
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. COMPLIANCE WITH LAW
The Corporation shall make reasonable efforts to comply with all applicable
federal and state securities laws; provided, however, that notwithstanding any
other provision of this Option Agreement, the Option shall not be exercisable if
the exercise thereof would result in a violation of any such law.
7. 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 of record on the books of the Corporation.
8. DISCLAIMER OF RIGHTS
No provision in this Option Agreement shall be construed to confer upon the
Optionee the right to be employed by or to serve as a Non-Employee Director of
the Corporation, or to interfere in any way with the right and authority of the
Corporation either to increase or decrease the compensation or other benefits of
the Optionee at any time, or to terminate any relationship between the Optionee
and the Corporation.
9. CHANGE IN CONTROL
For purposes of this Option Agreement, "Change in Control" means:
(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 Corporation (the
"Outstanding Corporation Common Stock") or (ii) the combined voting power of the
then-outstanding voting securities of the Corporation entitled to vote generally
in the election of directors (the "Outstanding Corporation Voting Securities");
provided, however, that the following acquisitions shall not constitute a Change
in Control: (A) any acquisition directly from the Corporation (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 Corporation or any corporation controlled by the Corporation
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 9 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 Corporation'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) consummation 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
Corporation Common Stock and Outstanding Corporation 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 Corporation Common
Stock and Outstanding Corporation 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 Corporation'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 Corporation),
(ii) no Person (excluding the Corporation, any employee benefit plan (or related
trust) of the Corporation, 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
Corporation Common Stock or Outstanding Corporation 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 Corporation of a complete
liquidation or dissolution of the Corporation 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 Corporation, or
(B) the approval by the stockholders of the Corporation 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 Corporation Common Stock and Outstanding Corporation 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 Corporation Common Stock and Outstanding
Corporation 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 Corporation'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 Corporation), (2) no Person
(excluding the Corporation and any employee benefit plan (or related trust) of
the Corporation, 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
Corporation Common Stock or Outstanding Corporation 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 Corporation.
10. 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.
11. COMPLIANCE WITH SECTION 409A OF THE CODE.
To the extent applicable, it is intended that this Option Agreement and the Plan
comply with the provisions of Section 409A of the Code, so that the income
inclusion provisions of Section 409A(a)(1) do not apply to Optionee. This Option
Agreement and the Plan shall be administered in a manner consistent with this
intent, and any provision that would cause the Option Agreement or the Plan to
fail to satisfy Section 409A of the Code shall have no force and effect until
amended to comply with Section 409A of the Code (which amendment may be
retroactive to the extent permitted by Section 409A of the Code and may be made
by the Corporation without the consent of the Optionee).
12. 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).
13. 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.
14. 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.
15. SEVERABILITY
If one or more of the provisions of this Option Agreement is invalidated for any
reason by a court of competent jurisdiction, any provision so invalidated shall
be deemed to be separable from the other provisions hereof, and the remaining
provisions hereof shall continue to be valid and fully enforceable.
16. ENTIRE AGREEMENT; ELIGIBILITY
This Option Agreement and the Plan together constitute the entire agreement and
supersedes all prior understandings and agreements, written or oral, 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. In the event that it
is determined that the Optionee was not eligible to receive this Option, the
Option and this Option Agreement shall be null and void and of no further
effect.
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Option Agreement,
or caused this 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:
----------------------------- -----------------------------
[_________________________] [_________________________]
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., 330 S. 108
Avenue, Omaha, NE 68154
- --------------------------------------------------------------------------------
2005 Equity and Performance Incentive Plan - US Plan
_________ Options $________/Share Exercise Price _______ Date
EXHIBIT 10.6
AMENDMENTS TO THE 2002 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
AND RELATED OPTION AGREEMENTS
I.
Amendment to 2002 Non-Employee Director Stock Option Plan
This Amendment to the Transaction Systems Architects, Inc. 2002
Non-Employee Director Stock Option Plan (the "Plan") is made as of March 7,
2005.
Section 13 is hereby amended to provide that, notwithstanding Section
13, with respect to options granted to Frank R. Sanchez on May 8, 2002 and March
9, 2004, such options may be exercised as to 100% of the shares available for
purchase under such options as of the date of this Amendment.
II.
Amendment No. 1 to Stock Option Agreement, dated May 8, 2002
(under Transaction Systems Architects, Inc.
2002 Non-Employee Director Stock Option Plan)
This Amendment No. 1 to the Stock Option Agreement (the "2002 Stock
Option Agreement"), dated as of May 8, 2002, by and between Transaction
Systems Architects, Inc. (the "Company") and Frank R. Sanchez (the "Optionee")
is made as of March 7, 2005.
Section 4.1 of the 2002 Option Agreement is hereby amended in its
entirety to read as follows:
"As of March 7, 2005, the Option will be fully vested and the Optionee may
purchase up to 100% of the shares of Stock available for purchase under 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 the Option is less than 100 shares. In no event
shall the Option be exercised for a fractional share."
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III.
Amendment No. 1 to Stock Option Agreement, dated March 9, 2004
(under Transaction Systems Architects, Inc.
2002 Non-Employee Director Stock Option Plan)
This Amendment No. 1 to the Stock Option Agreement (the "2004 Stock
Option Agreement"), dated as of March 9, 2004, by and between the Company and
the Optionee is made as of March 7, 2005.
Section 4.1 of the 2004 Option Agreement is hereby amended in its
entirety to read as follows:
"As of March 7, 2005, the Option will be fully vested and the Optionee may
purchase up to 100% of the shares of Stock available for purchase under 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 the Option is less than 100 shares. In no event
shall the Option be exercised for a fractional share."
A-2