Nonqualified Stock Option Agreement - Transaction Systems Architects Inc. and Philip G. Heasley
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.
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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
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After completing this page, please make a copy for your records and return it
to Stock Plan Administration, Transaction Systems Architects, Inc., 330 S. 108
Avenue, Omaha, NE 68154
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2005 Equity and Performance Incentive Plan - US Plan
_________ Options $________/Share Exercise Price _______ Date