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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 obligatio
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