Exhibit 10.01
FIRST AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This First Amended and Restated Employment Agreement ("Agreement") is
made as of April 28, 2003, by and between Transaction Systems Architects,
Inc., a Delaware corporation, ("Employer") and Gregory D. Derkacht ("Employee").
PRELIMINARY STATEMENTS
A. Employer and Employee have entered into that certain employment agreement
(the "2001 Employment Agreement") dated as of December 3, 2001 pertaining to the
terms of the employment of Employee by Employer.
B. Employer believes that it is advisable and in the best interests of the
company to amend and restate certain provisions of the 2001 Employment Agreement
to provide Employee with an incentive to continue employment.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as follows:
1. Employment. Employer hereby agrees to employ Employee as President
and Chief Executive Officer ("CEO"), and Employee hereby accepts such employment
by Employer upon the terms and conditions and with such duties as determined by
the Board of Directors of Employer from time to time and which shall be related
or appropriate to the position.
2. Term. The term of employment commenced on January 2, 2002, and shall
continue for a period of three years thereafter, unless sooner terminated as
hereinafter set forth in Section 6, subject to certain provisions surviving
termination as set forth below. Thereafter, this Agreement and the term of
employment pursuant hereto will be automatically extended for successive
one-year terms, unless either party elects to terminate this Agreement by giving
the other party written notice thereof not less than 90 days prior to the end of
the then-current term.
3. Duties. Employee shall, during the term hereof:
(a) Execute Duties. Execute the duties attendant to his position as
determined and directed by the Board of Directors from time to time.
(b) Board Service. Serve as a member of the Employer's Board of
Directors.
(c) Full Efforts and Time. Consistent with the foregoing,
Employee shall devote full business time, energy, and skill to the businesses of
Employer, and to the promotion of Employer's best interests; provided, however,
that this Agreement shall not preclude Employee from participating in the
affairs of any governmental, educational or other charitable institution, from
engaging in professional speaking and writing activities, and from serving as a
member of the board of directors of other corporations or entities (subject to
the approval by the Chairman of the Board of Directors of Employer) so long as
such activities do not unreasonably interfere with the businesses of Employer or
conflict with Employee's obligations under this Agreement.
4. Compensation.
(a) Base. Effective January 1, 2003, Employer shall pay Employee for
all services to be performed by Employee during the term of this Agreement a
base salary (the "Base Salary") at the minimum rate of $360,000 per year,
payable in substantially equal semi-monthly payments in accordance with
Employer's customary practice for other employees, as such practice may be
determined from time to time. The Board of Directors may increase such Base
Salary but not decrease such Base Salary unless, as a result of a reasonable
business judgment by the Board of Directors of Employer, there is a prorata
across-the-board salary reduction for all executive level management employees
of Employer.
(b) Management Incentive Compensation. In addition to the Base
Salary, Employee shall be entitled to participate in the Employer's Management
Incentive Compensation Program ("MICP"). Employee's "on target" incentive
compensation will be $150,000 per fiscal year prorated quarterly in the amount
of $37,500. The amount of incentive compensation payable to Employee with
respect to a fiscal quarter will depend on the achievement of certain financial
results achieved by Employer in such fiscal quarter. The Board of Directors may
increase the incentive compensation paid or payable to Employee pursuant to the
MICP, but not decrease such incentive compensation unless, as a result of a
reasonable business judgment by the Board of Directors of Employer, there is a
prorata across-the-board decrease for all executive level management employees
of Employer. The terms and conditions of the MICP applicable to Employee are
attached hereto as Exhibit A.
(c) Business Expenses. In addition to the Base Salary set forth
above, Employer agrees that during the term of this Agreement Employee shall be
entitled to reimbursement by Employer for all reasonable and documented
business expenses incurred by him on Employer's behalf in the course of his
employment hereunder in accordance with Employer's policy concerning the same.
(d) Board Service. No separate or additional compensation will be
paid to Employee with respect to service on the Board of Directors.
(e) Stock Options. Employee has received three stock option
grants from the Employer's existing stock option plans. The first grant was in
the amount of 100,000 shares and was made on January 2, 2002. The second and
third grants were in the amount of 200,000 shares each and were made February
19, 2002. The terms and conditions for each of the grants are set forth in
separate stock option agreements. The stock option agreements for each of the
grants are attached hereto as Exhibits B, C and D, respectively.
5. Additional Benefits. Employee and his dependents shall be entitled
to participate in and receive health insurance and other benefits ("Benefit
Plans") under the Employer's Benefit Plans, whether qualified or non-qualified,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such Benefit Plans as provided to similarly situated employees
of Employer, as changed from time to time. Employee shall be entitled to a
minimum of four weeks of paid vacation and holidays in accordance with
Employer's policies in effect from time to time for its employees.
6. Termination.
(a) Types of Termination.
(i) For Cause by Employer. Any termination of Employee's
employment by Employer for Cause (as defined in Exhibit E attached hereto)
shall be authorized by a vote of at least a majority of the non-employee
members of the Board of Directors of Employer within 12 months of a majority of
such non-employee members of the Board of Directors having actual knowledge of
the event or circumstances providing a basis for such termination. In the case
of clause (ii) of the definition of Cause, Employee shall be given notice by the
Board of Directors specifying in detail the particular act or failure to act on
which the Board of Directors is relying in proposing to terminate him for Cause
and offering Employee an opportunity, on a date at least 14 days after receipt
of such notice, to have a hearing, with counsel, before a majority of the
non-employee members of the Board of Directors, including each of the members of
the Board of Directors who authorized the termination for Cause. Employee shall
not be terminated for Cause if, within 30 days after the date of Employee's
hearing before the Board of Directors (or if Employee waives a hearing, within
30 days after receiving notice of the proposed termination), he has corrected
the particular act or failure to act specified in the notice and by so
correcting such act or failure to act he has reduced the economic damage his act
or failure to act has allegedly caused Employer to a level which is no longer
material or has eliminated the probability that such act or failure to act is
likely to result in material economic damage to Employer. No termination for
Cause shall take effect until the expiration of the correction period described
in the preceding sentence and the determination by a majority of the
non-employee members of the Board of Directors that Employee has failed to
correct the act or failure to act in accordance with the terms of the preceding
sentence.
Anything herein to the contrary notwithstanding, if,
following a termination of Employee's employment by Employer for Cause based
upon the conviction of Employee for a felony involving moral turpitude such
conviction is finally overturned on appeal, Employee shall be entitled to the
compensation provided in Sections 4(a) and 4(c) of that certain severance
compensation agreement (the "Severance Compensation Agreement") made as of April
28, 2003 between Employer and Employee, a copy of which is attached hereto as
Exhibit F. In lieu of the interest provided in clause (iv) of the first sentence
of Section 4(a) of the Severance Compensation Agreement and the interest
provided in the second sentence of Section 4(c) of the Severance Compensation
Agreement, however, the compensation provided in Sections 4(a) and 4(c) of the
Severance Compensation Agreement shall be increased by a 10% rate of interest,
compounded annually, calculated from the date such compensation would have been
paid if Employee's employment had been terminated without Cause.
(ii) By Employee Voluntarily. Employee may terminate his
employment voluntarily hereunder 30 days after providing Employer written notice
setting forth his intention to do so.
(iii) Death, Disability or Retirement of Employee. If Employee's
employment is terminated during the term of this Agreement due to the death,
Disability (as defined below) or Retirement (as defined in Exhibit E) of
Employee, then an amount equal to Employee's Base Salary (at the rate most
recently in effect) shall be paid through the date of his death, Disability or
Retirement, plus an amount in respect of any accrued but unused vacation days;
provided, however, that if Employee's employment is terminated due to death,
Disability or Retirement subsequent to a Change in Control, then the applicable
provisions of the Severance Compensation Agreement shall govern.
In addition to any other compensation provided for under this
Agreement or the Severance Compensation Agreement, Employee's beneficiaries
shall also receive any insurance benefits under the Benefit Plans to which
Employee or his beneficiaries are entitled on the date of his death or
Disability. Furthermore, if Employee's employment is terminated during the term
of this Agreement due to Disability, then Employee will be entitled to continued
participation in all Benefit Plans or programs available to Employer's employees
generally, until the earlier of (A) the date, or dates, he 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 (B) two years from the Termination Date; provided
(1) if Employee is precluded from continuing his participation in any Benefit
Plan or program as provided in the preceding sentence, he shall be paid, in a
lump sum cash payment, within 30 days following the date it is determined he is
unable to participate in any Benefit Plan or program, the after-tax economic
equivalent of the benefits provided under the plan or program in which he is
unable to participate for the period specified in the preceding sentence, and
(2) the economic equivalent of any benefit foregone shall he deemed to be the
lowest cost that would be incurred by Employee in obtaining such benefit for
himself (including family or dependent coverage, if applicable) on an individual
basis. Employee shall be eligible for group health plan continuation coverage
under and in accordance with the Consolidated Omnibus Budget Reconciliation Act
of 1965, as amended, when he ceases to be eligible for continued participation
in Employer's group health plan under this Section 6(a)(iii).
As used in this Agreement, the term "Disability" shall mean
the inability of Employee, due to physical or mental illness, with or without a
reasonable accommodation, to perform his duties with Employer on a full-time
basis for six months and, within 30 days after a Notice of Termination (as
defined in Exhibit E) is thereafter given by Employer, Employee's failure to
return to the full-time performance of Employee's duties as set forth in Section
3.
In the case of the Disability or Retirement of Employee, the
Noncompetition and Confidentiality and other provisions of Sections 7 and 8
hereof shall remain in effect.
(iv) Without Cause by Employer. Employer may terminate the
employment of Employee at any time without Cause after providing Employee with
30 days' prior written notice setting forth its intention to do so.
(v) Expiration of Term. The expiration of this Agreement is by
its own term, as set forth in Section 2.
(b) Compensation on Termination. Except as otherwise set forth
in the Severance Compensation Agreement, if Employee is terminated for Cause,
death, Disability, Retirement, or voluntarily terminates his employment, or if
this Agreement terminates by its own term, he shall not be entitled to any
compensation following the date of termination as defined below (the
"Termination Date"):
(i) for Cause by Employer - immediately upon the expiration of
the correction period described in Section 6(a)(i) and the determination by a
majority of the non-employee members of the Board of Directors that Employee
has failed to correct the act or failure to act in accordance with the terms of
Section 6(a)(i);
(ii) for death, Disability or Retirement - for death or
Retirement, immediately upon the date of such occurrence; for Disability,
immediately upon expiration of the notice period described in Section 6(a)(iii)
if Employee fails to return to the full-time performance of Employee's duties
as set forth in Section 3;
(iii) for voluntary termination - on the 30th day following
notice by Employee to Employer; and
(iv) by its own term - on the date set forth in Section 2,
(c) Compensation for Termination Without Cause. In the event
Employee is terminated by Employer without Cause, Employer shall pay to Employee
$150,000.
(d) Change in Control Compensation. Employee shall be entitled to
the compensation provided in the Severance Compensation Agreement pursuant to
the terms stated in such agreement.
(e) Any termination of Employee by Employer pursuant to Section
6(a)(i) or 6(a)(iii) above, or by Employee pursuant to Section 6(a)(ii) above,
shall be communicated by a Notice of Termination to the other party to this
Agreement.
7. Noncompetition, Noninducement, Nonsolicitation.
(a) Employee hereby agrees that commencing on the date of this
Agreement and continuing through 180 days after the termination date (the
"Non-Compete Period"), he shall not singly, jointly, or as a member, employee,
or agent of any partnership or as an officer, agent, employee, director or
stockholder, or investor of any other corporation or entity, or in any other
capacity, which is engaged in a similar business to that of Employer during the
period of non-competition:
(i) solicit, contact and/or service any person, firm,
corporation, partnership, or entity of any kind whatsoever for purposes which
are competitive to that of Employer, and for purposes similar to those performed
by Employee for Employer, a client of Employer for which Employee performed
service or had personal contact with on behalf of Employer during the last one
year of Employee's employment with Employer; provided, that Employee shall be
able to acquire and hold up to 1% of the outstanding shares of any publicly
traded stock of any company, and an unlimited percentage of outstanding shares
in the Employer, its parent, affiliates, or subsidiaries; and
(ii) directly or indirectly induce or attempt to induce any
person who, during the term of Employee's employment hereunder, was an employee,
representative or agent of Employer or any of its affiliates to terminate his
employment with Employer or any of its affiliates, or to violate the terms of
any agreement between said employee, representative or agent and Employer or any
of its affiliates.
(b) It is understood and agreed by Employer and Employee that the
time periods of the restrictions set forth in Section 7(a) of this Agreement
are intended by Employer and Employee to be extended by any time period during
which Employee violates the terms and conditions of Section 7(a).
Notwithstanding anything which could be construed to the contrary, this Section
7(b) is not intended to and shall not be deemed to permit Employee to violate
any term or condition of Section 7(a).
(c) In the event any of the provisions of this Agreement shall
be held to be invalid or unenforceable, the remaining portions thereof shall
nevertheless continue to be valid and enforceable as though the invalid or
unenforceable parts had not been included herein.
(d) Employer and Employee specifically agree that the provisions of
Sections 7, 8, 9, and 10 shall survive the termination of this Agreement.
(e) Employer and Employee agree that the provisions of this Section
7 may be waived in whole or in part by mutual agreement in writing by Employer
and Employee.
8. Confidentiality. Without the consent of Employer, Employee will not,
during his Employment or after termination of this Agreement, (a) disclose any
trade secret or proprietary or confidential knowledge or information of Employer
or any affiliate of Employer to any person or entity (other than to Employer or
shareholders, directors, officers or employees of Employer or representatives
thereof), or (b) otherwise make use of any such secret, knowledge or information
for other than Employers purposes, unless in the case of (a) or (b) above such
secret, knowledge or information is readily ascertainable from publicly
available information. Employee will hold confidential, on behalf of Employer as
the property of Employer, all memoranda, manuals, books, papers, letters,
documents, computer software and other similar property obtained during the
course of performing duties under this Agreement, and will return such property
to Employer at any time upon demand by Employer and, in any event, within three
calendar days after termination of his employment under this Agreement or after
the end of the term of this Agreement.
9. Developments.
(a) As used in this Agreement, the term "Employee Developments"
shall mean all technological, financial, operating and training ideas,
processes, methods and materials, specifically including, but not limited to,
all inventions, discoveries, improvements, devices, apparatus, designs,
practices, processes, methods, formulas, know-how, products, enhancements and
all software, computer programs (including source code, object code,
documentation and programmer's notes) and other works of authorship, whether or
not patentable or copyrightable, developed, written, conceived or reduced to
practice during Employee's employment by Employer or within a period of 90 days
thereafter (i) which result from any work performed by Employee for the
Employer, or (ii) which relate to the Employer's business or research or
development of the Employer at the time Employee develops, writes, conceives or
reduces to practice any of the foregoing, alone or with others.
(b) Employee shall promptly disclose all Employee Developments
to the Employer and make available to the Employer any work papers, drawings,
designs, schematics, specifications, descriptions, models, diskettes, computer
tapes, source codes or other tangible incidents of Employee Developments.
Employee agrees that all Employee Developments shall be considered work made by
Employee for the Employer and prepared within the scope of Employee's employment
and that all right, title and ownership interest in and to the Employee
Developments, including, without limitation, copyright, trade secret, patent or
other intellectual property rights, shall exclusively vest in and be retained by
the Employer, both during and following the term of employment. Employee agrees
to perform upon request of the Employer any acts that may be necessary or
convenient during his term of employment or thereafter to establish, perfect,
evidence, register, transfer, assign or convey ownership of Employee
Developments in or to the Employer, to the fullest extent possible, including
without limitation, assignment to the Employer of all ownership, copyright,
trade secret, patent and other intellectual property rights without any further
consideration.
10. Remedies.
(a) Employer shall be entitled, if it elects, to enjoin any
breach or threatened breach of, or enforce the specific performance of, the
obligations of Employee under Sections 7 and 8, without showing any actual
damage or that monetary damages would be inadequate. Any such equitable remedy
will not be the sole and exclusive remedy for any such breach, and Employer may
pursue other remedies for such a breach.
(b) Any court proceeding to enforce the specific performance
provisions of this Agreement may be commenced in the federal courts located in
the State of Nebraska, or in the absence of federal jurisdiction, the state
courts of Nebraska having jurisdiction. Employer and Employee submit to the
jurisdiction of such courts and waive any objection which they may have to the
pursuit of any such proceeding in any such court for purposes of specific
performance only.
11. Employer Assignment. Employer may assign this Agreement, provided,
however, that in the event of such assignment by the Employer, Employer's
obligations hereunder shall be binding legal obligations and shall inure to the
benefit of any successor.
12. Relocation. Employee agrees to relocate to Omaha, Nebraska, for the
term of this Agreement. Employer will pay for movement of Employee's household
and personal belongings. Employer will pay for real estate commission and other
customary and reasonable closing costs associated with the sale of Employee's
current home in Chicago. Employer will not pay for any fees or costs associated
with the purchase of a home in Omaha. Employer will pay for two house-hunting
trips in Omaha for Employee and spouse. No tax gross-up or equalization
allowances will be provided. Temporary housing in Omaha and related travel to
and from Chicago will be provided and paid for by the Employer while Employees
attempts to sell home in Chicago. Payment by Employer for such expenses will
cease at the earlier of (1) Employee moving into anew residence in Omaha; (2)
closing the sale of Employee's Chicago house; or (3) March 31, 2002.
13. Benefits Unfunded. All rights of Employee and his spouse or other
beneficiary under this Agreement shall at all times be entirely unfunded and no
provision shall at any time be made with respect to segregating any assets of
Employer for payment of any amounts due hereunder. Neither Employee nor his
spouse or other beneficiary shall have any interest in or rights against any
specific assets of Employer.
14. Waiver. No waiver by any party at any time of any breach by any
other party of, or compliance with, any condition or provision of this Agreement
to be performed by any other party shall be deemed a waiver of any other
provisions or conditions at the same time or at any prior or subsequent time.
15. Applicable Law . This Agreement shall be construed and interpreted
pursuant to the laws of the State of Nebraska without giving effect to the
conflict of laws provisions thereof.
16. Entire Agreement. This Agreement and the Severance Compensation
Agreement contain the entire agreement between Employer and Employee and
supersede any and all previous agreements, written or oral, between the parties
relating to the subject matter hereof and thereof including, without limitation,
the 2001 Employment Agreement. In the event of a conflict between the provisions
of this Agreement and the provisions contained in the Severance Compensation
Agreement, the provisions of the Severance Compensation Agreement shall govern.
No amendment or modification of the terms of this Agreement shall be binding
upon the parties hereto unless reduced to writing and signed by Employer and
Employee.
17. Counterparts. This Agreement may be executed in counterparts and by
facsimile signatures, each of which shall be deemed an original, and all of
which taken together shall constitute one instrument.
18. Severability. In the event any provision of this Agreement is held
illegal or invalid, the remaining provisions of this Agreement shall not be
affected thereby.
19. Notice. Notices under this Agreement shall be in writing and sent
by registered mail, return receipt requested, to the following addresses or to
such other addresses as the party being notified may have previously furnished
to the others by written notice.
If to Employer or its Board of Directors:
Transaction Systems Architects, Inc.
Attn: Chairman of the Board of Directors
224 South 108th Avenue
Omaha, NE 68154
with a copy to:
Transaction Systems Architects, Inc.
Attn: General Counsel
224 South 108th Avenue
Omaha, Nebraska 68154
If to Employee:
Gregory D. Derkacht
2441 South 191st Circle
Omaha, NE 68130
Such notices shall be deemed received three business days after they are so
sent.
IN WITNESS WHEREOF, the parties have executed this Agreement, on the
day and year first above written.
Transaction Systems Architects, Inc.
("Employer")
By:________________________________
Dwight G. Hanson,
Senior Vice President
Gregory D. Derkacht
("Employee")
____________________________________