<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
TRANSACTION SYSTEMS ARCHITECTS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[TSA LOGO]
TRANSACTION SYSTEMS ARCHITECTS, INC.
January 22, 1999
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders which
will be held on Tuesday, February 23, 1999 at 10:00 A.M., at the offices of the
Company at 230 South 108th Avenue, Omaha, Nebraska.
Details of the business to be conducted at the annual meeting are given in
the attached Notice of Annual Meeting and Proxy Statement.
After reading the Proxy Statement, please mark, date, sign, and return the
enclosed proxy in the prepaid envelope, to assure that your shares will be
represented. YOUR SHARES CANNOT BE VOTED UNLESS YOU DATE, SIGN, AND RETURN THE
ENCLOSED PROXY OR ATTEND THE ANNUAL MEETING IN PERSON.
On behalf of the Board of Directors, I would like to express our
appreciation for your interest in the Company.
Sincerely,
[SIGNATURE]
William E. Fisher
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 23, 1999
------------------------
The Annual Meeting of Stockholders of Transaction Systems Architects, Inc.
(the "Company") will be held at the offices of the Company at 230 South 108th
Avenue, Omaha, Nebraska, on February 23, 1999, at 10:00 A.M., for the following
purposes:
1. To elect six directors to hold office until the next Annual Meeting of
Stockholders;
2. To consider and vote upon a proposal to approve the Company's 1999 Stock
Option Plan;
3. To consider and vote upon a proposal to approve the Company's 1999
Employee Stock Purchase Plan;
4. To consider and vote upon a proposal to ratify the appointment of Arthur
Andersen LLP as the Company's independent auditors;
5. To transact such other business as may properly come before the Meeting
or any adjournment of the meeting.
The Board of Directors has fixed the close of business on January 15, 1999,
as the record date for determining the stockholders entitled to notice of and to
vote at the Meeting and any adjournment of the Meeting. Each share of the
Company's Class A Common Stock is entitled to one vote on all matters presented
at the Annual Meeting.
ALL HOLDERS OF THE COMPANY'S CLASS A COMMON STOCK (WHETHER THEY EXPECT TO
ATTEND THE ANNUAL MEETING OR NOT) ARE REQUESTED TO PROMPTLY COMPLETE, DATE,
SIGN, AND RETURN THE PROXY CARD ENCLOSED WITH THIS NOTICE.
[SIGNATURE]
David P. Stokes
SECRETARY
January 22, 1999
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 23, 1999
------------------------
This Proxy Statement is being furnished in connection with the solicitation
by and on behalf of the Board of Directors of Transaction Systems Architects,
Inc. (the "Company") of proxies to be used at the Annual Meeting of Stockholders
of the Company (the "Annual Meeting") to be held on February 23, 1999, and any
postponement or adjournment thereof. A copy of the Company's Annual Report to
Stockholders for the fiscal year ended September 30, 1998, which includes the
Company's financial statements as of and for the year ended September 30, 1998,
accompanies this Proxy Statement. STOCKHOLDERS MAY OBTAIN A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K AND A LIST OF THE EXHIBITS THERETO WITHOUT
CHARGE BY WRITTEN REQUEST TO INVESTOR RELATIONS, 224 SOUTH 108TH AVENUE, OMAHA,
NEBRASKA 68154. This Proxy Statement and the accompanying form of proxy are
being mailed to stockholders on or about January 22, 1999.
PROXY SOLICITATION
The shares represented by the proxies received pursuant to this solicitation
and not revoked will be voted at the Annual Meeting. A stockholder who has given
a proxy may revoke it prior to its exercise by giving written notice of
revocation to the Secretary of the Company or by giving a duly executed proxy
bearing a later date. Attendance in person at the Annual Meeting does not itself
revoke a proxy; however, any stockholder who does attend the Annual Meeting may
revoke a proxy previously submitted by voting in person. Subject to any such
revocation, all shares represented by properly executed proxies will be voted in
accordance with specifications on the enclosed proxy. If no such specifications
are made, proxies will be voted FOR the election of the six nominees for
director listed in this Proxy Statement, FOR approval of the Transaction Systems
Architects, Inc. 1999 Stock Option Plan, FOR approval of the Transaction Systems
Architects, Inc. 1999 Employee Stock Purchase Plan, FOR ratification of the
appointment of Arthur Andersen LLP as the Company's independent auditors for the
September 30, 1999 fiscal year and, as to any other matter that may be brought
before the Annual Meeting, in accordance with the judgement of the person or
persons voting the same.
The Company will bear the expense of preparing, printing and mailing this
Proxy Statement and proxies solicited hereby and will reimburse banks, brokerage
firms and nominees for their reasonable expenses in forwarding solicitation
materials to beneficial owners of shares held of record by such banks, brokerage
firms and nominees. The Company has retained Norwest Bank to assist in the
solicitation of proxies at a cost of approximately $10,000 plus normal
out-of-pocket expenses.
OUTSTANDING SHARES AND VOTING RIGHTS
Only stockholders of record at the close of business on January 15, 1999
(the "Record Date") are entitled to notice of and to vote at the Annual Meeting.
At the close of business on the Record Date, there were 31,186,947 shares of the
Company's Class A Common Stock, $0.005 par value (the "Common Stock"), issued
and outstanding, excluding 845 shares of Class A Common Stock held as treasury
stock by the Company. The shares held as treasury stock are not entitled to be
voted. Each holder of Common Stock is entitled to one vote per share for the
election of directors and on all other matters to be voted on by the Company's
stockholders. Holders of Common Stock may not cumulate their votes in the
election of directors.
1
<PAGE>
The presence in person or by proxy at the Annual Meeting of the holders of a
majority of the issued and outstanding Common Stock shall constitute a quorum.
Election of a director requires affirmative votes of the holders of a plurality
of the Common Stock present in person, or represented by proxy, at a meeting (at
which a quorum is present). Therefore, the six persons receiving the greatest
number of votes shall be elected as directors. Since only affirmative votes
count for this purpose, withheld votes will not affect the outcome, except that
they will count in determining the presence of a quorum.
With respect to the 1999 Stock Option Plan, 1999 Employee Stock Purchase
Plan and ratification of the appointment of independent auditors, a stockholder
may mark the accompanying form of proxy to (i) vote for the matter, (ii) vote
against the matter or (iii) abstain from voting on the matter. Assuming that a
quorum is present at the Annual Meeting, the affirmative vote of a majority of
the shares of Common Stock represented at the Annual Meeting and entitled to
vote on the matter is required for approval of the 1999 Stock Option Plan and
1999 Employee Stock Purchase Plan and the affirmative vote of a majority of the
shares of Common Stock represented at the meeting and voting on the matter is
required for ratification of the appointment of independent auditors. Proxies
marked to abstain from voting with respect to the 1999 Stock Option Plan or 1999
Employee Stock Purchase Plan will have the legal effect of voting against such
matter and with respect to the ratification of independent auditors will have
the effect of being represented for quorum purposes but not voted. The shares
represented by broker proxies which are not voted with respect to the 1999 Stock
Option Plan or 1999 Employee Stock Purchase Plan or the ratification of the
appointment of independent auditors will be considered represented at the
meeting and entitled to vote only as to those matters actually voted.
1. ELECTION OF DIRECTORS
The Company's Board of Directors currently consist of six members. The Board
of Directors has nominated the following persons, all of whom currently are
serving as directors, for election as directors to serve until the 2000 Annual
Meeting of Stockholders and thereafter until their respective successors are
duly elected and qualified. The Company expects that each of the nominees will
be available for election, but if any of them is not a candidate at the time the
election occurs, it is intended that such proxy will be voted for the election
of another nominee to be designated by the Board of Directors to fill any such
vacancy.
NOMINEES
WILLIAM E. FISHER, CHAIRMAN OF THE BOARD OF DIRECTORS. Mr. Fisher has been
Director, Chairman of the Board, President and Chief Executive Officer of the
Company since its formation in 1993. Mr. Fisher has also served as Chief
Executive Officer of ACI Worldwide Inc. (a subsidiary of the Company, "ACI")
since 1991. Since joining ACI in 1987, he has served in various other
capacities, including Vice President of Financial Systems, Senior Vice President
of Software and Services, Executive Vice President and Chief Operating Officer,
and President. Prior to joining ACI, he held the position of President for the
Government Services Division of First Data Resources ("FDR"), an information
processing company. Mr. Fisher is a director of BA Merchant Services, Inc.
(NYSE: BPI), West TeleServices Corporation (Nasdaq: WTSC) and Hypercom
Corporation (NYSE: HYC). BA Merchant Services provides payment processing and
related information products and services to merchants who accept credit and
debit cards as payment for goods and services. West TeleServices is a provider
of outsourced customized telecommunications-based services, inbound operator
services, automated voice response services and outbound direct teleservices.
Hypercom is a provider of point-of-sale payment products and enterprise
networking products. Mr. Fisher is 52 years old.
DAVID C. RUSSELL, DIRECTOR. Mr. Russell has been a Director of the Company
since its formation in 1993. Mr. Russell is Chief Operating Officer of TSA and
President of ACI. Since joining ACI in 1989, he has served in various other
capacities, including Vice President of Strategic Planning, Vice President of
Customer Support, and Senior Vice President of Software and Services. From 1984
to 1989, he held various operations and planning positions at FDR. Mr. Russell
is 50 years old.
2
<PAGE>
PROMOD HAQUE, DIRECTOR. Mr. Haque has been a Director of the Company since
January 1994. Mr. Haque is Vice President and General Partner of Norwest Venture
Capital, Inc. ("NVCM"), an affiliate of Norwest Equity Capital, LLC ("NEC") in
Minneapolis, Minnesota. He joined NVCM in 1990 as Investment Manager and became
Vice President in 1992. Mr. Haque is a director of Connect, Inc. (Nasdaq: CNKT),
Information Advantage, Inc. (Nasdaq: IACO), Prism Solutions (Nasdaq: PRZM), and
Raster Graphics, Inc. (Nasdaq: RGFX). Connect is a provider of electronic
procurement applications for the Internet. Information Advantage is a provider
of decision support data analysis and reporting software. Prism Solutions is a
provider of data warehouse management systems. Raster Graphics is a provider of
color electrostatic printing systems. Mr. Haque is 50 years old.
CHARLES E. NOELL, III, DIRECTOR. Mr. Noell has been a Director of the
Company since January 1994. Mr. Noell is the Managing Partner of JMI Equity
Fund, L.P. ("JMI"), a private investment fund. Prior to joining JMI in 1992, Mr.
Noell served at various positions at Alex. Brown & Sons Incorporated, including
Managing Director and head of the Technology Group. Mr. Noell is a director of
Peregrine Systems, Inc. (Nasdaq:PRGN). Peregrine is a provider of enterprise
wide help desk software. Mr. Noell is 47 years old.
JIM D. KEVER, DIRECTOR. Mr. Kever has been a Director of the Company since
November 1996. Mr. Kever is currently President and Co-Chief Executive Officer
of Envoy Corporation (Nasdaq: ENVY). Envoy provides electronic processing
services, primarily to the healthcare industry. He joined Envoy as Treasurer and
General Counsel in October 1981. Mr. Kever has been a director of Envoy since
1981 and from 1984 until June 1995 he was Executive Vice President of Envoy.
Before joining Envoy he was employed by Datanet, a corporation providing
pharmaceutical software. From 1977 until 1979, Mr. Kever was with the certified
public accounting firm of Peat, Marwick, Mitchell & Co. in the tax division. Mr.
Kever is 46 years old.
LARRY G. FENDLEY, DIRECTOR. Mr. Fendley has been a Director of the Company
since November 1996. Mr. Fendley is currently President of Fendley Technology
Services, Inc. Fendley Technology Services, Inc. provides consulting services to
transaction processing and software companies. Until mid-1998, he was Executive
Vice President, Product Delivery Services for CSG Systems, Inc., a subsidiary of
CSG Systems International, Inc. (Nasdaq: CSGS). CSG Systems provides customer
management solutions to the communications industry. Prior to joining CSG
Systems in 1996, he was with Citibank, NA for ten years, most recently as
General Manager of Information Services for the European, North America Card
Products Division. Prior to Citibank, Mr. Fendley was with FDR as Vice
President--Computer Technology and with Motorola in the Communications Products
Division as International Operations Manager. Mr. Fendley is 57 years old.
INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
Each of Messrs. Haque, Noell, Kever and Fendley receive a $3,125 fee per
quarter for their services. Such fees for Messrs. Haque and Noell are paid to
their affiliated management company. Messrs. Fisher and Russell do not receive
any compensation for their services as directors. All directors are reimbursed
for expenses incurred in connection with attendance at Board of Director and
committee meetings.
Each of Messrs. Kever and Fendley were granted a stock option for 20,000
shares of Common Stock upon their appointment to the Board of Directors on
November 11, 1996. These options were granted under the Transaction Systems
Architects, Inc. 1996 Stock Option Plan at an exercise price of $33.25 per
share, which was the market price of the Common Stock on that day. Vesting of
the options is 20% per year at the end of each of five years. Additionally, each
of Messrs. Kever and Fendley shall receive options for 4,000 additional shares
of Common Stock on the anniversary of their respective election to the Board in
each of the four succeeding years so long as they remain a member of the Board
of Directors on such anniversary date. Accordingly, on November 11, 1997, each
of Messrs. Kever and Fendley were granted a stock option for 4,000 shares of
Common Stock at an exercise price of $39.125
3
<PAGE>
per share and on November 11, 1998, each of Messrs. Kever and Fendley were
granted a stock option for 4,000 shares of Common Stock at an exercise price of
$36.375 per share.
The Company has standing audit and compensation committees of the Board of
Directors. The audit committee consists of Messrs. Noell and Fendley. The audit
committee monitors the effectiveness of the audit conducted by the Company's
independent auditors and of the Company's internal financial controls. The
auditors have full and free access to the audit committee without the presence
of management. The audit committee held one meeting in November 1998, primarily
to discuss the results of the fiscal 1998 independent audit and to recommend the
appointment of independent auditors for fiscal 1999. The compensation committee
consists of Messrs. Haque and Kever. This committee approves the compensation of
the Company's executive officers. The compensation committee held one meeting in
November 1998.
During fiscal 1998, there were four regular meetings of the Board of
Directors. Each incumbent director who was a member of the Board of Directors
during fiscal year 1998 attended all of the regular meetings except Mr. Haque
and Mr. Noell each of whom attended three of four regularly scheduled board
meetings.
INFORMATION REGARDING STOCK OWNERSHIP
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 31, 1998, by (i) each of
the Company's directors, (ii) each of the executive officers named in the
Summary Compensation Table below, (iii) all executive officers and directors of
the Company as a group, and (iv) each person known to the Company who
beneficially owns more than 5% of the outstanding shares of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNER NUMBER OF SHARES PERCENT
- ---------------------------------------------------------------- ------------------ ------------
<S> <C> <C>
Warburg, Pincus Asset Management, Inc.(1) ...................... 2,610,800 8.4
466 Lexington Avenue, New York NY 10017
Pilgrim Baxter & Associates, Ltd.(2) ........................... 2,514,600 8.1
825 Duportail Road, Wayne PA 19087
Charles E. Noell, III(3) ....................................... 22,600 *
Jim D. Kever(4) ................................................ 8,800 *
Larry G. Fendley(5) ............................................ 9,750 *
Promod Haque(6) ................................................ 14,347 *
William E. Fisher(7)(8) ........................................ 525,000 1.7
David C. Russell(7)(9) ......................................... 209,496 *
Edward H. Mangold(7)(10) ....................................... 140,842 *
Thomas H. Boje(7)(11) .......................................... 120,500 *
Fred L. Grabher(7)(12) ......................................... 71,942 *
All Directors and Executive Officers as a Group (17
persons)(13) ................................................. 1,391,690 4.4
</TABLE>
- ------------------------
* Less than 1% of the outstanding Common Stock.
(1) The number of shares in the table is based on a Schedule 13G dated December
31, 1998, which indicates that Warburg, Pincus Asset Management, Inc. has
sole dispositive power over all of these shares, sole voting power over
1,915,100 shares and shared voting power over 668,100 shares.
4
<PAGE>
(2) The number of shares in the table is based on a Schedule 13F dated September
30, 1998, which indicates that Pilgrim Baxter & Associates, Ltd. has sole
investment discretion over all of these shares, sole voting power over
2,026,400 of these shares and no voting power over 488,200 of these shares.
(3) Mr. Noell's business mailing address is 12680 High Bluff Drive, Number 200,
San Diego, CA 92130-2002.
(4) Consists of 8,800 shares issuable upon exercise of options. Mr. Kever's
business mailing address is Two Lakeview Place, 15 Century Boulevard, Suite
600, Nashville, TN 37214.
(5) Consists of 8,800 shares issuable upon exercise of options and 950 shares
owned by Mr. Fendley's spouse. Mr. Fendley's business mailing address is
4749 Catclaw Drive, Abilene, TX 79606.
(6) Mr. Haque is also an officer of NEC, which holds an aggregate of 1,156,262
shares, and a non-managing member of Itasca, NEC, L.L.C., a Minnesota
limited liability company ("Itasca"), which is the sole managing member of
NEC. Mr. Haque disclaims beneficial ownership of all shares directly or
indirectly beneficially owned by NEC, Itasca, and the managing members
thereof and the number of shares set forth in the table as owned by Mr.
Haque does not include the shares directly or indirectly beneficially owned
by NEC, Itasca, and the managing members thereof. Mr. Haque's business
mailing address is 245 Lytton Ave., Suite 250, Palo Alto, CA 94301.
(7) The business address is 224 South 108th Avenue, Omaha, NE 68154.
(8) Includes 450,000 shares held by a corporation of which Mr. Fisher is a
principal shareholder. Mr. Fisher has sole investment discretion and voting
authority over such shares. Also includes 25,000 shares issuable upon
exercise of options.
(9) Includes 93,116 shares owned by Mr. Russell's spouse and 25,000 shares
issuable upon exercise of options.
(10) Includes 21,250 shares issuable upon exercise of options.
(11) Includes 25,000 shares owned by Mr. Boje's spouse and 35,500 shares
issuable upon exercise of options.
(12) Includes 6,250 shares issuable upon exercise of options.
(13) Includes 266,951 shares issuable upon exercise of options.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
and the rules of the Securities and Exchange Commission (the "Commission")
thereunder require the Company's directors, certain officers, and beneficial
owners of more than ten percent of the Common Stock to file reports of their
ownership and changes in ownership of Common Stock with the Commission.
Personnel of the Company generally prepare these reports on behalf of its
executive officers on the basis of information obtained from them and review the
forms submitted to the Company by its non-employee directors and beneficial
owners of more than ten percent of the Common Stock. Based on such information,
the Company believes that all reports required by Section 16(a) of the Exchange
Act to be filed by its directors and officers during or with respect to the last
fiscal year were filed on time, except that Mr. Boje failed to timely file a
Form 5 to report one transaction. Mr. Russell failed to timely file a Form 5 to
report one transaction in fiscal 1996. Messrs. Boje and Russell subsequently
filed appropriate forms.
5
<PAGE>
INFORMATION REGARDING EXECUTIVE OFFICER COMPENSATION
The following table sets forth certain compensation information as to the
Chief Executive Officer ("CEO") and the four highest paid executive officers
(collectively, the "Named Executive Officers") of the Company for each of the
years ended September 30, 1996, 1997 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS(2)
--------------
ANNUAL COMPENSATION SECURITIES
------------------------------------ UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) OPTIONS(#)(2) COMPENSATION($)(3)(4)
- ------------------------------------ --------- ----------- ------------ -------------- -----------------------
<S> <C> <C> <C> <C> <C>
William E. Fisher................... 1998 $ 233,333 $ 255,768 None $ 4,153
Chairman of the Board 1997 150,000 189,334 100,000 4,952
Chief Executive Officer 1996 150,000 195,510 None 4,779
David C. Russell.................... 1998 $ 150,000 $ 154,255 None $ 4,153
Senior Vice President, 1997 140,000 145,299 100,000 5,035
Chief Operating Officer 1996 128,333 141,255 None 4,696
Edward H. Mangold................... 1998 $ 96,791 $ 234,618 None $ 4,698
Senior Vice President 1997 80,748 264,435 85,000 5,114
Americas Region 1996 80,748 339,601 None 3,793
Thomas H. Boje...................... 1998 $ 107,250 $ 178,294 None $ 2,602
Vice President 1997 96,279 80,206 110,000 2,602
EMEA Region 1996 75,030 86,893 None 1,987
Fred L. Grabher..................... 1998 $ 130,000 $ 134,946 None $ 4,153
Vice President 1997 112,653 164,748 25,000 1,265
Crystal Clear Technology 1996 95,000 156,005 None 2,279
</TABLE>
- ------------------------
(1) The Company's executive officers are eligible for quarterly cash bonuses.
Such bonuses are generally based upon achievement of corporate, geographic
or product performance objectives including sales, pretax profit, backlog,
and cash flow.
(2) Includes options granted under the 1997 Management Stock Option Plan. Each
of the Named Executive Officers paid for such options at the rate of $3.00
for each underlying share.
(3) Includes contributions made to the Company's retirement plans, except for
the amounts for Mr. Boje for fiscal 1998 and 1997. Amounts for Mr. Boje for
fiscal 1998 and 1997 represent payments made to him in lieu of contributions
to the Company's 401(k) Retirement Plan on his behalf. For fiscal 1998,
employer contributions to the Company's 401(k) Retirement Plan were $4,000,
$4,000, $4,545, and $4,000 for Messrs. Fisher, Russell, Mangold and Grabher,
respectively.
(4) Each of Messrs. Fisher, Russell, Mangold and Grabher and certain other
executive officers are a party to an agreement pursuant to which each has
agreed not to compete with the Company for so long as he or she is a
stockholder of the Company. At the election of the Company, the non-compete
agreement may remain in effect for two years after termination of employment
(even if he or she is no longer a stockholder) if the Company pays him or
her for two years. No amounts were paid in 1998 under this arrangement.
6
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS AT FISCAL YEAR- MONEY OPTIONS FISCAL YEAR-
SHARES END(#) END($)
ACQUIRED ON VALUE -------------------------- ----------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ---------------------------- ------------ ----------- -------------------------- ----------------------------
<S> <C> <C> <C> <C>
William E. Fisher........... -- -- 25,000/75,000 287,500/862,500
David C. Russell............ -- -- 25,000/75,000 287,500/862,500
Edward H. Mangold........... -- -- 21,250/63,750 244,375/733,125
Thomas H. Boje.............. -- -- 35,500/82,500 580,250/948,750
Fred L. Grabher............. -- -- 6,250/18,750 71,875/215,625
</TABLE>
- ------------------------
(1) "In-the-Money" options are options outstanding at the end of the last fiscal
year for which the fair market value of the Common Stock at the end of the
last fiscal year ($35.50 per share) exceeded the exercise price of the
options.
CERTAIN TRANSACTIONS
The Company and KFS Management, Inc. are parties to agreements pursuant to
which KFS Management, Inc. leases two aircraft to the Company on a non-exclusive
basis for business use by the Company. Mr. Fisher and his brother-in-law are the
sole stockholders of KFS Management, Inc. The Company pays rent equal to $1,300
per flight hour plus certain expenses. The agreements provide for advance
payments totaling $65,000 to be made quarterly by the Company, with a true-up at
the end of each quarter based on actual usage and expenses. During fiscal 1998,
the Company paid KFS Management, Inc. a total of $171,185 under the lease
agreements. Either party may terminate the lease agreements after April 1999
upon six months notice.
REPORT ON EXECUTIVE COMPENSATION
All issues relating to executive officer compensation are addressed by the
Board of Director's Compensation Committee. The Compensation Committee, which is
comprised of Messrs. Haque and Kever approves base salary and incentive
compensation for all executive officers. This report is submitted by the
Compensation Committee.
The components of the Company's executive compensation program consist of
base salaries and annual incentive plans. The Company's compensation program is
intended to provide executive officers with overall levels of compensation
opportunity that are competitive within the software and computer services
industries, as well as within a broader spectrum of companies of comparable size
and complexity. The Company's compensation program is structured and
administered to support the Company's business mission and generate favorable
returns for its stockholders.
BASE SALARY. Each executive officer's base salary, except for the CEO, is
based on the recommendation of Mr. Fisher to the Compensation Committee. Such
recommendations are derived primarily through a comparison of industry and
competitive labor markets for executive officer services from surveys conducted
by Culpepper and Associates, Inc. ("Culpepper"). In comparison to those surveys,
base salaries recommended are slightly lower than the average of other
comparably sized software companies. Other factors in formulating base salary
recommendations include the level of an executive's compensation in relation to
other executives in the Company with the same, more and less responsibilities,
the performance of the particular executive's business unit or department in
relation to
7
<PAGE>
established strategic plans, the Company's operating budget for the year and the
overall performance of the Company.
INCENTIVE COMPENSATION PLAN. For each executive officer, an incentive
compensation plan is established at the beginning of each fiscal year in
connection with the Company's strategic plans and annual operating budgets.
Except for the CEO, Mr. Fisher provides recommendations to the Compensation
Committee for incentive compensation for each executive officer. The level of
incentive compensation recommended for each executive officer is derived through
a comparison of industry and competitive labor markets from surveys conducted by
Culpepper. In comparison to those surveys, the incentive compensation
recommended approximates the average of other comparably sized software
companies. Under these incentive compensation plans, an executive's potential
incentive payment is related to the Company's profit attainment, ending backlog,
cash flow, and/or the financial performance of an executive's division or
department. Because growth in the Company's profit, backlog, cashflow and
divisional financial performance, all being substantial factors in the
calculation of incentive compensation, exceeded the Company's expectations in
fiscal 1998, bonuses for each of the Company's Named Executive Officers exceeded
target levels for fiscal 1998.
CEO COMPENSATION. Compensation for Mr. Fisher is based on the same criteria
used for executive officers generally, as described above. In addition to his
base salary, in 1998 Mr. Fisher was eligible to earn 100% of his base salary if
the Company attained 100% of its targets. As compared to industry surveys
conducted by Culpepper, Mr. Fisher's base salary was approximately 52% lower
than the average and his incentive compensation target for 1998 was
approximately 8% lower than the average. Mr. Fisher's actual combined earnings
for 1998 was approximately 36% less than the average. His maximum possible bonus
for 1998 was 150% of his base salary if the Company exceeded its targets. For
1998, the Company exceeded its targets and Mr. Fisher earned as a bonus 104% of
his base salary.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code, enacted in 1993, generally disallows a tax deduction to
public companies for compensation over $1,000,000 paid to the corporation's
Chief Executive Officer and the four other most highly compensated executive
officers. Qualifying performance-based compensation will not be subject to the
deduction limit if certain requirements are met. Although the Company has no
current plan to pay any of its executive officers annual compensation over
$1,000,000, it currently intends to structure the performance-based portion of
the compensation of its executive officers in a manner that complies with this
statute.
COMPENSATION COMMITTEE
Promod Haque
Jim D. Kever
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Messrs. Haque and
Kever. None of these individuals was at any time during 1998, or at any other
time an officer or employee of the Company. No executive officer of the Company
serves as a member of the board of directors or compensation committee of any
entity that has one or more executive officers serving as a member of the
Company's Board of Directors or Compensation Committee.
PERFORMANCE GRAPH
In accordance with Securities and Exchange Commission rules, the following
table shows a line-graph presentation comparing cumulative stockholder return on
an indexed basis with a broad equity
8
<PAGE>
market index and either a nationally recognized industry standard or an index of
peer companies selected by the Company. The Company has selected the S&P 500
Index and the NASDAQ Computer & Data Processing Services ("C&DP") Index for
comparison.
COMPARISON OF 43 MONTH CUMULATIVE TOTAL RETURN*
AMONG TRANSACTION SYSTEMS ARCHITECTS, INC., THE S & P 500 INDEX
AND THE NASDAQ COMPUTER & DATA PROCESSING INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TRANSACTION SYSTEMS ARCHITECTS, INC. S & P 500 NASDAQ COMPUTER & DATA PROCESSING
<S> <C> <C> <C>
2/24/95 100 100 100
9/95 149.65 122.64 140.75
9/96 472.73 147.58 174.56
9/97 454.55 207.27 236.26
9/98 397.20 226.02 308.26
</TABLE>
Assumes $100 invested on February 24, 1995 (the date of the Company's
Initial Public Offering ("IPO") at the closing price on the IPO date of $8.9375
per share adjusted for a two-for-one stock split effected in the form of a 100%
stock dividend in July 1996) in the Company's Common Stock, the S&P 500 Index
and the NASDAQ C&DP Index.
2. APPROVAL OF 1999 STOCK OPTION PLAN
On January 21, 1999, the Board of Directors adopted, subject to the approval
by the stockholders of the Company, the 1999 Stock Option Plan. Of the 1,008,000
shares of Common Stock authorized for issuance under the Company's 1996 Stock
Option Plan which was approved by the Company's stockholders at the 1996 Annual
Meeting of Stockholders, only 66,637 remain available for new grants as of
December 31, 1998. The 1999 Stock Option Plan provides for an additional
1,000,000 shares of Common Stock for which options may be granted.
The following summary description of the 1999 Stock Option Plan is qualified
in its entirety by reference to the full text of the 1999 Stock Option Plan,
which is set forth as Appendix A to this Proxy Statement.
9
<PAGE>
If approved by the stockholders, the 1999 Stock Option Plan will allow the
Compensation Committee (or such other committee of the Board as may be directed
by the Board) (the "Committee") to provide for awards for employees of the
Company and its subsidiaries from time to time, in its sole discretion, of stock
options (including incentive stock options qualifying under Section 422 of the
Code and non-qualified stock options which do not so qualify), that the
Committee determines to be consistent with the objectives and limitations of the
1999 Stock Option Plan. All employees of the Company or any subsidiary of the
Company who are actively and customarily employed for 20 hours or more per week
are eligible to participate in the 1999 Stock Option Plan, including employees
who are members of the Board of Directors. As of December 31, 1998, the Company
and its subsidiaries have approximately 2,000 eligible employees. The 1999 Stock
Option Plan will expire, unless earlier terminated, on February 22, 2009.
An aggregate of 1,000,000 shares of Common Stock will be available under the
1999 Stock Option Plan. The shares subject to grants that terminate unexercised
will be available for future grants. The total number of shares of Common Stock
for which options may be granted to any "covered employee" within the meaning of
Code Section 162(m) during any twelve month period will not exceed 75,000 in the
aggregate, subject to adjustment as provided below. Adjustments will be made in
the number of shares subject to existing or future awards under the 1999 Stock
Option Plan and in the exercise price of an outstanding award in the event that
the outstanding shares of the Company's Common Stock are increased or decreased
or changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation, without the
receipt of consideration by the Company, by reason of a reorganization, merger
or consolidation, recapitalization, reclassification, stock split, reverse stock
split, split-up, combination or exchange of shares or declaration of any
dividends payable in Common Stock. In the event of (i) any offer or proposal to
holders of the Company's Common Stock relating to the acquisition of their
shares, including, without limitation, through purchase, merger or otherwise or
(ii) any transaction generally relating to the acquisition of substantially all
of the assets or business of the Company, or (iii) the dissolution or
liquidation of the Company, the Committee may make such adjustment as it deems
equitable in respect of outstanding options and the shares of Common Stock for
which options may be granted, including without limitation the revision,
cancellation or termination of any outstanding options or the change, conversion
or exchange of the shares of the Company's Common Stock under outstanding
options (and of the shares of the Company's Common Stock for which options may
be granted under the 1999 Stock Option Plan) into or for securities or other
property of another corporation. Additional limitations apply to the aggregate
fair market value of shares granted under incentive stock options that are first
exercisable during any calendar year in order to comply with Section 422 of the
Code.
The exercise price of any option is determined by the Committee at the time
the option is awarded. In the case of incentive stock options, the option
exercise price may not be less than 100 percent of the fair market value of the
Company's Common Stock on the date the option is granted. In the case of non-
qualified stock options, the option exercise price may be equal to, more than or
less than the fair market value of the Company's Common Stock on the date the
option is granted.
Payment of the option exercise price may be made in cash, by certified
check, or if authorized by the Committee, by delivery of shares of Common Stock
having a fair market value on the date of delivery equal to the aggregate
exercise price of the shares of Common Stock as to which the option is being
exercised, or if authorized by the Committee, by authorizing the Company to
withhold from the total number of shares of Common Stock to be acquired upon
exercise of an option that number of shares of Common Stock having an aggregate
fair market value (as of the date the withholding is effected) that would equal
the aggregate exercise price of the shares of Common Stock as to which the
option is being exercised, or by any combination of such methods of payment or
by any other method of payment that may be authorized by the Committee.
Awards under the 1999 Stock Option Plan are not transferable otherwise than
by will or the laws of descent and distribution.
10
<PAGE>
The 1999 Stock Option Plan will be administered by the Committee. All
members of the Committee are non-employee directors.
The Committee has authority to, within the limits of the 1999 Stock Option
Plan, (i) determine the employees to whom options will be granted, (ii)
designate an option as an incentive stock option or a non-qualified stock
option, (iii) establish the number of shares of Common Stock that may be
purchased under each option and the option exercise price, (iv) determine the
time and the conditions subject to which options may be exercised in whole or in
part, (v) fix the term of all options granted under the 1999 Stock Option Plan,
provided that the term of any incentive stock option may not exceed ten years
from the date of grant, (vi) determine how withholding taxes related to
exercises are paid, (vii) establish any other terms, restrictions or conditions
applicable to any option not inconsistent with the provisions of the 1999 Stock
Option Plan, and (viii) take any other actions deemed necessary or advisable for
the administration of the 1999 Stock Option Plan. The Committee will have the
power to interpret the 1999 Stock Option Plan and may adopt, amend and rescind
rules, not inconsistent with the provisions of the 1999 Stock Option Plan, as it
deems advisable.
The Board of Directors may amend the 1999 Stock Option Plan from time to
time as it deems desirable in its sole discretion without approval of the
stockholders of the Company, except to the extent stockholder approval is
required by Rule 16b-3 of the Exchange Act, applicable Nasdaq National Market or
stock exchange rules, applicable Code provisions, or other applicable laws or
regulations. Amendments made without stockholder approval could increase the
cost to the Company under the 1999 Stock Option Plan although the amount of such
cost is not determinable. The Board of Directors may terminate the 1999 Stock
Option Plan at any time in its sole discretion. Any termination or amendment of
the 1999 Stock Option Plan may not alter or impair any rights or obligations
under any option previously granted in any material adverse way without the
affected participant's consent.
Within the limitations of the 1999 Stock Option Plan, the Committee may
modify, extend or renew outstanding options or accept the cancellation of
outstanding options for the granting of new options in substitution therefore,
provided that, except for certain adjustments, (i) no modification of an option
may, without the consent of the participant, alter or impair any rights or
obligations under any option previously granted in any material adverse way
without the affected participant's consent and (ii) the exercise price of
outstanding options may not be altered, amended or modified.
Under current law, the United States federal income tax consequences to
participants and the Company of options granted under the 1999 Stock Option Plan
would generally be as set forth in the following summary. This summary does not
purport to be a complete analysis of all potential United States federal income
tax or other tax consequences relevant to employees and the Company or to
describe tax consequences based upon particular circumstances. In addition, the
summary does not discuss the income tax laws of any municipality, state or
foreign country in which the participant may reside and to which the participant
may be subject.
A participant receiving a non-qualified stock option under the 1999 Stock
Option Plan does not recognize taxable income on the date of grant of the
option. However, the participant must generally recognize ordinary income when a
non-qualified stock option is exercised equal to the difference between the
option exercise price and the fair market value, on the date of exercise, of the
shares of the Company's Common Stock. If a holder of a non-qualified stock
option pays the exercise price, in full or in part, with previously acquired
shares of the Company's Common Stock, special rules will apply. Special rules
also apply if the shares acquired upon exercise of a non-qualified stock option
are subject to vesting, or are subject to certain restrictions on resale under
federal securities laws applicable to directors, executive officers or 10%
shareholders. Any compensation includable in the gross income of the participant
in respect of a non-qualified stock option will be subject to appropriate
federal employment taxes.
A participant who is granted an incentive stock option will not recognize
taxable income either on the date of grant or on the date of its timely
exercise, although the spread on exercise of an incentive
11
<PAGE>
stock option would be an item of tax preference income potentially subject to
the alternative minimum tax. Upon disposition of the shares of the Company's
Common Stock acquired upon exercise of an incentive stock option, capital gain
or loss would be recognized in an amount equal to the difference between the
sales price and the option exercise price, provided the participant has not
disposed of the shares of the Company's Common Stock within two years of the
date of grant of the option nor within one year from the date of exercise. When
a participant exercises an incentive stock option, the Company will not
generally be entitled to a federal income tax deduction. However, if the
participant disposes of stock acquired through exercise of such an option before
meeting the required holding periods, the participant must generally recognize
ordinary income in the amount of the difference between the option exercise
price and the fair market value, on the date of exercise, of the shares of the
Company's Common Stock, except that if the disposition is a sale and the sale
price is lower than the value of the shares on the exercise date, the lower sale
price generally governs the amount of ordinary income. The Company would
generally be entitled to a federal income tax deduction equal to the amount of
ordinary income recognized by the participant. The balance of the gain, if any,
will be capital gain taxed at the applicable capital gains rate. If the holder
of an incentive stock option pays the exercise price, in full or in part, with
previously acquired shares of the Company's Common Stock, special rules will
apply.
The Company will not be entitled to a federal income tax deduction upon the
grant of an option under the 1999 Stock Option Plan. However, when a participant
exercises a non-qualified stock option, the Company will generally be entitled
to a federal income tax deduction in the amount of the difference between the
option exercise price and the fair market value of the shares of the Company's
Common Stock on the date of exercise. The payment by the participant to the
Company of the exercise price has no tax consequences to the Company.
In fiscal 1998, the Company granted under the 1996 Stock Option Plan options
to purchase an aggregate of 8,000 shares to all current directors who are not
executive officers as a group and options to purchase an aggregate of 330,650
shares to all employees, including all current officers who are not executive
officers, as a group. In addition, in fiscal 1998 the Company did not grant any
options under the 1996 Stock Option Plan to any of the Named Executive Officers
or current executive officers of the Company.
The last sale price of the Company's Common Stock on January 15, 1999 as
reported by the Nasdaq National Market was $49.375 per share
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 STOCK
OPTION PLAN.
3. APPROVAL OF 1999 EMPLOYEE STOCK PURCHASE PLAN
On January 21, 1999 the Board of Directors adopted, subject to the approval
by the stockholders of the Company, the 1999 Employee Stock Purchase Plan. Of
the 900,000 shares of Common Stock authorized for issuance under the Company's
1996 Employee Stock Purchase Plan which was approved by the Company's
stockholders at the 1996 Annual Meeting of Stockholders, 819,330 remain
available for issuance as December 31, 1998. However, the 1996 Employee Stock
Purchase Plan terminates March 31, 1999 and no shares will be issued under the
1996 Employee Stock Purchase Plan after March 31, 1999. The 1999 Employee Stock
Purchase Plan provides for 250,000 shares of Common Stock for purchase by
participating employees.
The following summary describes the 1999 Employee Stock Purchase Plan. This
summary is qualified in its entirety by reference to the specific provisions of
the 1999 Employee Stock Purchase Plan, the full text of which is set forth as
Appendix B.
If approved by stockholders, the 1999 Employee Stock Purchase Plan will
become effective April 1, 1999. The plan will have a duration of five years and
one month subject to earlier termination by the Board of Directors.
12
<PAGE>
The 1999 Employee Stock Purchase Plan permits eligible employees of the
Company and its participating subsidiaries to purchase the Company's Common
Stock through payroll deductions during twenty (20) consecutive participation
periods, beginning with the period commencing April 1, 1999. The participation
periods will be three months in length with the exception of the first
participation period which will be four months in length commencing April 1,
1999 and ending July 31, 1999. In general, eligible employees can elect for each
participation period to purchase full shares through payroll deductions of up to
10 percent of base pay, but in no event may the participant's rights to purchase
shares of Common Stock accrue at a rate that exceeds $25,000 of fair market
value of Common Stock in a calendar year. The purchase price a participant pays
for the shares is equal to 85 percent of the closing market bid price of the
Common Stock on the first business day or the last business day of each
participation period, whichever is lower. Shares for the 1999 Employee Stock
Purchase Plan may be authorized and unissued shares or treasury shares.
Eligibility to participate will generally be extended to all regular
employees of the Company and its participating subsidiaries who are actively and
customarily employed for 20 hours or more per week and who have completed three
months of employment. Officers and members of the Board of Directors who are
eligible employees are also permitted to participate. An employee is ineligible
to participate if immediately after such grant, such employee would own stock
possessing 5 percent or more of the total combined voting power or value of all
classes of stock of the Company or any subsidiary of the Company, such ownership
to be determined by applying the rules of Section 424(d) of the Code and
treating stock which the employee may purchase under outstanding options as
stock owned by the employee.
The 1999 Employee Stock Purchase Plan will be administered by the
Compensation Committee of the Board of Directors or such other committee
established by the Board of Directors (the "Committee"). The Committee may amend
the 1999 Employee Stock Purchase Plan or adopt sub-plans, in its sole
discretion, in order to conform the terms of the 1999 Employee Stock Purchase
Plan with the requirements of local law with respect to participating
subsidiaries that employ participants who reside outside the United States. The
Committee will have the power to interpret the plan and may adopt, amend and
rescind rules, not inconsistent with the provisions of the plan, that it deems
advisable. The 1999 Employee Stock Purchase Plan may be amended by the Board of
Directors from time to time as it deems desirable in its sole discretion without
approval of the stockholders of the Company, except to the extent stockholder
approval is required by Rule 16b-3 of the Exchange Act, applicable NASDAQ
National Market or stock exchange rules, applicable provisions of the Code, or
other applicable laws or regulations. The Board of Directors may terminate the
plan at any time in its sole discretion.
The proceeds of the sale of stock received under the 1999 Employee Stock
Purchase Plan will constitute general funds of the Company and may be used by it
for any purpose.
The number of shares to be issued under the 1999 Employee Stock Purchase
Plan will be adjusted by the Board of Directors in the event that the
outstanding shares of the Company's Common Stock are increased or decreased or
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation without the receipt of
consideration by the Company, by reason of a reorganization, merger or
consolidation, recapitalization, reclassification, stock split, reverse stock
split, split-up, combination or exchange of shares or declaration of any
dividends payable in Common Stock. In the event of (i) any offer or proposal to
holders of the Company's Common Stock relating to the acquisition of their
shares, including, without limitation, through purchase, merger or otherwise or
(ii) any transaction generally relating to the acquisition of substantially all
of the assets or business of the Company, or (iii) the dissolution or
liquidation of the Company, the Board of Directors may make such adjustment as
it deems equitable.
Under current law, the United States federal income tax consequences to
participants and the Company of options granted under the 1999 Employee Stock
Purchase Plan would generally be as set forth in the following summary. This
summary does not purport to be a complete analysis of all potential
13
<PAGE>
United States federal income tax or other tax consequences relevant to employees
and the Company or to describe tax consequences based upon particular
circumstances. In addition, the summary does not discuss the income tax laws of
any municipality, state or foreign country in which the participant may reside
and to which the participant may be subject.
If shares of Common Stock are issued to a participant under the 1999
Employee Stock Purchase Plan, and if no disposition of such shares is made
within two years of the first day of the participation period, or within one
year after the transfer to such participant of such shares, or in the event of
the participant's death (whenever occurring) while owning such shares, then: (a)
no income will be realized by the participant at the time of the transfer of the
shares to such participant and (b) when the participant sells or otherwise
disposes of such shares (or dies holding the shares), there will be included in
his or her gross income, as compensation, an amount equal to the lesser of (i)
the amount by which the fair market value of the shares on the first day of the
participation period exceeds the purchase price for the shares, or (ii) the
amount by which the fair market value at the time of disposition or death
exceeds the purchase price for the shares. Any further gain will be treated for
federal income tax purposes as long-term capital gain, provided that the
employee holds the shares for the applicable long-term capital gain holding
period after the last day of the participation period applicable to such shares.
No deduction will be allowed to the Company for federal income tax purposes
in connection with the grant or exercise of any right to purchase shares under
the 1999 Employee Stock Purchase Plan if there is no disposition of the shares
within either the two-year or the one-year periods referred to above. If there
is a disposition of shares by a participant within either of these periods, such
participant will realize ordinary income in the year of disposition in an amount
equal to the difference between the purchase price and the fair market value of
the shares at the time of purchase, and the Company will generally be entitled
to a deduction in the same amount. The amount of ordinary income realized by the
participant may be subject to withholding for taxes. Any difference between the
amount received by an employee upon such a disposition and the fair market value
of the shares at the time of purchase will be capital gain or loss, as the case
may be.
If the purchase of shares under the 1999 Employee Stock Purchase Plan is not
pursuant to an "employee stock purchase plan" under Section 423 of the Code, the
purchase will be treated as the exercise of a non-qualified stock option. The
participant will therefore recognize ordinary income at the time of purchase in
an amount equal to the excess of the fair market value of the shares acquired
over the purchase price, and the Company will generally be entitled to a
deduction in the same amount. Such income is subject to withholding of income
and employment taxes. Any gain or loss recognized on a subsequent sale of the
shares, as measured by the difference between the sale proceeds and the sum of
(a) the purchase price for such shares and (b) the amount of ordinary income
recognized on the purchase of such shares, will be treated as a capital gain or
loss, as the case may be.
During fiscal 1998, employees purchased an aggregate of 30,881 shares of
Common Stock under the 1996 Employee Stock Purchase Plan. Executive officers and
directors of the Company are not eligible to participate in the 1996 Employee
Stock Purchase Plan but are eligible to participate in the 1999 Employee Stock
Purchase Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE 1999 EMPLOYEE
STOCK PURCHASE PLAN.
4. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of Arthur Andersen LLP,
independent public accountants, as the auditors of the Company for the fiscal
year ending September 30, 1999, subject to the ratification of such appointment
by stockholders at the Annual Meeting. Arthur Andersen LLP has audited the
Company's financial statements since the Company's inception in 1993.
If the foregoing appointment of Arthur Andersen LLP is not ratified by the
stockholders, the Board of Directors will appoint other independent accountants
whose appointment for any period subsequent to
14
<PAGE>
the 1999 Annual Meeting of Stockholders will be subject to approval of
stockholders at that meeting. Representatives of Arthur Andersen LLP are
expected to be present at the Company's Annual Meeting and will have the
opportunity to make statements and/or respond to appropriate questions from
stockholders present at the meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF ARTHUR ANDERSEN
LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
5. OTHER MATTERS
The Board of Directors does not know of any matters that are to be presented
at the Annual Meeting other than those stated in the Notice of Annual Meeting
and referred to in this Proxy Statement. If any other matters should properly
come before the Meeting, it is intended that the proxies in the accompanying
form will be voted as the persons named therein may determine in their
discretion.
STOCKHOLDERS PROPOSALS
Proposals of stockholders intended to be presented at the Company's next
Annual Meeting of Stockholders must be received at the Corporate Secretary's
office, 224 South 108th Avenue, Omaha, Nebraska 68154, no later than September
24, 1999, to be considered for inclusion in the proxy statement and form of
proxy for that meeting.
Pursuant to Rule 14a-4(c) under the Securities Exchange Act of 1934, if the
Company does not receive advance notice of a stockholder proposal to be raised
at its next Annual Meeting in accordance with the requirements of the Company's
By-laws, management may use its discretionary voting authority to vote
management proxies on the stockholder proposal without any discussion of the
matter in the proxy statement. The Company's By-laws provide that written notice
of a stockholder proposal must be delivered to or mailed and received by the
Secretary of the Company at the principal executive offices of the Company not
less than 80 days prior to the meeting; provided, however, that in the event
that the date of the meeting is not publicly announced by the Company by mail,
press release or otherwise more than 90 days prior to the meeting, notice by the
stockholder to be timely must be delivered to the Secretary of the Company not
later than the close of business on the tenth day following the day on which
such announcement of the date of the meeting was communicated to stockholders.
The stockholder's notice must set forth as to each matter the stockholder
proposes to bring before the annual meeting (a) a brief description of the
business desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (b) the name and address, as
they appear on the Company's books, of the stockholder proposing such business,
(c) the class and number of shares of the Company which are beneficially owned
by the stockholder, and (d) any material interest of the stockholder in such
business. The Company's By-laws also provide that the chairman of an annual
meeting shall, if the facts warrant, determine and declare to the meeting that
business was not properly brought before the meeting, and if he should so
determine, any such business not properly brought before the meeting shall not
be transacted.
By Order of the Board of Directors,
[SIGNATURE]
David P. Stokes
SECRETARY
15
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APPENDIX A
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 STOCK OPTION PLAN
A-1
<PAGE>
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 STOCK OPTION PLAN
Section 1. PURPOSE. The purpose of the Transaction Systems Architects,
Inc. 1999 Stock Option Plan (the "Plan") is to provide long term incentives and
rewards to employees of Transaction Systems Architects, Inc. (the "Company") and
any Subsidiary of the Company, by providing an opportunity to selected employees
to purchase Common Stock of the Company. By encouraging stock ownership, the
Company seeks to attract and retain employees and to encourage their best
efforts to work at the success of the Company.
Section 2. DEFINITIONS. For purposes of this Plan, the following terms
used herein shall have the following meanings, unless a different meaning is
clearly required by the context.
2.1. "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
2.2. "CODE" shall mean the Internal Revenue Code of 1986, as amended.
2.3. "COMMITTEE" shall mean the committee of the Board of Directors
referred to in Section 5 hereof.
2.4. "COMMON STOCK" shall mean the Class A Common Stock of the Company.
2.5. "DISABILITY" shall mean permanent and total disability as defined in
Section 22(e)(3) of the Code.
2.6. "EFFECTIVE DATE" shall have the meaning set forth in Section 18.
2.7. "EMPLOYEE" shall mean any person, including an officer or
employee-director of the Company or any Subsidiary of the Company, who, at the
time an Option is granted to such person hereunder, is actively and customarily
employed for 20 hours or more per week by the Company or any Subsidiary of the
Company.
2.8. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
2.9. "FAIR MARKET VALUE" shall mean the closing bid price on the date in
question, as such price is reported by the National Association of Securities
Dealers on the NASDAQ National Market or any successor system for a share of
Common Stock.
2.10. "ISO" shall mean an option granted under the Plan which constitutes
and shall be treated as an "incentive stock option" as defined in Section 422(b)
of the Code.
2.11. "NON-QUALIFIED OPTION" shall mean an option granted under the Plan
which does not constitute and is not treated as an ISO nor as an option
described in Section 423(b) of the Code.
2.12. "OPTION" shall mean any ISO or Non-Qualified Option granted under
this Plan.
2.13. "PARTICIPANT" shall mean any Employee to whom an Option is granted
under the Plan.
2.14. "SUBSIDIARY OF THE COMPANY" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company if each
of the corporations other than the last corporation in the unbroken chain owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
Section 3. ELIGIBILITY. Options may be granted to any Employee. The
Committee shall have the sole authority to select the Employees to whom Options
are to be granted hereunder and to determine whether an Employee is to be
granted a Non-Qualified Option or an ISO or any combination thereof. No Employee
shall have any right to participate in the Plan. Any Employee selected by the
Committee for participation during any one period will not by virtue of such
participation have the right to be selected as a Participant for any other
period.
A-2
<PAGE>
Section 4. COMMON STOCK SUBJECT TO THE PLAN.
4.1. The total number of shares of Common Stock for which Options may be
granted under this Plan shall not exceed in the aggregate one million
(1,000,000) shares of Common Stock, subject to adjustment pursuant to Section 7.
The total number of shares of Common Stock for which Options may be granted to
any "covered employee" within the meaning of Section 162(m) of the Code during
any twelve month period shall not exceed 75,000 in the aggregate, subject to
adjustment pursuant to Section 7.
4.2. The shares of Common Stock that may be subject to Options granted under
this Plan may be either authorized and unissued shares or shares reacquired at
any time and now or hereafter held as treasury stock as the Committee may
determine. In the event that any outstanding Option expires or is terminated for
any reason, the shares allocable to the unexercised portion of such Option may
again be subject to an Option granted under this Plan. If any shares of Common
Stock acquired pursuant to the exercise of an Option shall have been repurchased
by the Company, then such shares shall again become available for issuance
pursuant to the Plan.
4.3. SPECIAL ISO LIMITATIONS.
(a) The aggregate Fair Market Value (determined as of the date an ISO is
granted) of the shares of Common Stock with respect to which ISO's are
exercisable for the first time by a Participant during any calendar year (under
all incentive stock option plans of the Company or any Subsidiary of the
Company) shall not exceed $100,000.
(b) No ISO shall be granted to an Employee who, at the time the ISO is
granted, owns (actually or constructively under the provisions of Section 424(d)
of the Code) stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or any Subsidiary of the Company, unless
the option price is at least 110% of the Fair Market Value (determined as of the
time the ISO is granted) of the shares of Common Stock subject to the ISO and
the ISO by its terms is not exercisable more than five years from the date it is
granted.
4.4. Notwithstanding any other provision of the Plan, the provisions of
Sections 4.3(a) and (b) shall not apply, nor shall be construed to apply, to any
Non-Qualified Option granted under the Plan.
Section 5. ADMINISTRATION OF THE PLAN.
5.1 The Plan shall be administered by the Compensation Committee of the
Board of Directors, or such other committee of the Board of Directors as may be
directed by the Board of Directors (the "Committee") consisting of no less than
two persons. All members of the committee shall be "Non-Employee Directors"
within the meaning of Rule 16b-3 under the Exchange Act. The Committee shall be
appointed from time to time by, and shall serve at the pleasure of, the Board of
Directors.
5.2. The Committee shall have the sole authority and discretion to grant
Options under this Plan and, subject to the limitations set forth in Sections
4.3 and 6 hereof, to determine the terms and conditions of all Options,
including, without limitation, (i) selecting the Employees who are to be granted
Options hereunder; (ii) designating whether any Option to be granted hereunder
is to be an ISO or a Non-Qualified Option; (iii) establishing the number of
shares of Common Stock that may be purchased under each Option upon exercise and
the Option exercise price per share of Common Stock; (iv) determining the time
and the conditions subject to which Options may be exercised in whole or in
part; (v) determining the form of the consideration that may be used to purchase
shares of Common Stock upon exercise of any Option (including the circumstances
under which the Company's issued and outstanding shares of Common Stock or the
shares of Common Stock available under the Option may be used by a Participant
to exercise an Option) and establishing procedures in connection therewith; (vi)
imposing restrictions and/or conditions with respect to shares of Common Stock
acquired upon exercise of an Option; (vii) determining the circumstances under
which shares of Common Stock
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acquired upon exercise of any Option may be subject to repurchase by the
Company, including without limitation, the circumstances and conditions subject
to which a proposed sale of shares of Common Stock acquired upon exercise of an
Option may be subject to the Company's right of first refusal (as well as the
terms and conditions of any such right of first refusal); (viii) establishing
procedures whereby a number of shares of Common Stock may be withheld from the
total number of shares of Common Stock to be issued upon exercise of an Option
to meet the obligation of withholding for federal and state income and other
taxes, if any, incurred by the Participant upon exercise of an Option; (ix)
accelerating or, with the consent of the Participant, deferring the time when
outstanding Options may be exercised, provided, however, that any ISO's shall be
"accelerated" within the meaning of Section 424(h) of the Code; (x) establishing
any other terms, restrictions and/or conditions applicable to any Option not
inconsistent with the provisions of the Plan; (xi) authorizing any person to
execute on behalf of the Company any instrument required to effectuate the grant
of an Option previously granted by the Committee; and (xii) taking any other
actions deemed necessary or advisable for the administration of the Plan.
5.3. The Committee shall be authorized to interpret the Plan and may, from
time to time, adopt, amend and rescind such rules, regulations and procedures,
not inconsistent with the provisions of the Plan, as it may deem advisable to
carry out the purpose of the Plan.
5.4. The interpretation and construction by the Committee of any provision
of the Plan, any Option granted hereunder or any agreement evidencing any such
Option shall be final, conclusive and binding upon all parties.
5.5 Only members of the Committee shall vote on any matter affecting the
administration of the Plan or the granting of Options under the Plan.
5.6. All expenses and liabilities incurred by the Committee in the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants or other persons in connection with
the administration of the Plan. The Company, and its officers and directors,
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. No member of the Board of Directors or the Committee shall be liable
for any action, determination or interpretation taken or made in good faith with
respect to the Plan or any Option granted hereunder.
Section 6. TERMS AND CONDITIONS OF OPTIONS.
6.1. ISO'S. Except as otherwise provided in this Section 6.1, the terms
and conditions of each ISO granted under the Plan shall be specified by the
Committee, in its sole discretion, and shall be set forth in a written ISO
agreement between the Company and the Participant in such form as the Committee
shall approve. No person shall have any rights under any ISO granted under the
Plan unless and until the Company and the person to whom such ISO shall have
been granted shall have executed and delivered an agreement expressly granting
the ISO to such person and containing provisions setting forth the terms for the
ISO. The terms and conditions of each ISO shall be such that each ISO issued
hereunder shall constitute and shall be treated as an "incentive stock option"
as defined in Section 422 of the Code. The terms and conditions of any ISO
granted hereunder need not be identical to those of any other ISO granted
hereunder. The terms and conditions of each ISO agreement shall include the
following:
(a) The ISO exercise price shall be fixed by the Committee but shall in no
event be less than 100% (or 110% in the case of an Employee referred to in
Section 4.3(b) hereof) of the Fair Market Value of the shares of Common Stock
subject to the ISO on the date the ISO is granted.
(b) ISO's shall not be transferable otherwise than by will or the laws of
descent and distribution, and, during a Participant's lifetime, an ISO shall be
exercisable only by the Participant.
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(c) The Committee shall fix the term of all ISO's granted pursuant to the
Plan (including the date on which such ISO shall expire and terminate) provided,
however, that such term shall in no event exceed ten years from the date on
which such ISO is granted (or, in the case of an ISO granted to an Employee
referred to in Section 4.3(b) hereof, such term shall in no event exceed five
years from the date on which such ISO is granted). Each ISO shall be exercisable
in such amount or amounts, under such conditions and at such times or intervals
or in such installments as shall be determined by the Committee in its sole
discretion.
(d) In the event that the Company or any Subsidiary of the Company is
required to withhold any Federal, state, local or foreign taxes in respect of
any compensation income realized by the Participant as a result of any
"disqualifying disposition" of any shares of Common Stock acquired upon exercise
of an ISO granted hereunder, the Company or such Subsidiary of the Company shall
deduct from any payments of any kind otherwise due to such Participant the
aggregate amount of such Federal, state, local or foreign taxes required to be
so withheld or, if such payments are insufficient to satisfy such Federal,
state, local or foreign taxes, such Participant will be required to pay to the
Company or such Subsidiary of the Company, or make other arrangements
satisfactory to the Company or such Subsidiary of the Company regarding payment
to the Company or such Subsidiary of the Company of, the aggregate amount of any
such taxes. All matters with respect to the total amount of taxes to be withheld
in respect of any such compensation income shall be determined by the Committee
in its sole discretion. Subject to approval by the Committee, a Participant may
elect to have such tax withholding obligation satisfied, in whole or in part, by
(i) authorizing the Company to withhold from shares of Common Stock to be
acquired upon exercise of an Option, a number of shares of Common Stock with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due, or (ii) transferring to the Company
shares of Common Stock owned by the Participant with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.
6.2. NON-QUALIFIED OPTIONS. The terms and conditions of each Non-Qualified
Option granted under the Plan shall be specified by the Committee, in its sole
discretion, and shall be set forth in a written option agreement between the
Company and the Participant in such form as the Committee shall approve. No
person shall have any rights under any Non-Qualified Option granted under the
Plan unless and until the Company and the person to whom such Non-Qualified
Option shall have been granted shall have executed and delivered an agreement
expressly granting the Non-Qualified Option to such person and containing
provisions setting forth the terms for the Non-Qualified Option. The terms and
conditions of each Non-Qualified Option will be such that each Non-Qualified
Option issued hereunder shall not constitute nor be treated as an "incentive
stock option" as defined in Section 422 of the Code or an option described in
Section 423(b) of the Code and will be a "non-qualified stock option" for
federal income tax purposes. The terms and conditions of any Non-Qualified
Option granted hereunder need not be identical to those of any other
Non-Qualified Option granted hereunder. The terms and conditions of each
Non-Qualified Option agreement shall include the following:
(a) The Option exercise price shall be fixed by the Committee and may be
equal to, more than or less than 100% of the Fair Market Value of the shares of
Common Stock subject to the Non-Qualified Option on the date such Non-Qualified
Option is granted.
(b) The Committee shall fix the term of all Non-Qualified Options granted
pursuant to the Plan (including the date on which such Non-Qualified Option
shall expire and terminate). Each Non-Qualified Option shall be exercisable in
such amount or amounts, under such conditions, and at such times or intervals or
in such installments as shall be determined by the Committee in its sole
discretion.
(c) Non-Qualified Options shall not be transferable otherwise than by will
or the laws of descent and distribution, and during a Participant's lifetime a
Non-Qualified Option shall be exercisable only by the Participant.
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(d) In the event that the Company or any Subsidiary of the Company is
required to withhold any Federal, state, local or foreign taxes in respect of
any compensation income realized by the Participant in respect of a
Non-Qualified Option granted hereunder or in respect of any shares of Common
Stock acquired upon exercise of a Non-Qualified Option, the Company or such
Subsidiary of the Company shall deduct from any payments of any kind otherwise
due to such Participant the aggregate amount of such Federal, state, local or
foreign taxes required to be so withheld or, if such payments are insufficient
to satisfy such Federal, state, local or foreign taxes, or if no such payments
are due or to become due to such Participant, then, such Participant will be
required to pay to the Company or such Subsidiary of the Company, or make other
arrangements satisfactory to the Company or such Subsidiary of the Company
regarding payment to the Company or such Subsidiary of the Company of, the
aggregate amount of any such taxes. All matters with respect to the total amount
of taxes to be withheld in respect of any such compensation income shall be
determined by the Committee in its sole discretion. Subject to approval by the
Committee, a Participant may elect to have such tax withholding obligation
satisfied, in whole or in part, by (i) authorizing the Company to withhold from
shares of Common Stock to be acquired upon exercise of an Option, a number of
shares of Common Stock with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the withholding amount due, or (ii)
transferring to the Company shares of Common Stock owned by the Participant with
an aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due.
6.3 VESTING; PERIOD FOR EXERCISE OF OPTION. In the sole discretion of the
Committee, the terms and conditions of any Option may include any of the
following provisions:
(a) An Option may not be exercised during the first year from the date it is
granted. After the first anniversary of the date on which an Option is granted,
it may be exercised as to not more than 33-1/3% of the shares of Common Stock
available for purchase under the Option and, after the second and third
anniversaries of the Option grant date, it may be exercised as to not more than
an additional 33-1/3% of such shares plus any shares as to which the Option
might theretofore have been exercisable but shall not have been exercised.
(b) Subject to subsection (d) below, if a Participant ceases to be an
Employee of the Company or a Subsidiary of the Company for any reason other than
as a result of his death or Disability, the unexercised portion of any Option
held by such Participant at that time may only be exercised within one month
after the date on which the Participant ceased to be so employed, but no later
than the date the Option expires, and only to the extent that the Participant
could have otherwise exercised such Option as of the date on which he ceased to
be so employed. To the extent that the Participant is not entitled to exercise
the Option on such date, or if the Participant does not exercise it within the
time specified, such Option shall terminate. The Committee shall have the
authority to determine the date a Participant ceases to be an Employee.
(c) Subject to subsection (d) below, if a Participant ceases to be an
Employee of the Company or a Subsidiary of the Company by reason of his
Disability, the unexercised portion of any Option held by such Participant at
that time may only be exercised within one year after the date on which the
Participant ceased to be so employed, but no later than the date the Option
expires, and to the extent that the Participant could have otherwise exercised
such Option if it had been completely exercisable. To the extent that the
Participant is not entitled to exercise the Option on such date, or if the
Participant does not exercise it within the time specified, such Option shall
terminate. The Committee shall have the authority to determine the date a
Participant ceases to be an Employee by reason of his Disability.
(d) If a Participant dies while employed by the Company or a Subsidiary of
the Company (or dies within a period of one month after ceasing to be an
Employee for any reason other than Disability or within a period of one year
after ceasing to be an Employee by reason of Disability), the unexercised
portion of any Option held by such Participant at the time of his death may only
be exercised within one year after the date of such Participant's death, but no
later than the date the Option expires, and to the
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extent that the Participant could have otherwise exercised such Option if it had
been completely exercisable. Such Option may be exercised by the executor or
administrator of the Participant's estate or by any person or persons who shall
have acquired the Option directly from the Participant by bequest or
inheritance. To the extent that the Option is not entitled to be exercised on
such date or if the Option is not exercised within the time specified, such
Option shall terminate.
6.4. PROCEDURES FOR EXERCISE OF OPTION; RIGHTS OF STOCKHOLDER. Any Option
granted hereunder shall be exercisable at such times, under such conditions, as
shall be determined by the Committee and in accordance with the terms of the
Plan. An Option may not be exercised for a fraction of a share of Common Stock.
An Option shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the Option
agreement by the Participant entitled to exercise the Option and full payment
for the shares of Common Stock with respect to which the Option is exercised has
been received by the Company. Full payment may, as authorized by the Committee,
consist of any form of consideration and method of payment allowable hereunder.
Payment for the shares of Common Stock upon exercise of an Option shall be made
in cash, by certified check, or if authorized by the Committee, by delivery of
other shares of Common Stock having a Fair Market Value on the date of delivery
equal to the aggregate exercise price of the shares of Common Stock as to which
the Option is being exercised, or if authorized by the Committee, by authorizing
the Company to withhold from the total number of shares of Common Stock to be
acquired upon exercise of an Option that number of shares of Common Stock having
an aggregate Fair Market Value (as of the date the withholding is effected) that
would equal the aggregate exercise price of the shares of Common Stock as to
which the Option is being exercised, or by any combination of such methods of
payment or by any other method of payment that may be permitted under applicable
law and the Plan and authorized by the Committee under Section 5.2 of the Plan.
Upon the receipt of notice of exercise and full payment for the shares of Common
Stock, the shares of Common Stock shall be deemed to have been issued and the
Participant shall be entitled to receive such shares of Common Stock and shall
be a stockholder with respect to such shares, and the shares of Common Stock
shall be considered fully paid and nonassessable. No adjustment will be made for
a dividend or other right for which the record date is prior to the date on
which the stock certificate is issued, except as provided in Section 7 of the
Plan. Each exercise of an Option shall reduce, by an equal number, the total
number of shares of Common Stock that may thereafter be purchased under such
Option.
Section 7. ADJUSTMENTS.
7.1 In the event that the outstanding shares of the Company's Common Stock
shall be increased or decreased or changed into or exchanged for a different
number or kind of shares of stock or other securities of the Company or of
another corporation, effected without the receipt of consideration by the
Company, through reorganization, merger or consolidation, recapitalization,
reclassification, stock split, reverse stock split, split-up, combination or
exchange of shares or declaration of any dividends payable in Common Stock, the
Board of Directors shall appropriately adjust, subject to any required action by
the stockholders of the Company, (i) the number of shares of Common Stock (and
the Option exercise price per share) subject to the unexercised portion of any
outstanding Option (to the nearest possible full share), provided, however, that
the limitations of Section 424 of the Code shall apply with respect to
adjustments made to ISO's and (ii) the number of shares of Common Stock for
which Options may be granted under the Plan, as set forth in Section 4.1 hereof,
and such adjustments shall be final, conclusive and binding for all purposes of
the Plan. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Common Stock
subject to an Option.
7.2 Notwithstanding the foregoing, in the event of (i) any offer or proposal
to holders of the Company's Common Stock relating to the acquisition of their
shares, including, without limitation, through purchase, merger or otherwise, or
(ii) any transaction generally relating to the acquisition of substantially all
of the assets or business of the Company, or (iii) the dissolution or
liquidation of the
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Company, the Committee may make such adjustment as it deems equitable in respect
of outstanding Options (and in respect of the shares of Common Stock for which
Options may be granted under the Plan), including, without limitation, the
revision, cancellation, or termination of any outstanding Options, or the
change, conversion or exchange of the shares of the Company's Common Stock under
outstanding Options (and of the shares of the Company's Common Stock for which
Options may be granted under the Plan) into or for securities or other property
of another corporation. Any such adjustments by the Committee shall be final,
conclusive and binding for all purposes of the Plan.
Section 8. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP. Neither this
Plan nor any Option granted hereunder to a Participant shall be construed as
conferring upon such Participant any right to continue in the employ of the
Company or any Subsidiary of the Company as the case may be, or limit in any
respect the right of the Company or any Subsidiary of the Company to terminate
such Participant's employment with the Company or any Subsidiary of the Company,
as the case may be, at any time.
Section 9. AMENDMENT OF THE PLAN. The Board of Directors may amend the
Plan from time to time as it deems desirable in its sole discretion without
approval of the stockholders of the Company, except to the extent stockholder
approval is required by Rule 16b-3 of the Exchange Act, applicable NASDAQ
National Market or stock exchange rules, applicable Code provisions, or other
applicable laws or regulations.
Section 10. TERMINATION OF THE PLAN. The Board of Directors may terminate
the Plan at any time in its sole discretion. No Option may be granted hereunder
after termination of the Plan. The termination or amendment of the Plan shall
not alter or impair any rights or obligations under any Option previously
granted under the Plan in any material adverse way without the affected
Participant's consent.
Section 11. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Within the
limitations of the Plan and subject to Section 7, the Committee may modify,
extend or renew outstanding Options or accept the cancellation of outstanding
Options for the granting of new Options in substitution therefor.
Notwithstanding the preceding sentence, except for any adjustment described in
Section 7, (i) no modification of an Option shall, without the consent of the
Participant, alter or impair any rights or obligations under any Option
previously granted under the Plan in any material adverse way without the
affected Participant's consent, and (ii) the exercise price of outstanding
Options may not be altered, amended or modified.
Section 12. GOVERNING LAW. The Plan and any and all Option agreements
executed in connection with the Plan shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflict of
laws principles.
Section 13. NO STRICT CONSTRUCTION. No rule of strict construction shall
be applied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Option agreement, any Option
granted under the Plan, or any rule, regulation or procedure established by the
Committee.
Section 14. SUCCESSORS. This Plan is binding on and will inure to the
benefit of any successor to the Company, whether by way of merger,
consolidation, purchase, or otherwise.
Section 15. SEVERABILITY. If any provision of the Plan or an Option
agreement shall be held illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining provisions of the Plan or such
agreement, and the Plan and such agreement shall each be construed and enforced
as if the invalid provisions had never been set forth therein.
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Section 16. PLAN PROVISIONS CONTROL. The terms of the Plan govern all
Options granted under the Plan, and in no event will the Committee have the
power to grant any Option under the Plan which is contrary to any of the
provisions of the Plan. In the event any provision of any Option granted under
the Plan shall conflict with any term in the Plan as constituted on the grant
date of such Option, the term in the Plan as constituted on the grant date of
such Option shall control.
Section 17. HEADINGS. The headings used in the Plan are for convenience
only, do not constitute a part of the Plan, and shall not be deemed to limit,
characterize, or affect in any way any provisions of the Plan, and all
provisions of the Plan shall be construed as if no captions had been used in the
Plan.
Section 18. EFFECTIVE DATE OF THE PLAN. The Plan shall be submitted to the
stockholders of the Company for approval and ratification at the next regular or
special meeting thereof to be held after January 1, 1999. Unless at such meeting
the Plan is approved and ratified by the stockholders of the Company, in the
manner provided by the Company's By-Laws, then and in such event, the Plan and
any then outstanding Options that may have been conditionally granted prior to
such stockholder meeting shall become null and void and of no further force and
effect. Subject to the immediately preceding sentence, the Plan shall be
effective as of February 23, 1999. The Plan shall continue in effect for a term
of 10 years unless sooner terminated under Section 10.
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APPENDIX B
TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
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TRANSACTION SYSTEMS ARCHITECTS, INC.
1999 EMPLOYEE STOCK PURCHASE PLAN
Section 1. PURPOSE. The purpose of the Transaction Systems Architects,
Inc. 1999 Employee Stock Purchase Plan (the "Plan") is to provide an opportunity
to current employees of Transaction Systems Architects, Inc. (the "Company") or
any Participating Subsidiary of the Company to purchase its Common Stock. By
encouraging such stock ownership, the Company seeks to attract, retain and
motivate such employees to devote their best efforts to the financial success of
the Company. It is intended that the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). In addition, the Plan authorizes the grant of Options and issuance of
Common Stock which do not qualify under Section 423 of the Code pursuant to sub-
plans adopted by the Committee designed to achieve desired tax or other
objectives in particular locations outside the United States.
Section 2. DEFINITIONS. For purposes of the Plan, the following terms used
herein shall have the following meanings, unless a different meaning is clearly
required by the context.
2.01. "BASE PAY" shall mean the monthly pay rate of a salaried Employee or
the hourly pay rate of an hourly Employee. Base Pay shall not include payments
for overtime, allowances, bonuses and other special payments, commissions and
other marketing incentive payments.
2.02. "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Company.
2.03. "COMMITTEE" shall mean the committee of the Board of Directors
referred to in Section 5 hereof.
2.04. "COMMON STOCK" shall mean the Class A Common Stock of the Company.
2.05. "EMPLOYEE" shall mean any person, including any officer or
employee-director of the Company or any Participating Subsidiary of the Company,
who is actively and customarily employed for 20 hours or more per week by the
Company or a Participating Subsidiary of the Company.
2.06. "FAIR MARKET VALUE" shall mean the closing bid price on the date in
question, as such price is reported by the National Association of Securities
Dealers on the NASDAQ National Market or any successor system for a share of
Common Stock.
2.07. "OFFERING" shall have the meaning described in Section 4.01.
2.08. "OPTION" shall mean any option to purchase Common Stock granted to
an Employee pursuant to this Plan.
2.09. "PARTICIPANT" shall mean any Employee that is eligible to
participate in the Plan in accordance with Section 3 and who elects to
participate in the Plan.
2.10 "PARTICIPATING SUBSIDIARY OF THE COMPANY" means any Subsidiary of the
Company that has been designated by the Board of Directors as eligible to
participate in the Plan with respect to its Employees.
2.11. "PARTICIPATION PERIOD" shall mean the period beginning on April 1,
1999 and ending on July 31, 1999 and each three-month period thereafter during
the term of the Plan. The Plan shall be in effect from April 1, 1999, to April
30, 2004. There shall be twenty Participation Periods during the term of the
Plan.
2.12. "SUBSIDIARY OF THE COMPANY" means any foreign or U.S. domestic
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if each of the corporations other than the last
corporation in the unbroken chain owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.
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Section 3. ELIGIBILITY AND PARTICIPATION. The following provisions shall
govern the eligibility of Employees to participate in the Plan.
3.01. ELIGIBILITY. Any Employee who shall have completed three months of
employment with the Company or any Participating Subsidiary of the Company shall
be eligible to participate in the Offering as of the first day of the next
Participation Period. The Committee may also determine that a designated group
of highly compensated Employees are ineligible to participate in the Plan so
long as the excluded category fits within the definition of "highly compensated
employee" in Code Section 414(q). The Committee may impose restrictions on
eligibility and participation of Employees who are officers or directors to
facilitate compliance with federal or state securities laws or foreign laws.
3.02. RESTRICTIONS ON PARTICIPATION. Notwithstanding any provisions of the
Plan to the contrary, no Employee shall be granted an Option under the Plan:
(a) if, immediately after such grant, such Employee would own stock
possessing five percent or more of the total combined voting power or value of
all classes of stock of the Company or any Subsidiary of the Company, such
ownership to be determined by applying the rules of Section 424(d) of the Code
and treating stock which the Employee may purchase under outstanding options as
stock owned by the Employee; or
(b) which would permit his or her rights to purchase stock under the Plan
(and under any other plans of the Company or any Subsidiary of the Company
qualifying under Section 423 of the Code) to accrue at a rate which exceeds the
lesser of (i) $25,000 or (ii) 10% of the Employee's Base Pay of fair market
value of the stock (determined on the basis of the fair market value of the
stock at the time such Option is granted) for each calendar year in which such
Option is outstanding.
3.03. COMMENCEMENT OF PARTICIPATION. A Participant may elect to
participate by executing the enrollment form prescribed for such purpose by the
Committee which enrollment form may include an application for an account with
the Company's designated broker. The enrollment form shall be filed with the
Committee at any time prior to the first day of the next Participation Period.
The Participant shall designate on the enrollment form the percentage of his or
her Base Pay which he or she elects to have withheld for the purchase of Common
Stock, which may be any whole percentage from 1% to 10%. Once enrolled, a
Participant will continue to participate in the Plan for each succeeding
Participation Period until he or she terminates participation or ceases to
qualify as an Employee.
Section 4. COMMON STOCK SUBJECT TO THE PLAN.
4.01. NUMBER OF SHARES. The total number of shares of Common Stock for
which Options may be granted under this Plan shall not exceed in the aggregate
250,000 shares of Common Stock. The Plan will be implemented by an Offering of
shares of Common Stock (the "Offering"). The Offering shall begin on April 1,
1999 and shall terminate on April 30, 2004.
4.02. REISSUANCE. The shares of Common Stock that may be subject to
Options granted under this Plan may be either authorized and unissued shares of
Common Stock or shares of Common Stock reacquired at any time and now or
hereafter held as treasury stock of the Company as the Committee may determine.
In the event that any outstanding Option expires or is terminated for any
reason, the shares allocable to the unexercised portion of such Option may again
be subject to an Option granted under this Plan. If any shares of Common Stock
acquired pursuant to the exercise of an Option shall have been repurchased by
the Company, then such shares shall again become available for issuance pursuant
to the Plan.
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Section 5. ADMINISTRATION OF THE PLAN.
5.01. COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board of Directors, or such other committee established by the
Board of Directors (the "Committee") consisting of no less than two persons. The
Committee shall be appointed from time to time by, and shall serve at the
pleasure of, the Board of Directors.
5.02. INTERPRETATION. The Committee shall be authorized (i) to interpret
the Plan and decide any matters arising thereunder, and (ii) to adopt such
rules, regulations and procedures, not inconsistent with the provisions of the
Plan, as it may deem advisable to carry out the purpose of this Plan.
5.03. FINALITY. The interpretation and construction by the Committee of
any provision of the Plan, any Option granted hereunder or any agreement
evidencing any such Option shall be final, conclusive and binding upon all
parties.
5.04. VOTING BY COMMITTEE MEMBERS. Only members of the Committee shall
vote on any matter affecting the administration of the Plan or the granting of
Options under the Plan.
5.05. EXPENSES. All expenses and liabilities incurred by the Committee in
the administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants or other persons in connection with
the administration of the Plan. The Company, and its officers and directors,
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. No member of the Board of Directors or the Committee shall be liable
for any action, determination or interpretation taken or made in good faith with
respect to the Plan or any Option granted hereunder.
5.06 NON-U.S. PARTICIPATION. The Committee may adopt rules or procedures
relating to the operation and administration of the Plan to accommodate the
specific requirements of local laws and procedures. Without limiting the
generality of the foregoing, the Committee is specifically authorized to adopt
rules and procedures regarding handling of payroll deductions, payment of
interest, conversion of local currency, payroll tax and withholding procedures
which vary with local requirements. With respect to any Participating Subsidiary
which employs Participants who reside outside of the United States, and
notwithstanding anything herein to the contrary, the Committee may in its sole
discretion amend or vary the terms of the Plan in order to conform such terms
with the requirements of local law or to meet the objectives and purpose of the
Plan, and the Committee may, where appropriate, establish one or more sub-plans
to reflect such amended or varied provisions which sub-plans may be designed to
be outside the scope of Code Section 423. The provisions of such sub-plans may
take precedence over other provisions of the Plan, with the exception of Section
4.01, but unless otherwise superseded by the terms of such sub-plan, the
provisions of the Plan shall govern the operation of such sub-plan.
Section 6. PAYROLL DEDUCTIONS.
6.01. AMOUNT OF DEDUCTION. At the time a Participant files his or her
enrollment form authorizing payroll deductions pursuant to Section 3.03, he or
she shall elect to have deductions made from his or her Base Pay on each payday
during the time he or she is a Participant in the Offering.
6.02. PARTICIPANT'S ACCOUNT; NO INTEREST. All payroll deductions made for
a Participant shall be credited to his or her account under the Plan. A
Participant may not make any separate cash payment into such account. No
interest shall accrue on amounts credited to a Participant's account under the
Plan, regardless of whether or not the funds in such account are ultimately used
to acquire shares of Common Stock, unless required under local law.
6.03. CHANGES IN PAYROLL DEDUCTIONS. A Participant may change the rate of
payroll deductions, effective for the next Participation Period, by filing a new
enrollment form with the Committee at any time prior to the first day of the
Participation Period for which such change is to be effective. A Participant may
also discontinue his or her participation in the Plan by notifying the Committee
in accordance with the procedures established by the Committee for such purpose.
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6.04. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions unless
required under local law.
Section 7. GRANT OF OPTION.
7.01. TERMS AND CONDITIONS. A description of the terms and conditions of
the Plan shall be made available to Participants in such form and manner as the
Committee shall approve.
7.02. NUMBER OF OPTION SHARES. On the first business day of each
Participation Period during the term of the Plan, each Participant shall be
deemed to have been granted an Option, subject to the limitations of Section
3.02, to purchase a maximum number of shares of Common Stock during the
Participation Period equal to the number obtained by multiplying (i) the
percentage of the Employee's Base Pay for that Participation Period which he or
she has elected to have withheld pursuant to Section 6.01 by (ii) the Employee's
Base Pay for that Participation Period and dividing the resulting product by
(iii) 85% of the Fair Market Value of one share of Common Stock of the Company
on the first business day or on the last business day of that Participation
Period, whichever is lower, provided, however, that in no event shall the total
number of shares of Common Stock for which Options are granted exceed the number
of shares set forth in Section 4.01. If the total number of shares of Common
Stock for which Options would have been granted to Participants pursuant to the
preceding sentence would have exceeded the number of shares set forth in Section
4.01 (absent the proviso in the preceding sentence), the Committee shall make a
pro rata allocation of the shares of Common Stock available for grant to
Participants' Options in such manner as it shall determine, in its sole
discretion, to be reasonably practicable, uniform and equitable.
7.03. OPTION PRICE. The Option price per share of the Common Stock subject
to an Option shall be 85% of the Fair Market Value of one share of Common Stock
on the first business day or on the last business day of the applicable
Participation Period, whichever is lower.
7.04. INTEREST IN OPTION STOCK. A Participant shall have no interest in
shares of Common Stock covered by his or her Option until such Option has been
exercised.
7.05. TRANSFERABILITY. Neither payroll deductions credited to a
Participant's account nor Options granted to a Participant shall be transferable
other than by will or the laws of descent and distribution and, during a
Participant's lifetime, an Option shall be exercisable only by the Participant.
7.06 TAX WITHHOLDING. In the event that the Company or any Subsidiary of
the Company is required to withhold any Federal, state, local or foreign taxes
in respect of any compensation income realized by the Participant as a result of
any "disqualifying disposition" of any shares of Common Stock acquired upon
exercise of an Option granted hereunder, the Company or such Subsidiary of the
Company shall deduct from any payments of any kind otherwise due to such
Participant the aggregate amount of such Federal, state, local or foreign taxes
required to be so withheld or, if such payments are insufficient to satisfy such
Federal, state, local or foreign taxes, such Participant will be required to pay
to the Company or such Subsidiary of the Company, or make other arrangements
satisfactory to the Company or such Subsidiary of the Company regarding payment
to the Company or such Subsidiary of the Company of, the aggregate amount of any
such taxes. All matters with respect to the total amount of taxes to be withheld
in respect of any such compensation income shall be determined by the Committee
in its sole discretion. Subject to approval by the Committee, a Participant may
elect to have such tax withholding obligation satisfied, in whole or in part, by
(i) authorizing the Company to withhold from shares of Common Stock to be
acquired upon exercise of an Option, a number of shares of Common Stock with an
aggregate Fair Market Value (as of the date the withholding is effected) that
would satisfy the withholding amount due, or (ii) transferring to the Company
shares of Common Stock owned by the Participant with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due.
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Section 8. EXERCISE OF OPTIONS.
8.01. AUTOMATIC EXERCISE. Unless a Participant gives written notice to the
Company of withdrawal pursuant to Section 9.01, his or her Option to acquire
Common Stock with payroll deductions credited to his or her account for any
Participation Period will be deemed to have been exercised automatically on the
last business day of the applicable Participation Period for the purchase of the
number of full shares of Common Stock which the accumulated payroll deductions
credited to his or her account at that time will purchase at the applicable
Option price (but not in excess of the number of shares of Common Stock for
which Options have been granted to the Employee pursuant to Section 7.02), and
any excess credited to his or her account at that time will be carried forward
to the next Participation Period.
8.02. FRACTIONAL SHARES. Fractional shares will not be issued under the
Plan and any accumulated payroll deductions which would have been used to
purchase fractional shares will be carried over to the next following
Participation Period.
8.03. DELIVERY OF STOCK. As soon as reasonably practicable after each
Participation Period, the Company will deliver to the Participant's account with
the Company's designated broker, in such Participant's name, the shares of
Common Stock purchased upon exercise of such Participant's Option. It is a
condition of participation in the Plan that each Participant maintain an account
with the broker designated by the Company. The Company reserves the right to
change its designated broker from time to time in its sole discretion.
Section 9. WITHDRAWAL.
9.01. IN GENERAL. A Participant may withdraw payroll deductions credited
to his or her account for a Participation Period under the Plan at any time
prior to the last business day of such Participation Period by giving written
notice to the Committee. As soon as reasonably practicable after receipt by the
Committee of his or her notice of withdrawal, the payroll deductions credited to
the Participant's account for such Participation Period will be paid to him or
her without interest (except to the extent required by local law), and no
further payroll deductions will be made from his or her Base Pay for such
Participation Period.
9.02. CESSATION OF EMPLOYEE STATUS. In the event a Participant shall cease
to be an Employee during a Participation Period for any reason, other than as a
result of his or her death, the payroll deductions credited to his or her
account for such Participation Period will be returned to him or her without
interest (except to the extent required by local law) as soon as reasonably
practicable thereafter.
9.03. TERMINATION DUE TO DEATH. In the event a Participant shall cease to
be an Employee during a Participation Period by reason of his or her death, his
or her legal representative shall have the right to elect, by written notice to
the Committee prior to the last business day of the Participation Period:
(a) to withdraw all of the payroll deductions credited to the Participant's
account under the Plan for such Participation Period without interest (except to
the extent required by local law), or
(b) to exercise the Participant's Option for such Participation Period with
any excess in the Participant's account after exercise of the Option to be
returned to the Participant's legal representative.
In the event that no such written notice of election is duly and timely
received by the Committee, the Participant's legal representative shall
automatically be deemed to have elected, pursuant to clause (b) above, to
exercise the Participant's Option.
Section 10. ADJUSTMENTS.
10.01. CHANGES IN CAPITALIZATION. In the event that the outstanding shares
of the Company's Common Stock shall be increased or decreased or changed into or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation, effected without the
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receipt of consideration by the Company, through reorganization, merger or
consolidation, recapitalization, reclassification, stock split, reverse stock
split, split-up, combination or exchange of shares or declaration of any
dividends payable in Common Stock, the Board of Directors shall appropriately
adjust, subject to any required action by the stockholders of the Company, (i)
the number of shares of Common Stock (and the Option price per share) subject to
the unexercised portion of any outstanding Option (to the nearest possible full
share), provided, however, that the limitations of Section 424 of the Code shall
apply with respect to such adjustments and (ii) the number of shares of Common
Stock for which Options may be granted under the Plan, as set forth in Section
4.01 hereof, and such adjustments shall be final, conclusive and binding for all
purposes of the Plan. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of shares of
Common Stock subject to an Option.
10.02. ACQUISITION, MERGER, SALE OF ASSETS, DISSOLUTION OR
LIQUIDATION. Notwithstanding the foregoing, in the event of (i) any offer or
proposal to holders of the Company's Common Stock relating to the acquisition of
their shares, including, without limitation, through purchase, merger or
otherwise, or (ii) any transaction generally relating to the acquisition of
substantially all of the assets or business of the Company, or (iii) the
dissolution or liquidation of the Company, the Board of Directors may make such
adjustment as it deems equitable in respect of outstanding Options (and in
respect of the shares of Common Stock for which Options may be granted under the
Plan), including, without limitation, the revision, cancellation, or termination
of any outstanding Options, or the change, conversion or exchange of the shares
of the Company's Common Stock under outstanding Options (and of the shares of
the Company's Common Stock for which Options may be granted under the Plan) into
or for securities or other property of another corporation. Any such adjustments
by the Board of Directors shall be final, conclusive and binding for all
purposes of the Plan.
Section 11. EFFECT OF THE PLAN ON EMPLOYMENT RELATIONSHIP. Neither this
Plan nor any Option granted hereunder to a Participant shall be construed as
conferring upon such Participant any right to continue in the employ of the
Company or any Subsidiary of the Company as the case may be, or limit in any
respect the right of the Company or any Subsidiary of the Company to terminate
such Participant's employment with the Company or any Subsidiary of the Company,
as the case may be, at any time.
Section 12. AMENDMENT OF THE PLAN. The Board of Directors may amend the
Plan from time to time as it deems desirable in its sole discretion without
approval of the stockholders of the Company, except to the extent stockholder
approval is required by Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, applicable NASDAQ National Market or stock exchange rules, applicable
provisions of the Code, or other applicable laws or regulations.
Section 13. TERMINATION OF THE PLAN. The Board of Directors may terminate
the Plan at any time in its sole discretion. No Option may be granted hereunder
after termination of the Plan. The termination or amendment of the Plan shall
not alter or impair any rights or obligations under any Option theretofore
granted under the Plan in any material adverse way without the consent of the
affected Participant.
Section 14. GOVERNING LAW. The Plan and any and all Option agreements
executed in connection with the Plan shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to conflict of
laws principles.
Section 15. NO STRICT CONSTRUCTION. No rule of strict construction shall
be applied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Option agreement, any Option
granted under the Plan, or any rule, regulation or procedure established by the
Committee.
Section 16. SUCCESSORS. This Plan is binding on and will inure to the
benefit of any successor to the Company, whether by way of merger,
consolidation, purchase, or otherwise.
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Section 17. SEVERABILITY. If any provision of the Plan or an Option
agreement shall be held illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining provisions of the Plan or such
agreement, and the Plan and such agreement shall each be construed and enforced
as if the invalid provisions had never been set forth therein.
Section 18. PLAN PROVISIONS CONTROL. Except as otherwise provided in
Section 5.06, the terms of the Plan govern all Options granted under the Plan,
and in no event will any Option be granted under the Plan which is contrary to
any of the provisions of the Plan. In the event any provision of any Option
granted under the Plan shall conflict with any term in the Plan as constituted
on the grant date of such Option, the term in the Plan as constituted on the
grant date of such Option shall control except as otherwise provided in Section
5.06.
Section 19. HEADINGS. The headings used in the Plan are for convenience
only, do not constitute a part of the Plan, and shall not be deemed to limit,
characterize, or affect in any way any provisions of the Plan, and all
provisions of the Plan shall be construed as if no captions had been used in the
Plan.
Section 20. EFFECTIVE DATE OF THE PLAN. The Plan shall be submitted to the
stockholders of the Company for approval and ratification at the next regular or
special meeting thereof to be held after January 1, 1999. Unless at such meeting
the Plan is approved and ratified by the stockholders of the Company, in the
manner provided by the Company's By-Laws, then and in such event, the Plan shall
become null and void and of no further force and effect. Subject to the
immediately preceding sentence, the Plan shall be effective as of April 1, 1999.
The Plan shall continue in effect until April 30, 2004 unless sooner terminated
under Section 13.
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VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid
envelope we've provided or return it to Transaction Systems Architects, Inc.
c/o Shareowner Services,-SM- P.O. Box 64873, St. Paul, MN 55164-9397.
DIRECTORS
1. Directors recommend a vote FOR election of the following directors:
01 William E. Fisher 02 David C. Russell 03 Jim D. Kever
04 Promod Haque 05 Charles E. Noell, III 06 Larry G. Fendley
/ / FOR ALL / / WITHHOLD
NOMINEES ALL NOMINEES
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER(S) OF THE NOMINEE(S) IN THE BOX PROVIDED TO THE RIGHT.)
/ /
PLEASE FOLD HERE
PROPOSAL(S)
2. Approval of 1999 Stock Option Plan DIRECTORS
RECOMMEND
/ / For / / Against / / Abstain FOR
3. Approval of 1999 Employee Stock Purchase Plan
/ / For / / Against / / Abstain FOR
4. Appointment of Independent Auditors
/ / For / / Against / / Abstain FOR
5. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY
ADJOURNMENT OR ADJOURNMENTS THEREOF
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN, THIS PROXY SHALL BE VOTED FOR THE ELECTION OF DIRECTORS
AND FOR PROPOSAL 2, PROPOSAL 3 AND PROPOSAL 4.
PLEASE MARK, SIGN, DATE AND RETURN Dated: _____________, 1999
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE ______________________________
Signature(s) in Box
Address Change? Mark Box / /
Indicate changes below: (If there are co-owners both
must sign)
THE SIGNATURE(S) SHOULD BE
EXACTLY AS THE NAME(S) APPEAR
PRINTED TO THE LEFT. IF A
CORPORATION, PLEASE SIGN THE
CORPORATION NAME IN FULL BY A
DULY AUTHORIZED OFFICER AND
INDICATE THE OFFICE OF THE
SIGNER. WHEN SIGNING AS
EXECUTOR, ADMINISTRATOR,
FIDUCIARY, ATTORNEY, TRUSTEE
OR GUARDIAN, OR AS CUSTODIAN
FOR A MINOR, PLEASE GIVE FULL
TITLE AS SUCH. IF A
PARTNERSHIP, SIGN IN THE
PARTNERSHIP NAME.
<PAGE>
TRANSACTION SYSTEMS
ARCHITECTS, INC.
1999 ANNUAL MEETING OF
STOCKHOLDERS
TUESDAY, FEBRUARY 23, 1999
10:00 A.M.
230 SOUTH 108TH AVENUE
OMAHA, NEBRASKA
LOGO TRANSACTION SYSTEMS ARCHITECTS, INC.
230 SOUTH 108TH AVENUE, OMAHA, NEBRASKA PROXY
- -------------------------------------------------------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
The undersigned hereby appoints William E. Fisher, Gregory J. Duman and David
P. Stokes, and each of them, with power to appoint a substitute, to vote, in
accordance with the specifications appearing below, all shares the
undersigned is entitled to vote at the Annual Meeting of Stockholders of
Transaction Systems Architects, Inc., a Delaware corporation, to be held on
Tuesday, February 23, 1999, at 10:00 a.m. CST at the offices of the Company
at 230 South 108th Avenue, Omaha, Nebraska, and at all adjournments thereof,
and in their discretion, upon all other matters that may properly come before
the Annual Meeting or any adjournment or adjournments thereof, and hereby
revokes all former proxies. The undersigned hereby acknowledges receipt of
the Proxy Statement for the Annual Meeting.
SEE REVERSE FOR VOTING INSTRUCTIONS
