Exhibit 10.16


 


SEVERANCE
COMPENSATION AGREEMENT

(CHANGE IN CONTROL)


 


 


SEVERANCE COMPENSATION AGREEMENT dated as of
              ,
2003 between Transaction Systems Architects, Inc., a Delaware corporation (the
“Company”), and               
(the “Executive”).


 


WHEREAS, the Company’s Board of Directors has determined that it is
appropriate to reinforce and encourage the continued attention and dedication
of the Executive to his assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change in control of
the Company.


 


NOW, THEREFORE, this Agreement sets forth the severance compensation
which the Company agrees it will pay to the Executive if the Executive’s
employment with the Company terminates under certain circumstances described
herein following a Change in Control (as defined herein) and the other benefits
the Company will provide the Executive following a Change in Control.


 


1.             TERM.


 


This Agreement shall terminate, except to the extent that any obligation
of the Company hereunder remains unpaid as of such time, upon the earlier of
(i) the termination of Executive’s employment for any reason prior to a Change
in Control; and (ii) three years after the date of a Change in Control.


 


2.             CHANGE IN CONTROL.


 


For purposes of this Agreement, Change in Control shall mean:


 


(a)           the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”), of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then-outstanding shares of
common stock of the Company (the “Outstanding Company Common Stock”) or (ii)
the combined voting power of the then-outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
“Outstanding Company Voting Securities”); provided, however, that the following
acquisitions shall not constitute a Change in Control: (A) any acquisition
directly from the Company (excluding an acquisition by virtue of the exercise
of a conversion privilege), (B) any acquisition by any employee benefit plan
(or related trust) sponsored or maintained by the Company or any corporation controlled
by the Company or (C) any acquisition by any corporation pursuant to a
reorganization, merger
or consolidation, if, following such reorganization, merger or consolidation,
the conditions described in sub-clauses (i), (ii) and (iii) of clause (c) of this
Section 2 are satisfied; or


 

















 


(b)           if individuals who, as of the date hereof,
constitute the Board of Directors (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders, was approved by a vote
of at least two-thirds of the directors then constituting the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest subject to Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act or other actual or threatened solicitation of proxies or consents
by or on behalf of a Person other than the Board; or


 


(c)           approval by the stockholders of the Company
of a reorganization, merger or consolidation, unless following such
reorganization, merger or consolidation (i) more than 60% of, respectively, the
then-outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to such
reorganization, merger, or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be (for purposes of determining whether such
percentage test is satisfied, there shall be excluded from the number of shares
and voting securities of the resulting corporation owned by the Company’s
stockholders, but not from the total number of outstanding shares and voting
securities of the resulting corporation, any shares or voting securities
received by any such stockholder in respect of any consideration other than
shares or voting securities of the Company), (ii) no Person (excluding the
Company, any employee benefit plan (or related trust) of the Company, any
qualified employee benefit plan of such corporation resulting from such reorganization,
merger or consolidation and any Person beneficially owning, immediately prior
to such reorganization, merger or consolidation, directly or indirectly, 20% or
more of the Outstanding Company Common Stock or Outstanding Company Voting
Securities, as the case may be) beneficially owns, directly or indirectly, 20%
or more of, respectively, the then-outstanding shares of common stock of the
corporation resulting from such reorganization, merger or consolidation or the
combined voting power of the then-outstanding voting securities of such
corporation entitled to vote generally in the election of directors and (iii)
at least a majority of the members of the board of directors of the corporation
resulting from such reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial agreement providing
for such reorganization, merger or consolidation; or


 


(d)           (i)            approval
by the stockholders of the Company of a complete liquidation or dissolution of
the Company or (ii) the first to occur of (A) the sale or other disposition (in
one transaction or a series of related transactions) of all or substantially
all of the assets of the Company, or (B) the approval by the stockholders of
the Company of any such sale or disposition, other than, in each case, any such
sale or disposition to a corporation, with respect to


 


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which immediately thereafter,
(1) more than 60% of, respectively, the then-outstanding shares of common stock
of such corporation and the combined voting power of the then-outstanding
voting securities of such corporation entitled to vote generally in the
election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such sale or other
disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be (for
purposes of determining whether such percentage test is satisfied, there shall
be excluded from the number of shares and voting securities of the transferee
corporation owned by the Company’s stockholders, but not from the total number
of outstanding shares and voting securities of the transferee corporation, any
shares or voting securities received by any such stockholder in respect of any
consideration other than shares or voting securities of the Company), (2) no
Person (excluding the Company and any employee benefit plan (or related trust)
of the Company, any qualified employee benefit plan of such transferee
corporation and any Person beneficially owning, immediately prior to such sale
or other disposition, directly or indirectly, 20% or more of the Outstanding
Company Common Stock or Outstanding Company Voting Securities, as the case may
be) beneficially owns, directly or indirectly, 20% or more of, respectively,
the then-outstanding shares of common stock of such transferee corporation and
the combined voting power of the then-outstanding voting securities of such
transferee corporation entitled to vote generally in the election of directors
and (3) at least a majority of the members of the board of directors of such
transferee corporation were members of the Incumbent Board at the time of the
execution of the initial agreement or action of the board providing for such
sale or other disposition of assets of the Company.


 


3.             TERMINATION FOLLOWING
A CHANGE IN CONTROL.


 


(a)           The Executive shall be entitled to the
compensation provided in Section 4 of this Agreement if all of the following
conditions are satisfied:


 


(i)            there is a Change in Control of the Company
while the Executive is still an employee of the Company;


 


(ii)           the Executive’s employment with the Company
is terminated within two years after the Change in Control; and


 


(iii)          the Executive’s termination of employment is
not a result of (A) the Executive’s death; (B) the Executive’s Disability (as
defined in section 3(b) below); (C) the Executive’s Retirement (as defined in
section 3(c) below); (D) the Executive’s termination by the Company for Cause
(as defined in Section 3(d) below); or (E) the Executive’s decision to
terminate employment other than for Good Reason (as defined in Section 3(e)
below).


 


(b)           If, as a result of the Executive’s
incapacity due to physical or mental illness, the Executive shall have been
unable, with or without a reasonable accommodation, to perform his duties with
the Company on a full-time basis for six months and within 30 days after a
Notice of


 


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Termination (as defined in
Section 3(f) below) is thereafter given by the Company, the Executive shall not
have returned to the full-time performance of the Executive’s duties, the
Company may terminate the Executive’s employment for “Disability”.  If there is a Change in Control of the
Company while the Executive is still an employee and if the Executive’s
employment with the Company is terminated for Disability within two years after
the Change in Control, the Executive shall be entitled to receive in a lump sum
cash payment within five days after his Date of Termination (as defined in
section 3(g) below) the following:


 


(i)            one times the Base Amount (as defined in
Section 4(b)(i)) determined with respect to the Base Period (as defined in
Section 4(b)(ii)); plus


 


(ii)           his earned but unpaid base salary through
his Date of Termination; plus


 


(iii)          a quarterly incentive award for the current
fiscal quarter prorated through the Date of Termination equal to the greater of
(A) the quarterly incentive award (whether paid or payable in cash or in
securities of the Company) awarded to the Executive with respect to the
Company’s most recent fiscal quarter ending prior to the Date of Termination or
(B) the average quarterly incentive award (whether paid or payable in cash or
in securities of the Company) made to the Executive with respect to the
Company’s most recent three fiscal years ending prior to the Date of
Termination; plus


 


(iv)          interest on the amounts payable pursuant to
clauses (i), (ii) and (iii) above calculated from the Date of Termination until
paid at a rate equal to the prime rate as published in The Wall Street Journal
on the Date of Termination plus three percentage points.


 


(c)           For purposes of this Agreement only,
“Retirement” shall mean termination by the Company or the Executive of the
Executive’s employment based on the Executive’s having reached age 65 or such
other age as shall have been fixed in any arrangement established pursuant to
this Agreement with the Executive’s consent with respect to the Executive.


 


(d)           For purposes of this Agreement only, “Cause”
shall mean: (i) the Executive’s conviction of a felony involving moral
turpitude; (ii) the Executive’s serious, willful gross misconduct or willful
gross neglect of duties (other than any such neglect resulting from the
Executive’s incapacity due to physical or mental illness or any such neglect
after the issuance of a Notice of Termination by the Executive for Good Reason,
as such terms are defined in subsections (e) and (f) below), which, in either
case, has resulted, or in all probability is likely to result, in material
economic damage to the Company; provided no act or failure to act by the
Executive will constitute Cause under this clause (ii) if the Executive
believed in good faith that such act or failure to act was in the best interest
of the Company; or (iii) the Executive’s violation of any provision of the
Company’s Code of Ethics for the Chief Executive Officer and Senior Financial
Officers, as the same may be amended from time to time (the “Code of
Ethics”).  For purposes of clause (iii)
of this subsection (d), the Executive shall be deemed to be subject to the
provisions of the Code of Ethics regardless of whether the Executive is a
Senior Officer as defined in the Code of Ethics or otherwise subject to the
Code of Ethics.


 


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For purposes of this Agreement only, any termination of the Executive’s
employment by the Company for Cause shall be authorized by a vote of at least a
majority of the non-employee members of the Board of Directors of the Company
(the “Board”) within 12 months of a majority of such non-employee members of
the Board having actual knowledge of the event or circumstances providing a
basis for such termination.  In the case
of clause (ii) of the second sentence of this subsection (d), the Executive
shall be given notice by the Board specifying in detail the particular act or
failure to act on which the Board is relying in proposing to terminate him for
cause and offering the Executive an opportunity, on a date at least 14 days
after receipt of such notice, to have a hearing, with counsel, before a
majority of the non-employee members  of the Board, including each of the
members of the Board who authorized the termination for Cause.  The Executive shall not be terminated for
Cause if, within 30 days after the date of the Executive’s hearing before the
Board (or if the Executive waives a hearing, within 30 days after receiving
notice of the proposed termination), he has corrected the particular act or
failure to act specified in the notice and by so correcting such act or failure
to act he has reduced the economic damage his act or failure to act has
allegedly caused the Company to a level which is no longer material or has
eliminated the probability that such act or failure to act is likely to result
in material economic damage to the Company. 
No termination for Cause shall take effect until the expiration of the
correction period described in the preceding sentence and the determination by
a majority of the non-employee members of the Board that the Executive has
failed to correct the act or failure to act in accordance with the terms of the
preceding sentence.


 


Anything herein to the contrary notwithstanding, if, following a
termination of the Executive’s employment by the Company for Cause based upon
the conviction of the Executive for a felony involving moral turpitude such
conviction is finally overturned on appeal, the Executive shall be entitled to
the compensation provided in Sections 4(a) and 4(c).  In lieu of the interest provided in clause (iv) of the first
sentence of Section 4(a) and the interest provided in the second sentence of
Section 4(c), however, the compensation provided in Sections 4(a) and 4(c)
shall be increased by a ten percent rate of interest, compounded annually,
calculated from the date such compensation would have been paid if the
Executive’s employment had been terminated without Cause.


 


(e)           For
purposes of this Agreement, “Good Reason” shall mean, after any Change in
Control and without the Executive’s express written consent, any of the
following:


 


(i)            a significant diminution in the Executive’s
duties and responsibilities, or the assignment to the Executive by the Company
of duties inconsistent with the Executive’s position, duties, responsibilities
or status with the Company immediately prior to a Change in Control of the
Company, or a change in the Executive’s titles or offices as in effect
immediately prior to a Change in Control of the Company, or any removal of the
Executive from or any failure to re-elect the Executive  to any of such positions,
except in connection with the termination of his employment for Disability,
Retirement or Cause or as a result of the Executive’s death or by the Executive
other than for Good Reason;


 


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(ii)           a reduction by the Company in the Executive’s
annual rate of base salary as in effect on the  date hereof or as the same
may be increased from time to time during the term of this Agreement or the
Company’s failure to increase (within 12 months of the Executive’s last
increase in his annual rate of base salary) the Executive’s annual rate of base
salary after a Change in Control of the Company in an amount which at least
equals, on a percentage  basis, the greater of (A) the average
percentage increase  in the annual rate of base salary for all
officers of the Company effected in the preceding 12 months; or (B) the
Consumer Price Index as published by the United States Government (or, in the
event such index is discontinued, any similar index published by the United
States Government as designated in good faith by the Executive); provided,
however, that nothing contained in this clause (ii) shall he construed under any
circumstances as permitting the Company to decrease the Executive’s annual rate
of base salary;


 


(iii)          (A)          any
failure by the Company to continue in effect any benefit plan or arrangement
(including, without limitation, the life insurance, medical, dental, accident
and disability plans) in which the Executive is participating at the time of a
Change in Control of the Company, or any other plan or arrangement providing
the Executive with benefits that are no less favorable (hereinafter referred to
as “Benefit Plans”), (B) the taking of any action by the Company which would
adversely affect the Executive’s participation in or materially reduce the
Executive’s benefits under any such Benefit Plan or deprive the Executive of
any material fringe benefit or perquisite of office enjoyed by the Executive at
the time of a Change in Control of the Company, unless in the case of either
sub-clause (A) or (B) above, there is substituted a comparable plan or program
that is economically equivalent or superior, in terms of the benefit offered to
the Executive, to the Benefit Plan being altered, reduced, affected or ended;


 


(iv)          (A)          any failure by the Company to continue in effect any
incentive plan or arrangement (including, without limitation, the Company’s
bonus arrangements, the Transaction Systems Architects, Inc., Deferred
Compensation Plan, the Transaction Systems Architects, Inc. 401(k) Plan, the
sales incentive plans, and the management incentive plans) in which the
Executive is participating at the time of a Change in Control of the Company,
or any other plans or arrangements providing him with substantially similar
benefits, (hereinafter referred to as “Incentive Plans”), (B) the taking of any
action by the Company which would adversely affect the Executive’s participation
in any such Incentive Plan or reduce the Executive’s benefits under any such
Incentive Plan, unless in the case of either sub-clause (A) or (B) above, there
is substituted a comparable plan or program that is economically equivalent or
superior, in terms of the benefit offered to the Executive, to the Incentive
Plan being altered, reduced, affected or ended, or (C) any failure by the
Company with respect to any fiscal year to make an award to the Executive
pursuant to each such Incentive Plan or such substituted comparable plan or
program equal to or greater than the greater of (1) the award (whether paid or
payable in cash or in securities of the Company) made to the Executive pursuant
to such Incentive Plan or such substituted comparable plan or program with
respect to the immediately preceding fiscal year or (2) the average annual
award (whether paid or payable in cash or in securities of the Company) made to
the Executive pursuant to such Incentive Plan or such substituted comparable
plan with respect to the prior three fiscal years (or such


 


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lesser number
of prior fiscal years that the Executive was employed by the Company or that
the Incentive Plan (together with any substituted comparable plan) was
maintained);


 


(v)           (A)          any
failure by the Company to continue in effect any plan or arrangement to receive
securities of the Company (including, without limitation, the Transaction
Systems Architects, Inc. 1999 Employee Stock Purchase Plan and the Transaction
Systems Architects Inc. 1999 Stock Option Plan) in which the Executive is
participating at the time of a Change in Control of the Company, or any other
plan or arrangement providing him with substantially similar benefits,  (hereinafter
referred to as “Securities Plans”), (B) the taking of any action by the Company
which would adversely affect the Executive’s participation in or materially
reduce the Executive’s benefits under any such Securities Plan, unless in the
case of either sub-clause (A) or (B) above, there is substituted a comparable
plan or program that is economically equivalent or superior, in terms of the
benefit offered to the Executive, to the Securities Plan being altered,
reduced, affected or ended, or (C) any failure by the Company in any fiscal
year to grant stock options, stock appreciation rights or securities awards to
the Executive pursuant to such Securities Plans with respect to an aggregate
number of securities of the Company of each kind that is equal to or greater  than
the greater of (1) the aggregate  number of securities of the Company of
that kind covered  by stock options, stock appreciation rights, or securities
awards granted to the Executive pursuant to such Securities Plans in the
immediately preceding fiscal year; or (2) the average annual aggregate number
of securities of the Company of that kind covered by stock options, stock
appreciation rights, or securities awards granted to the Executive pursuant to
such Securities Plans in the prior three fiscal years; and provided further the
material terms and conditions of such stock options, stock appreciation rights,
and securities awards granted to the Executive after the Change in Control
(including, but not limited to, the exercise price, vesting schedule, period and
methods of exercise, expiration date, forfeiture provisions and other
restrictions) are substantially similar to the material terms and conditions of
the stock options, stock appreciation rights, and securities awards granted to
the Executive under the Securities Plans immediately prior to the Change in
Control of the Company;


 


(vi)          the Executive’s relocation more than 50 miles
from the location at which the Executive performed the Executive’s duties prior
to a Change in Control of the Company, except for required travel by the
Executive on the Company’s business to an extent substantially consistent with
the Executive’s business travel obligations at the time of a Change in Control
of the Company;


 


(vii)         any failure by the Company to provide the
Executive with the number of annual paid vacation days to which the Executive
is entitled for the year in which a Change in Control of the Company occurs;


 


(viii)        any material breach by the Company of any
provision of this Agreement;


 


(ix)           any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the Company prior to
such succession or assignment;


 


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(x)            any failure by the Company or its successor
to enter into an agreement  with the Executive that is substantially
similar to this Agreement with respect to a Change in Control of the Company or
its successor occurring thereafter; or


 


(xi)           any purported termination of the Executive’s
employment by the Company pursuant to Section 3(b), 3(c) or 3(d) above which is
not effected pursuant to a Notice of Termination satisfying the requirements of
Section 3(f) below (and, if applicable, Section 3(d) above), and for purposes
of this Agreement, no such purported termination shall be effective.


 


For purposes of this subsection (e), an isolated, immaterial, and
inadvertent action not taken in bad faith by the Company in violation of clause
(ii), (iii), (iv), (v) or (vii) of this subsection that is remedied by the
Company promptly after receipt of notice thereof given by the Executive shall
not be considered Good Reason for the Executive’s termination of employment
with the Company.  In the event the
Executive terminates his employment for Good Reason hereunder, then
notwithstanding that the Executive may also retire for purposes of the Benefit
Plans, Incentive Plans or Securities Plans, the Executive shall be deemed to
have terminated his employment for Good Reason for purposes of this Agreement.


 


(f)            Any
termination of the Executive by the Company pursuant to Section 3(b), 3(c) or
3(d) above, or by the Executive pursuant to Section 3(e) above, shall be
communicated by a Notice of Termination to the other party hereof.  For purposes of this Agreement, a “Notice of
Termination” shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so
indicated.  For purposes of this
Agreement, no such purported termination by the Company shall be effective
without such Notice of Termination.


 


(g)           “Date
of Termination” shall mean (i) if the Executive’s employment is terminated by
the Company for Disability, 30 days after Notice of Termination is given to the
Executive (provided that the Executive shall not have returned to the
performance of the Executive’s duties on a full-time basis during such 30-day
period), (ii) if the Executive’s employment is terminated by the Executive for
Good Reason, the date specified in the Notice of Termination, and (iii) if the
Executive’s employment is terminated by the Company for any other reason, the
date on which a Notice of Termination is given; provided, however, that if
within 30 days after any Notice of Termination is given to the Executive by the
Company, the Executive notifies the Company that a dispute exists concerning
the termination, the Date of Termination shall be the date the dispute is finally
determined, whether by mutual written agreement of the parties or upon final
judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected).


 


4.             SEVERANCE
COMPENSATION UPON TERMINATION OF EMPLOYMENT.


 


(a)           If
pursuant to Section 3(a) above the Executive is entitled to the compensation
provided in this Section 4, then the Company shall pay to the Executive in a
lump sum cash payment within five days after the Date of Termination the
following:


 


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(i)            the Severance Amount as defined in Section
4(b) below; plus


 


(ii)           his earned but unpaid base salary through his
Date of Termination; plus


 


(iii)          a quarterly incentive award for the current
fiscal quarter prorated through the Date of Termination equal to the greater of
(A) the quarterly incentive award (whether paid or payable in cash or in
securities of the Company) awarded to the Executive with respect to the
Company’s most recent fiscal quarter ending prior to the Date of Termination or
(B) the average quarterly incentive award (whether paid or payable in cash or
in securities of the Company) made to the Executive with respect to the
Company’s most recent three fiscal years ending prior to the Date of
Termination; plus


 


(iv)          interest on the amounts payable pursuant to
clauses (i), (ii) and (iii) above calculated from the Date of Termination until
paid at a rate equal to the prime rate as published in The Wall Street Journal on
the Date of Termination plus three percentage points, compounded annually.


 


(b)           “Severance
Amount” shall mean an amount equal to one times the Base Amount (as defined
below) determined with respect to the Base Period (as defined below); provided,
however, in no event shall the Severance Amount be less than two times the
Executive’s annual rate of base salary at the higher of the annual rate in
effect (i) immediately prior to the Date of Termination or (ii) on the date six
months prior to the Date of Termination. 
For purposes of this subsection (b):


 


(i)            “Base Amount” means the Executive’s average
fiscal-year Compensation (as defined below) for fiscal years of the Company in
the Base Period.  Such average shall be
computed by dividing the total of the Executive’s Compensation for the Base
Period by the number of fiscal years in the Base Period.  If the Executive’s Base Period includes a
portion of a fiscal year during which he was not an employee  of the Company (or a
predecessor entity or a related entity, as such terms are defined in clause
(iii) below), the Executive’s Compensation for such fiscal year shall be
annualized before determining the average fiscal-year Compensation for the Base
Period.  In annualizing Compensation,
the frequency with which payments are expected to be made over a fiscal year
shall be taken into account; thus, any amount of Compensation that represents a
payment that will not be made more often than once per fiscal year is not
annualized.  Set forth on Appendix A,
which is attached hereto and made a part hereof, are three examples
illustrating the calculation of the Base Amount.


 


(ii)           “Base Period” means the most recent two
consecutive fiscal years of the Company ending prior to the Date of
Termination.  However, if the Executive
was not an employee of the Company (or a predecessor entity or a related
entity, as such terms are defined in clause (iii) below) at any time during one
of such two fiscal years, the Executive’s Base Period is the one fiscal year of


 


9

















 


such
two-fiscal-year period during which the Executive performed personal services
for the Company or a predecessor entity or a related entity.


 


(iii)          “Compensation” means the compensation which
was payable by the Company, by a predecessor entity, or by a related entity and
which was includible in the gross income of the Executive (or either was
excludible from such gross income as “foreign earned income” within the meaning
of Section 911 of the Internal Revenue Code of 1986, as amended (the “Code”),
or would have been includible in such gross income if the Executive had been a
United States citizen or resident), but excluding the following: (A) amounts
realized from the exercise of a non-qualified stock option; and (B) amounts
realized from the sale, exchange or other disposition of stock acquired under
an incentive stock option described in Code Section 422 (b) or under an
employee stock purchase plan described in code Section 423 (b).  Notwithstanding the preceding sentence, Compensation
shall be determined without regard to any compensation deferral election under
any plan, program or arrangement, qualified or non-qualified, maintained or
contributed to by the Company, a predecessor entity or a related entity,
including but not limited to a cash-or-deferred arrangement described in Code
Section 401(k), a cafeteria plan described in Code Section 125 or a
non-qualified deferred compensation plan. 
A “predecessor entity” is any entity which, as a result of a merger,
consolidation, purchase or acquisition of property or stock, corporate
separation, or other similar business transaction transfers some or all of its
employees to the Company or to a related entity or to a predecessor entity of
the Company.  The term “related entity”
includes any entity treated as a single employer with the Company in accordance
with subsections (b), (c), (m) and (o) of Code Section 414.


 


(c)           If
pursuant to Section 3(a) above the Executive is entitled to the compensation
provided in this Section 4, then the Executive will be entitled to continued
participation in all employee benefit plans or programs available to Company
employees generally in which the Executive was participating on the Date of
Termination, such continued participation to be at Company cost and otherwise
on the same basis as Company employees generally, until the earlier of (i) the
date, or dates, he receives equivalent coverage and benefits under the plans
and programs of a subsequent employer (such coverages and benefits to be determined
on a coverage-by-coverage or benefit-by-benefit basis) or (ii) two years from
the Date of Termination; provided (A) if the Executive is precluded from
continuing his participation in any employee benefit plan or program as
provided in this sentence, he shall be paid, in a lump sum cash payment, within
30 days following the date it is determined he is unable to participate in any
employee benefit plan or program, the after-tax economic equivalent of the
benefits provided under the plan or program in which he is unable to
participate for the period specified in this sentence, and (B) the economic
equivalent of any benefit foregone shall he deemed to be the lowest cost that
would be incurred by the Executive in obtaining such benefit for himself
(including family or dependent coverage, if applicable) on an individual
basis.  The Executive shall be eligible
for group health plan continuation coverage under and in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1965, as amended, when he ceases
to be eligible for continued participation in the Company’s group health plan
under this subsection (c).


 


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5.             NO OBLIGATION TO MITIGATE DAMAGES; NO
EFFECT ON OTHER CONTRACTUAL RIGHTS.


 


(a)           The
Executive shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise, nor shall the amount of any payment provided for under this
Agreement be reduced by any compensation earned by the Executive as the result
of employment by another employer after the Date of Termination or otherwise.


 


(b)           The
provisions of this Agreement, and any payment provided for hereunder, shall not
reduce any amounts otherwise payable, or in any way diminish the Executive’s
existing  rights,
or rights which would accrue solely as a result of the passage of time, under  any
Benefit Plan, Incentive Plan or Securities Plan, employment agreement or other
contract, plan or agreement with or of the Company.


 


6.             INCENTIVE AWARDS­.


 


In the event of a Change in Control of the Company, then
notwithstanding the terms and conditions of any Incentive Plan, the Company
agrees (i) to immediately and fully vest all unvested awards, units, and
benefits (other than options to acquire securities of the Company or awards of
securities of the Company) which have been awarded or allocated to the
Executive under the Incentive Plans; and (ii) upon the exercise of such awards
or units or the distribution of such benefits, to pay all amounts due under the
IncentivePlans solely in cash.


 


7.             CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY­.


 


(a)           Anything
in this Agreement to the contrary notwithstanding, in the event it shall be
determined that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 7) (a “Payment”) would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the “Excise
Tax”), then the Executive shall be entitled to receive an additional payment (a
“Gross-Up Payment”) in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.


 


(b)           All
determinations required to be made under this Section 7, including whether and
when a Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be made
by the Accounting Firm which shall provide detailed supporting calculations
both to the Company and the Executive within 15 business days after the receipt
of notice from the Executive that there has


 


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been a Payment, or such earlier  time
as is requested by the Company.  The
determination of tax liability made by the Accounting Firm shall be subject to
review by the Executive’s tax advisor, and, if the Executive’s tax advisor does
not agreewith the determination reached by the Accounting Firm, then the
Accounting Firm and the Executive’s tax advisor shall jointly designate a
nationally recognized public accounting firm which shall make the
determination. All fees and expenses of the accountants and tax advisors
retained by both the Executive and the Company shall be borne solely by the
Company.  Any Gross-Up Payment, as
determined pursuant to this Section 7, shall be paid by the Company to the
Executive within five days after the receipt of the determination.  Any determination by such jointly designated
public accounting firm shall be binding upon the Company and the
Executive.  As a result of the
uncertainty in the application of Section 4999 of the Code at the time of the
initial determination hereunder, it is possible that Gross-Up Payments will not
have been made by the Company that should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder.  In the event that the Executive hereafter is
required to make a payment of any Excise Tax, any such underpayment shall be
promptly paid by the Company to or for the benefit of the Executive. Upon
notice by the Executive of any audit or other proceeding that may result in a
liability to the Company hereunder, the Executive shall promptly notify the
Company of such audit or other proceeding; and the Company may, at its option,
but solely with respect to the item or items that relate to such potential
liability, choose to assume the defense of such audit or other proceeding at
its own cost, provided that (i) the Executive shall cooperate with the Company
in such defense and (ii) the Company will not settle such audit or other
proceeding without the consent of the Executive (such consent not to be
unreasonably withheld).  The highest
effective marginal tax rate (determined by taking into account any reduction in
itemized deductions and/or exemptions attributable to the inclusion of the
additional amounts payable under this Section 7 in the Executive’s adjusted
gross or taxable income) based upon the state and locality where the Executive
is resident at the time of payment of such amounts will be used for purposes of
determining the federal and state income and other taxes with respect thereto.


 


8.             INDEMNIFICATION.


 


(a)           The Company agrees to indemnify the Executive to the
fullest extent permitted by law if the Executive is a party or threatened to be
made a party to any Proceeding (as defined below).


 


(b)           If requested by the Executive, the Company shall advance (within two
business days of such request) any and all Expenses, as defined below, relating
to a Proceeding to the Executive (an “Expense Advance”), upon the receipt of a
written undertaking by or on behalf of the Executive to repay such Expense
Advance if a judgment or other final adjudication adverse to the Executive (as
to which all rights of appeal therefrom have been exhausted or lapsed)
establishes that the Executive is not entitled to indemnification by the
Company.  Expenses shall include
attorney’s fees and all other costs, charges and expenses paid or incurred in
connection with investigating, defending, being a witness in or participating
in (including on appeal), or preparing to defend, be a witness in or
participate in any Proceeding.


 


(c)           The Company agrees to obtain a directors’ and officers’ liability
insurance policy covering the Executive and to continue and maintain such
policy.  The amount of coverage shall


 


12

















 


be reasonable in relation to
the Executive’s position and responsibilities during his employment by the
Company.


 


(d)           This
Section 8 is a supplement to and in furtherance of the Certificate of
Incorporation and Bylaws of the Company and shall not be deemed a substitute
therefor, or diminish or abrogate any rights of the Executive thereunder.


 


(e)           For
purposes of Section 8(a), the meaning of the phrase “to the fullest extent
permitted by law” shall include but not be limited to:


 


(i)            to the fullest extent permitted by the provision of the Delaware General
Corporation Law (“DGCL”) that authorizes or contemplates additional
indemnification by agreement, or the corresponding provision of any amendment
to or replacement of the DGCL, and


 


(ii)           to the fullest extent authorized or permitted
by any amendments to or replacements of the DGCL adopted after the date of this
Agreement that increase the extent to which a corporation may indemnify its
officers and directors.


 


(f)            For purposes of Sections 8(a) and 8(b), “Proceeding” shall mean any
threatened, pending or completed action, suit, arbitration, alternate dispute
resolution mechanism, investigation, inquiry, administrative hearing or any
other actual, threatened or completed proceeding, whether brought in the right
of the Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, in which the Executive was, is or will be involved as a
party or otherwise by reason of the fact that the Executive is or was a
director or officer of the Company, by reason of any action taken by him or of
any action on his part while acting as director or officer of the Company, or
by reason of the fact that he is or was serving at the request of the Company
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, in each case whether or not serving
in such capacity at the time any liability or expense is incurred for which
indemnification, reimbursement, or advancement of expenses can be provided
under this Agreement.


 


9.             SUCCESSORS.


 


(a)           The Company will require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, expressly, absolutely and
unconditionally to assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to perform it
if no such succession or assignment had taken place. Any failure of the Company
to obtain such agreement prior to the effectiveness of any such succession or
assignment shall be a material breach of this Agreement and shall entitle the
Executive to terminate the Executive’s employment for Good Reason and receive
the compensation provided for in Section 4 hereof.  As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor or assign to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 9 or which


 


13

















 


otherwise becomes bound by all
the terms and provisions of this Agreement by operation of law.


 


(b)           This Agreement shall inure to the benefit of and be enforceable by the
Executive’s personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.  If the Executive should die while any
amounts are still payable to him hereunder, all such amounts, unless otherwise
provided herein, shall he paid in accordance with the terms of this Agreement
to the Executive’s devisee, legatee or other designee or, if there be no such
designee, to the Executive’s estate.


 


10.           NOTICE.


 


For purposes of this Agreement, notices and
all other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, as follows:


 


If to the Company:


 


Transaction Systems Architects, Inc.


224 South 108th Avenue


Omaha, NE 68154


Attn: President


 


If to the Executive:


 


 


 


 


 


or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notices of change of
address shall be effective  only upon receipt.


 


11.           MISCELLANEOUS.


 


No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company.  No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
time or at any prior or subsequent time. 
No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not set forth expressly in this Agreement. 
This Agreement shall be governed by and construed in accordance with the
laws of the State of Nebraska, without giving effect to any principles of
conflicts of law.


 


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12.           CONFLICT IN BENEFITS.


 


Except as otherwise provided in the preceding sentences, this Agreement
is not intended to and shall not limit or terminate any other agreement or
arrangement between the Executive and the Company presently in effect or
hereafter entered into.


 


13.           VALIDITY.


 


The invalidity
or unenforceability of any provisions of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which
shall remain in full force and effect.


 


14.           SURVIVORSHIP.


 


The respective
rights and obligations of the parties hereunder shall survive any termination
of this Agreement to the extent necessary to the intended preservation of such
rights and obligations and to the extent that any performance is required
following termination of this Agreement. 
Without limiting the foregoing, Sections 7, 8 and 15 shall expressly
survive the termination of this Agreement.


 


15.           LEGAL
FEES AND EXPENSES.


 


If a claim or
dispute arises concerning the rights of the Executive under this Agreement,
regardless of the party by whom such claim or dispute is initiated, the Company
shall, upon presentation of appropriate vouchers, pay all legal expenses,
including reasonable attorneys’ fees, court costs and ordinary and necessary
out-of-pocket costs of attorneys, billed to and payable by the Executive or by
anyone claiming under or through the Executive, in connection with the
bringing, prosecuting, arbitrating, defending, litigating, negotiating, or
settling such claim or dispute.  In no
event shall the Executive be required to reimburse the Company for any of the
costs of expenses incurred by the Company relating to arbitration or
litigation.  Pending the outcome or
resolution of any claim or dispute, the Company shall continue payment of all
amounts due the Executive without regard to any dispute.


 


16.           EFFECTIVE
DATE.


 


This Agreement
shall become effective upon execution.


 


17.           COUNTERPARTS.


 


This Agreement
may be executed in one or more counterparts, each of which shall be deemed to
be an original but all of which together will constitute one and the same
instrument.


 


15

















 


18.           NO
GUARANTEE OF EMPLOYMENT.


 


Neither this
Agreement nor any action taken hereunder shall be construed as giving the
Executive the right to be retained in employment with the Company, nor shall it
interfere with either the Company’s right to terminate the employment of the
Executive at any time or the Executive’s right to terminate his employment at
any time.


 


19.           NO
ASSIGNMENT BY EXECUTIVE.


 


Except as
otherwise provided in Section 9(b), the Executive’s rights and interests under
this Agreement shall not be assignable (in law or in equity) or subject to any
manner of alienation, sale, transfer, claims of creditors, pledge, attachment,
garnishment, levy, execution or encumbrances of any kind.


 


20.           WAIVER.


 


The Executive’s or
the Company’s failure to insist upon strict compliance with any provision of
this Agreement shall not he deemed a waiver of such provision or any other
provision of this Agreement.  Any waiver
of any provision of this Agreement shall not be deemed to be a waiver of any
other provision, and any waiver of default in any provision of this Agreement
shall not be deemed to be a waiver of any later default thereof or of any other
provision.


 


21.           WITHHOLDING.


 


All amounts paid pursuant to this Agreement shall be subject to
withholding for taxes (federal,  state, local or otherwise) to the extent
required by applicable law.


 


22.           HEADINGS.


 


The headings of this Agreement have been
inserted for convenience of reference only and are to be ignored in the
construction of the provisions hereof.


 


23.           NUMBERS
AND GENDER.


 


The use of the singular shall be interpreted
to include the plural and the plural the singular, as the context
requires.  The use of the masculine,
feminine or neuter shall be interpreted to include the masculine, feminine or
neuter as the context shall require.


 


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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.


 


 


	
   

  	
  TRANSACTION SYSTEMS
  ARCHITECTS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					



 


17

















 


APPENDIX A


 


EXAMPLE 1 – Executive was employed by the Company for 1-1/3 fiscal
years preceding the fiscal year in which a Change in Control of the Company
occurs.  The Executive’s Compensation
from the Company was $30,000 for the 4-month period and $120,000 for the full
fiscal year.  The Executive’s Base
Amount is $105,000.


 


Year 1:            3 x $30,000 = $90,000


Year 2:            $120,000


[90,000 + 120,000] DIVIDED BY 2 = $105,000


 


$105,000 is the average fiscal-year Compensation for the Base Period.


 


EXAMPLE 2 – Assume the same facts as in Example 1, except that the
Executive also received a $70,000 sign-on bonus when his employment with the
Company commenced at the beginning of the 4-month period.  The Executive’$ Base Amount is $140,000


 


Year 1:            [3 X $30,000] + $70,000 = $160,000


Year 2:            $120,000


[160,000 + 120,0001 DIVIDED BY 2 = $140,000


 


Since the sign-on bonus will not be paid more often than once per
fiscal year, the amount of the bonus is not increased in annualizing the
Executive’s Compensation for the 4-month period.


 


EXAMPLE 3 – Executive was employed by the Company for the last 4 months
of the fiscal year preceding the fiscal year in which a Change in Control of
the Company occurs.  The Executive’s
Compensation from the Company was $30,000 for the 4-month period.  The Executive’s Base Amount is $90,000.


 


Year 1:            3 x $30,000 = $90,000


$90,000 DIVIDED BY 1 = $90,000


 


$90,000 is the average fiscal-year Compensation for the Base Period.


 


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