Exhibit 2.1
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
by and between
TRANSACTION SYSTEMS ARCHITECTS, INC.
and
INSESSION TECHNOLOGIES, INC.
Effective as of _______________, 2000
1. Definitions.......................................................... 2
2. Separation........................................................... 6
2.1 Separation Date...................................................... 6
2.2 Closing of Transactions.............................................. 6
2.3 Exchange of Secretary's Certificates................................. 7
3. Documents and Items to be Delivered on the Separation Date........... 7
3.1 Documents to Be Delivered by TSAI.................................... 7
3.2 Documents to Be Delivered by Insession............................... 8
4. The IPO, Actions Pending the IPO and Option Grant.................... 8
4.1 Transactions Prior to the IPO........................................ 8
4.2 Cooperation.......................................................... 9
4.3 Conditions Precedent to Consummation of the IPO...................... 9
5. The Distribution..................................................... 11
5.1 The Distribution..................................................... 11
5.2 Actions Prior to the Distribution.................................... 12
5.3 Sole Discretion of TSAI.............................................. 12
5.4 Conditions Precedent to Distribution................................. 13
5.5 Fractional Shares.................................................... 13
6. Covenants and Other Matters.......................................... 14
6.2 Other Agreements..................................................... 18
6.3 Further Instruments.................................................. 18
6.4 Agreement for Exchange of Information................................ 19
6.5 Auditors and Audits; Annual and Quarterly Statements and Accounting.. 20
6.6 Notice of Change in Accounting Principles............................ 22
6.7 Consistency with Past Practices...................................... 22
6.8 Payment of Expenses.................................................. 22
6.9 Foreign Subsidiaries................................................. 23
6.10 Dispute Resolution................................................... 23
6.11 Governmental Approvals............................................... 24
6.12 No Representation or Warranty........................................ 24
6.13 Non-Solicitation of Employees........................................ 25
6.14 Employee Agreements.................................................. 25
6.15 Cooperation in Obtaining New Agreements.............................. 27
6.16 Property Damage to Insession Assets Prior to the Separation Date..... 27
6.17 Use of Supplies and Promotional Materials............................ 28
7. Miscellaneous........................................................ 28
7.1 Limitation of Liability.............................................. 28
7.2 Entire Agreement..................................................... 28
7.3 Governing Law........................................................ 28
7.4 Termination.......................................................... 28
7.5 Notices.............................................................. 28
7.6 Counterparts......................................................... 29
7.7 Binding Effect; Assignment........................................... 29
7.8 Severability......................................................... 29
7.9 Failure or Indulgence Not Waiver; Remedies Cumulative................ 30
7.10 Amendment............................................................ 30
7.11 Authority............................................................ 30
7.12 Interpretation....................................................... 30
7.13 Conflicting Agreements............................................... 30
7.14 Subsidiaries......................................................... 30
EXHIBITS
Exhibit A Certificate of Secretary of TSAI
Exhibit B Certificate of Secretary of Insession
Exhibit C General Assignment and Assumption Agreement
Exhibit D Employee Matters Agreement
Exhibit E Tax Sharing Agreement
Exhibit F Master Transitional Services Agreement
Exhibit G Real Estate Matters Agreement
Exhibit H Master Confidential Disclosure Agreement
Exhibit I Indemnification and Insurance Matters Agreement
Exhibit J Registration Rights Agreement
Exhibit K NET24 Sales Agency Agreement
Exhibit L Finder's Fee Agreement
ii
MASTER SEPARATION AND DISTRIBUTION AGREEMENT
This Master Separation and Distribution Agreement ("Agreement") is made as
of ________________, 2000, by and between Transaction Systems Architects, Inc.
("TSAI"), a Delaware corporation, and Insession Technologies, Inc.
("Insession"), a Delaware corporation. TSAI and Insession are referred to
collectively in this Agreement as the "Parties."
Preliminary Statements
▇. ▇▇▇▇, through a wholly owned subsidiary, currently owns all of the
issued and outstanding Insession Common Stock (defined below).
▇. ▇▇▇▇ offers, among other things, electronic business infrastructure
software and services (the "Insession Business"), as more particularly described
in the IPO Registration Statement (defined below).
C. The Boards of Directors of TSAI and Insession have each determined that
it would be appropriate and desirable for TSAI and its Subsidiaries (as defined
in Article 1) to contribute and transfer to Insession, and for Insession to
receive and assume, directly or indirectly, assets and liabilities currently
held by TSAI and its Subsidiaries and associated with the Insession Business
(the "Separation").
▇. ▇▇▇▇ and Insession currently contemplate that, following the
contribution of assets and assumption of liabilities, Insession will make an
initial public offering ("IPO") of an amount of its common stock, par value
$0.01 per share ("Insession Common Stock"), pursuant to a registration statement
on Form S-1 pursuant to the Securities Act of 1933, as amended (the "IPO
Registration Statement"), that will reduce TSAI's ownership of Insession after
the IPO to not less than 80.1%.
▇. ▇▇▇▇ currently contemplates that, several months following such IPO,
TSAI will distribute, pro rata, to the holders of its common stock all of the
shares of Insession Common Stock owned by TSAI (the "Distribution").
▇. ▇▇▇▇ and Insession intend that the Separation and the Distribution will
qualify as a tax-free reorganization under Sections 368(a)(1)(D) and 355 of the
Internal Revenue Code of 1986, as amended (the "Code"), and that this Agreement
is intended to be, and is hereby adopted as, a plan of reorganization under
Section 368 of the Code.
G. The Parties intend in this Agreement, including the Exhibits and
Schedules attached to this Agreement, to set forth the principal arrangements
between them regarding the Separation.
Agreement
The Parties, intending to be legally bound, agree as follows:
1. Definitions.
"AAA" has the meaning provided in Section 6.9.
"Active Trade or Business" means, for the purposes of Section 6.1, the
active conduct of the trade or business (as defined in Section 355(b)(2) of the
Code) conducted by Insession immediately prior to the Distribution Date.
"Affiliated Company" of any Person means any entity that controls, is
controlled by, or is under common control with such Person. As used herein,
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such entity, whether
through ownership of voting securities or other interests, by contract or
otherwise.
"Agreement" has the meaning provided in the Preliminary Statements.
"Ancillary Agreements" has the meaning provided in Section 3.1.
"Assignment Agreement" has the meaning provided in Section 3.1.
"B&M" has the meaning provided in Section 2.2 provided that at the request
of either party another law firm mutually agreeable to the parties shall be
substituted for B&M.
"Change of Control" with respect to any Person means the occurrence of any
of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) other than TSAI
or any Subsidiary of TSAI is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under said Act), directly or indirectly, of securities of
such Person representing 50% or more of the total voting power represented
by such Person's then outstanding voting securities; or
(ii) A change in the composition of the Board of Directors of
such Person occurring within a two-year period as a result of which fewer
than a majority of the directors are Incumbent Directors except in
connection with the Distribution; or
(iii) The consummation of (A) a merger or consolidation of such
Person with any other corporation, other than a merger or consolidation
which would result in the voting securities of such Person outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or the entity that controls such surviving entity) at least fifty
percent (50%) of the total voting power represented by the voting
securities of such Person, such surviving entity or the entity that
controls such Person or such surviving entity outstanding immediately after
such merger or consolidation, (B) the sale or disposition by such Person of
all or substantially all such Person's assets, other than a sale or
disposition to any company where such Person owns, directly or indirectly,
at least 70% of the outstanding voting securities of such company after any
such sale or disposition, or (C) a statutory exchange in which another
entity acquires securities of such Person representing 50% or more of the
total voting power represented by such Person's outstanding voting
securities; or
(iv) The shareholders of such Person approve a plan of complete
liquidation of such Person.
"Code" has the meaning provided in the Preliminary Statements.
"Commission" has the meaning provided in Section 4.1(a).
"Dispute" has the meaning provided in Section 6.9.
"Dispute Resolution Commencement Date" has the meaning provided in Section
6.9.
"Distribution" has the meaning provided in the Preliminary Statements.
"Distribution Agent" has the meaning provided in Section 5.1
"Distribution Date" has the meaning provided in Section 5.1.
"Exchange Act" has the meaning provided in Section 4.1(a).
"Governmental Approvals" means any notices, reports or other filings to be
made, or any consents, registrations, approvals, permits or authorizations to be
obtained from, any Governmental Authority.
"Governmental Authority" means any federal, state, local, foreign or
international court, government, department, commission, board, bureau, agency,
official or other regulatory, administrative or governmental authority.
"Incumbent Directors" means directors who either (A) are directors of such
Person as of the date hereof, or (B) are elected, or nominated for election, to
the Board of Directors with the affirmative votes (either by a specific vote or
by approval of the proxy statement of such Person in which such person is named
as a nominee for election as a director without objection to such nomination) of
at least a majority of the Incumbent Directors at the time of such election
or nomination (but shall not include an individual whose election or nomination
is in connection with an actual or threatened proxy contest relating to the
election of directors of such Person);
"Information" means information, whether or not patentable or
copyrightable, in written, oral, electronic or other tangible or intangible
forms, stored in any medium, including studies, reports, records, books,
contracts, instruments, surveys, discoveries, ideas, concepts, know-how,
techniques, designs, specifications, drawings, blueprints, diagrams, models,
prototypes, samples, flow charts, data, computer data, disks, diskettes, tapes,
computer programs or other software, marketing plans, customer names,
communications by or to attorneys (including attorney-client privileged
communications), memos and other materials prepared by attorneys or under their
direction (including attorney work product), and other technical, financial,
employee or business information or data.
"IPO" has the meaning provided in the Preliminary Statements.
"IPO Registration Statement" has the meaning provided in the Preliminary
Statements.
"Insession" has the meaning provided in the introductory paragraph to the
Agreement.
"Insession Assets" has the meaning provided in Section 1.2 of the
Assignment Agreement.
"Insession Business" has the meaning provided in the Preliminary
Statements.
"Insession Common Stock" has the meaning provided in the Preliminary
Statements.
"Insession Group" means Insession, each Subsidiary and Affiliated Company
of Insession upon the Separation Date and each Person that becomes a Subsidiary
or Affiliated Company of Insession after the Separation Date.
"Insession Stock Option" has the meaning provided in Section 4.4.
"Insession's Auditors" means Insession's independent certified public
accountants.
"IRS" means Internal Revenue Service of the U.S. Department of Treasury or
any successor agency.
"IRS Ruling" has the meaning provided in Section 5.4(a).
"Issuance Event" has the meaning provided in Section 4.4.
"Issuance Event Date" has the meaning provided in Section 4.4.
"Market Price" of any shares of Insession Common Stock on any date means
(a) the average of the last sale price of such shares on each of the five
trading days immediately preceding such date on the Nasdaq Stock Market's
National Market or, if such shares are not listed on such market, on the
principal national securities exchange or automated interdealer quotation system
on which such shares are traded or (b) if such sale prices are unavailable or
such shares are not so traded, the value of such shares on such date determined
in accordance with agreed-upon procedures reasonably satisfactory to Insession
and TSAI.
"Nasdaq" has the meaning provided in Section 4.1(c).
"Parties" has the meaning provided in the introductory paragraph to this
Agreement.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Pre-Distribution Period" means the period of time from the date of this
Agreement until the completion of the Distribution.
"Proposed Acquisition Transaction" means a transaction or series of
transactions as defined in Section 355(e) of the Code and regulations
promulgated thereunder as a result of which one or more Persons would (directly
or indirectly) acquire, or have the right to acquire, from Insession or one or
more holders of outstanding shares of Insession Common Stock, a number of shares
of Insession Common Stock that would comprise 50% or more of (i) the value of
all outstanding shares of Insession Common Stock as of the date of such
transaction, or in the case of a series of transactions, the date of the last
transaction of such series, or (ii) the total combined voting power of all
outstanding shares of Insession Common Stock as of the date of such transaction,
or in the case of a series of transactions, the date of the last transaction of
such series.
"Record Date" means the close of business on the date to be determined by
the Board of Directors of TSAI as the record date for determining the
stockholders of TSAI entitled to receive shares of Insession Common Stock in the
Distribution.
"Representation Date" means any date on which Insession makes any
representation (i) to the IRS or to counsel selected by TSAI for the purpose of
obtaining a Subsequent Tax Opinion/Ruling, or (ii) to TSAI for the purpose of
any determination required to be made by TSAI pursuant to Section 6.1.
"Representation Letters" means the representation letters and any other
materials (including, without limitation, the ruling request and the related
supplemental submissions to the IRS) delivered or deliverable by TSAI and others
in connection with the rendering of an opinion in connection with the
Distribution and the issuance by the IRS of the Ruling described in Section
5.4(a), which to the extent related to Insession shall be in form and substance
reasonably satisfactory to TSAI.
"Separation" has the meaning provided in the Preliminary Statements.
"Separation Date" means the date and time of the Closing of the IPO.
"Stock Option Notice" has the meaning provided in Section 4.4.
"Subsequent Tax Opinion/Ruling" means either (i) an opinion of counsel
selected by TSAI, in its sole and absolute discretion, confirming, in form and
substance reasonably satisfactory to TSAI, that, as a consequence of the
consummation of a subsequent transaction, no income, gain, or loss for the
United States federal income tax purposes will be recognized by TSAI, the
stockholders or former stockholders of TSAI, or any Affiliated Company with
respect to the Distribution, or (ii) an IRS private letter ruling to the same
effect.
"Subsidiary" of any Person means a corporation or other organization
whether incorporated or unincorporated of which at least a majority of the
securities or interests having by the terms thereof ordinary voting power to
elect at least a majority of the board of directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such Person or by
any one or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries; provided, however, that no Person that is not directly or
indirectly wholly-owned by any other Person shall be a Subsidiary of such other
Person unless such other Person controls, or has the right, power or ability to
control, that Person.
"Tax Control" means the definition of "control" provided in Section 368(c)
of the Code (or in any successor statute or provision) , as such definition may
from time to time be amended.
"Tax-Free Status of the Distribution" means the non-recognition of taxable
gain or loss for United States federal income tax purposes to TSAI, its
Affiliated Companies and its stockholders in connection with the Distribution.
"TSAI" has the meaning provided in the introductory paragraph to this
Agreement.
"TSAI Common Stock" means the shares of Class A Common Stock of TSAI, par
value $0.005 per share.
"TSAI Group" means TSAI, each Subsidiary and Affiliated Company of TSAI
(other than any member of the Insession Group) upon the Separation Date and each
Person that becomes a Subsidiary or Affiliate Company of TSAI after the
Separation Date.
"TSAI's Auditors" means TSAI's independent certified public accountants.
"Underwriters" has the meaning provided in Section 4.1(a).
"Underwriting Agreement" has the meaning provided in Section 4.1(a).
"Value" means with respect to any trade or business (or portion thereof),
the fair market value of the assets constituting such trade or business, less
the current liabilities associated with such trade or business, in each case
determined as of the date of such liquidation, disposition or discontinuance as
contemplated by the provisions of Section 6.1.
2. Separation.
2.1 Separation Date. Unless otherwise provided in this Agreement, or in
any agreement to be executed in connection with this Agreement, the effective
time and date of each transfer of property, assumption of liability, license,
undertaking, or agreement in connection with the Separation shall be the
Separation Date.
2.2 Closing of Transactions. Unless otherwise provided herein, the
closing of the transactions contemplated in Article 2 shall occur by the lodging
of each of the executed instruments of transfer, assumptions of liability,
undertakings, agreements, instruments or other documents executed or to be
executed with ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ ("B&M"), One Prudential Plaza,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, to be held in escrow for
delivery as provided in Section 2.3.
2.3 Exchange of Secretary's Certificates. Upon receipt of a certificate
of the Secretary or an Assistant Secretary of TSAI in the form attached to this
Agreement as Exhibit A, B&M shall deliver to Insession on behalf of TSAI all of
the items required to be delivered by TSAI hereunder pursuant to Section 3.1 and
each such item shall be deemed to be delivered to Insession as of the Separation
Date upon delivery of such certificate. Upon receipt of a certificate of the
Secretary or an Assistant Secretary of Insession in the form attached to this
Agreement as Exhibit B, B&M shall deliver to TSAI on behalf of Insession all of
the items required to be delivered by Insession pursuant to Section 3.2 and each
such item shall be deemed to be delivered to TSAI as of the Separation Date upon
receipt of such certificate.
3. Documents and Items to be Delivered on the Separation Date.
3.1 Documents to Be Delivered by TSAI. On the Separation Date TSAI will
deliver, or will cause its appropriate Subsidiaries to deliver, to Insession all
of the following items and agreements (collectively, together with all
agreements and documents contemplated by such agreements, the "Ancillary
Agreements"):
(a) A duly executed General Assignment and Assumption Agreement (the
"Assignment Agreement") substantially in the form attached hereto as Exhibit C;
(b) A duly executed Employee Matters Agreement substantially in the
form attached hereto as Exhibit D;
(c) A duly executed Tax Sharing Agreement substantially in the form
attached hereto as Exhibit E;
(d) A duly executed Master Transitional Services Agreement
substantially in the form attached hereto as Exhibit F;
(e) A duly executed Real Estate Matters Agreement substantially in the
form attached hereto as Exhibit G;
(f) A duly executed Master Confidential Disclosure Agreement
substantially in the form attached hereto as Exhibit H;
(g) A duly executed Indemnification and Insurance Matters Agreement
substantially in the form attached hereto as Exhibit I;
(h) A duly executed Registration Rights Agreement substantially in the
form attached hereto as Exhibit J;
(i) A duly executed NET24 Sales Agency Agreement substantially in the
form attached hereto as Exhibit K;
(j) A duly executed Finder's Fee Agreement substantially in the form
attached hereto as Exhibit L;
(k) Resignations of each Person who is an officer of Insession or an
officer or director of any of its Subsidiaries, immediately prior to the
Separation Date, and who will not be employees of Insession from and after the
Separation Date;
(l) Such other agreements, documents or instruments as the Parties may
agree are necessary or desirable in order to achieve the purposes of this
Agreement.
3.2 Documents to Be Delivered by Insession. As of the Separation Date,
Insession will deliver to TSAI all of the following:
(a) In each case where Insession is a party to any agreement or
instrument referred to in Section 3.1, a duly executed counterpart of such
agreement or instrument; and
(b) Resignations of each person who is an officer or director of TSAI
or its Subsidiaries immediately prior to the Separation Date, and who will be an
employee of Insession from and after the Separation Date.
4. The IPO, Actions Pending the IPO and Option Grant.
4.1 Transactions Prior to the IPO. Subject to the conditions specified in
Section 4.3, TSAI and Insession shall use their reasonable commercial efforts to
consummate the IPO. Such efforts shall include, but not necessarily be limited
to, those specified in this Section 4.1
(a) Registration Statement. Insession shall file the IPO Registration
Statement, and such amendments or supplements thereto as may be necessary in
order to cause the same to become and remain effective as required by law or by
the managing underwriters for the IPO (the "Underwriters"), including, but not
limited to, filing such amendments to the IPO Registration Statement as may be
required by the underwriting agreement to be entered into between Insession and
the Underwriters (the "Underwriting Agreement"), the Securities and Exchange
Commission (the "Commission") or federal, state or foreign securities laws.
TSAI and Insession shall also cooperate in preparing, filing with the Commission
and causing to become effective a registration statement registering the
Insession Common Stock under the Securities and Exchange Act of 1934, as amended
(the "Exchange Act"), and any registration statements or amendments thereof
which are required to reflect the establishment of, or amendments to, any
employee benefit and other plans necessary or appropriate in connection
with the IPO, the Separation, the Distribution or the other transactions
contemplated by this Agreement.
(b) Underwriting Agreement. Insession shall enter into the
Underwriting Agreement, in form and substance reasonably satisfactory to
Insession, and shall comply with its obligations thereunder.
(c) Nasdaq Listing. Insession shall prepare, file and use reasonable
commercial efforts to seek to make effective, an application for listing of the
Insession Common Stock issued in the IPO on the Nasdaq National Market
("Nasdaq"), subject to declaration of effectiveness of the designation of the
Insession Common Stock as Nasdaq national market securities.
(d) Blue Sky. Insession shall prepare, file, and use reasonable
commercial efforts to make effective any required filings with regard to state
securities and blue sky laws of the United States and any comparable laws of any
applicable foreign jurisdiction.
4.2 Cooperation. Insession shall consult with, and cooperate in all
respects with, TSAI in connection with the pricing of the Insession Common Stock
to be offered in the IPO and shall, at TSAI's direction, promptly take any and
all actions necessary or desirable to consummate the IPO as contemplated by the
IPO Registration Statement and the Underwriting Agreement.
4.3 Conditions Precedent to Consummation of the IPO. The obligations of
the Parties to consummate the IPO shall be conditioned on the satisfaction of
the following conditions:
(a) Registration Statement. The IPO Registration Statement shall have
been filed and declared effective by the Commission, and there shall be no stop-
order in effect with respect thereto.
(b) Blue Sky. The actions and filings with regard to state securities
and blue sky laws of the United States (and any comparable laws of any
applicable foreign jurisdictions) shall have been taken and, where applicable,
have become effective or been accepted.
(c) Nasdaq Listing. The Insession Common Stock to be issued in the
IPO shall have been accepted for listing on the Nasdaq and designated as
national market securities.
(d) Underwriting Agreement. Insession shall have entered into the
Underwriting Agreement and all conditions to the obligations of Insession and
the Underwriters shall have been satisfied or waived.
(e) Common Stock Ownership. TSAI shall be satisfied in its sole
discretion that it will own at least 80.1% of the Insession Common Stock
following the IPO. All other conditions to permit the Distribution to qualify
as a tax-free distribution to TSAI, Insession and TSAI's stockholders shall, to
the extent applicable as of the time of the IPO, be satisfied. There shall be
no event or condition that is likely to cause any of such conditions not to be
satisfied as of the time of the Distribution or thereafter.
(f) No Legal Restraints. No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Separation or the IPO or any of
the other transactions contemplated by this Agreement shall be in effect.
(g) Other Actions. Such other actions as the Parties may, based upon
the advice of counsel, reasonably request to be taken prior to the IPO in order
to assure the successful completion of the IPO shall have been taken.
(h) No Termination. This Agreement shall not have been terminated.
4.4. Option Grant.
(a) Grant of Option. Insession grants to TSAI, on the terms and
conditions set forth in this Section 4.4, a continuing right (the "Insession
Stock Option") to purchase from Insession, at the times set forth in this
Section, such number of shares of Insession Common Stock as is necessary to
allow TSAI to maintain Tax Control of Insession. The exercise price for the
shares of Insession Common Stock purchased pursuant to the Insession Stock
Option shall be the Market Price of the Insession Common Stock as of the date of
first delivery of notice of exercise of the Insession Stock Option by TSAI to
Insession.
(b) Exceptions to Grant. The provisions of Section 4.4(a)
notwithstanding, the Insession Stock Option granted pursuant to Section 4.4
shall not apply and shall not be exercisable in connection with the issuance by
Insession of any shares of Insession Common Stock pursuant to any stock option
or other executive or employee benefit or compensation plan maintained by
Insession, so long as, from and after the date of this Agreement and prior to
the issuance of such shares, Insession has repurchased from shareholders and not
subsequently reissued a number of shares equal or greater to the number of
shares to be issued in any such issuance.
(c) Notice by Insession. At least 15 business days prior to (i) the
issuance of any shares of Insession Common Stock (other than in connection with
the IPO, including the full exercise of all underwriters' over-allotment options
granted in connection with the IPO) or (ii) the first date on which any event
could occur that, in the absence of a full or partial exercise of the Insession
Stock Option, would result in TSAI not having Tax Control of Insession,
Insession will notify TSAI in writing (a "Stock Option Notice") of any plans it
has to issue such shares or the date on which such event could first occur. Each
Stock Option Notice must specify the date on which Insession intends to issue
such additional shares or on which such event could first occur (such issuance
or event being referred to herein as an "Issuance Event" and the date of such
issuance or event as an "Issuance Event Date"), the number of shares Insession
intends to issue or may issue and the other terms and conditions of such
Issuance Event.
(d) Option Exercise and Payment. The Insession Stock Option may be
exercised by TSAI for a number of shares equal to or less than the number of
shares that are necessary for the TSAI to maintain Tax Control of Insession.
The option may be exercised at
any time after receipt of a Stock Option Notice and prior to the applicable
Issuance Event Date by the delivery to Insession of a written notice to such
effect specifying (i) the number of shares of Insession Common Stock to be
purchased by TSAI and (ii) a calculation of the exercise price for such shares.
Upon any such exercise of the Insession Stock Option, Insession will, prior to
the applicable Issuance Event Date, deliver to TSAI, against payment therefore,
certificates (issued in the name of TSAI) representing the shares of Insession
Common Stock, being purchased upon such exercise. Payment for such shares shall
be made by wire transfer or intrabank transfer of immediately-available funds to
such account as shall be specified by Insession, for the full purchase price for
such shares.
(e) Effect of Failure to Exercise. Except as provided in Section
4.4(f), any failure by TSAI to exercise its Insession Stock Option, or any
exercise for less than all shares purchasable under the Insession Stock Option,
in connection with any particular Issuance Event shall not affect TSAI's right
to exercise the Insession Stock Option in connection with any subsequent
Issuance Event.
(f) Termination of Option. The Insession Stock Option shall terminate
upon the earlier of (i) the Distribution Date and (ii) the occurrence of any
Issuance Event that, after considering TSAI's response thereto and to any other
Issuance Events, results in TSAI owning, in the aggregate, less than 45% of the
total combined voting power of all classes of Insession Voting Stock, other than
any Issuance Event in violation of this Agreement.
5. The Distribution.
5.1 The Distribution.
(a) Delivery of Shares for Distribution. Subject to Section 5.4, on
or prior to the date the Distribution is effective (the "Distribution Date"),
TSAI will deliver to the distribution agent (the "Distribution Agent") to be
appointed by TSAI to distribute to the stockholders of TSAI the shares of
Insession Common Stock held by TSAI pursuant to the Distribution for the benefit
of holders of record of TSAI Common Stock on the Record Date, a single stock
certificate, endorsed by TSAI, representing all of the outstanding shares of
Insession Common Stock then owned by TSAI, and shall cause the transfer agent
for the shares of TSAI Common Stock to instruct the Distribution Agent to
distribute on the Distribution Date the appropriate number of such shares of
Insession Common Stock to each such holder or designated transferee or
transferees of such holder.
(b) Shares Received. Subject to Sections 5.4 and 5.5, each holder of
TSAI Common Stock on the Record Date (or such holder's designated transferee or
transferees) will be entitled to receive in the Distribution a number of shares
of Insession Common Stock equal to the product of (i) the number of shares of
Insession Common Stock beneficially owned by TSAI on the Record Date multiplied
by (ii) a fraction the numerator of which is the number of shares of TSAI Common
Stock beneficially owned by such holder on the Record Date and the denominator
of which is the number of shares of TSAI Common Stock outstanding on the Record
Date.
(c) Obligation to Provide Information. Insession and TSAI, as the
case may be, will provide to the Distribution Agent all share certificates and
any information required in order to complete the Distribution on the basis
specified above.
5.2 Actions Prior to the Distribution.
(a) Information Statement. TSAI and Insession shall prepare and mail,
prior to the Distribution Date, to the holders of common stock of TSAI, such
information concerning Insession and the Distribution and such other matters as
TSAI shall reasonably determine are necessary and as may be required by law.
TSAI and Insession will prepare, and Insession will, to the extent required
under applicable law, file with the Commission any such documentation which TSAI
and Insession determine is necessary or desirable to effectuate the
Distribution, and TSAI and Insession shall each use its reasonable commercial
efforts to obtain all necessary approvals from the Commission with respect to
the Distribution as soon as practicable.
(b) Blue Sky. TSAI and Insession shall take all such actions as may
be necessary or appropriate under the securities or blue sky laws of the United
States (and any comparable laws under any foreign jurisdiction) in connection
with the Distribution.
(c) Nasdaq Listing. Insession shall prepare and file, and shall use
its reasonable commercial efforts to have approved, an application for the
additional listing of the Insession Common Stock to be distributed in the
Distribution on the Nasdaq, subject to declaration of effectiveness of the
designation of such Insession Common Stock as Nasdaq national market
securities.
(d) Conditions. TSAI and Insession shall take all reasonable steps
necessary and appropriate to cause the conditions set forth in Section 5.4 to be
satisfied and to effect the Distribution on the Distribution Date.
5.3 Sole Discretion of TSAI. TSAI currently intends, following the
consummation of the IPO, to complete the Distribution as soon as practicable
after obtaining the IRS Ruling. TSAI shall, in its sole and absolute
discretion, determine the date of the consummation of the Distribution and all
terms of the Distribution, including, without limitation, the form, structure
and terms of any transaction(s) and/or offering(s) to effect the Distribution
and the timing of and conditions to the consummation of the Distribution. In
addition, TSAI may at any time and from time to time until the completion of the
Distribution, modify or change the terms of the Distribution, including, without
limitation, by accelerating or delaying the timing of the consummation of all or
part of the Distribution. Insession shall cooperate with TSAI in all respects
to accomplish the Distribution and shall, at TSAI's direction, promptly take any
and all actions necessary or desirable to effect the Distribution, including,
without limitation, the registration under the Securities Act of the Insession
Common Stock on an appropriate registration form or forms to be designated by
TSAI. TSAI shall select any investment banker(s) and manager(s) in connection
with the Distribution, as well as any financial printer, solicitation and/or
exchange agent and outside counsel for TSAI; provided, however, that nothing
herein shall prohibit Insession from engaging (at its own expense) its own
financial, legal, accounting and other advisors in connection with the
Distribution.
5.4 Conditions Precedent to Distribution. The following are conditions
that must take place prior to the consummation of the Distribution. The
conditions are for the sole benefit of TSAI and shall not give rise to or create
any duty on the part of TSAI or the TSAI Board of Directors to waive or not
waive any such condition.
(a) IRS Ruling. TSAI shall have obtained a private letter ruling
("IRS Ruling") from the IRS in form and substance satisfactory to TSAI (in its
sole discretion), and such ruling shall remain in effect as of the Distribution
Date, to the effect that (i) the transfer by the TSAI Group to the Insession
Group of the property, subject to liabilities, held by TSAI related to the
Insession Business, and Insession's assumption of liabilities held by TSAI
related to the Insession Business, followed by the distribution by TSAI of all
of its Insession stock to the stockholders of TSAI, will qualify as a
reorganization under Sections 368(a)(1)(D) and 355 of the Code; (ii) no gain or
loss will be recognized by TSAI on its transfer of property related to the
Insession Business to Insession; (iii) no gain or loss will be recognized by
Insession on its receipt of property related to the Insession Business from
TSAI; and (iv) no gain or loss will be recognized by (and no amount will
otherwise be included in the income of) the stockholders of TSAI upon their
receipt of Insession common stock pursuant to the Distribution;
(b) Government Approvals. Any material governmental approvals and
consents necessary to consummate the Distribution shall have been obtained and
be in full force and effect;
(c) No Legal Restraints. No order, injunction or decree issued by any
court or agency of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the Distribution shall be in effect
and no other event outside the control of TSAI shall have occurred or failed to
occur that prevents the consummation of the Distribution; and
(d) No Material Adverse Effect. No other events or developments shall
have occurred subsequent to the Separation Date that, in the judgment of the
Board of Directors of TSAI, would result in the Distribution having a material
adverse effect on TSAI or on the stockholders of TSAI.
5.5 Fractional Shares. As soon as practicable after the Distribution
Date, TSAI shall direct the Distribution Agent to determine the number of whole
shares and fractional shares of Insession Common Stock allocable to each holder
of record or beneficial owner of common stock of TSAI as of the Record Date, to
aggregate all such fractional shares and, subject to applicable securities laws,
sell the whole shares obtained thereby at the direction of TSAI, in open market
transactions, at then prevailing trading prices, and to cause to be distributed
to each such holder or for the benefit of each such beneficial owner to which a
fractional share shall be allocable such holder's or owner's ratable share of
the proceeds of such sale, after making appropriate deductions of the amount
required to be withheld for federal income tax purposes and after deducting an
amount equal to all brokerage charges, commissions and transfer taxes attributed
to such sale. TSAI and the Distribution Agent shall use their reasonable
commercial efforts to aggregate the shares of common stock of TSAI that may be
held by any beneficial
owner thereof through more than one account in determining the fractional share
allocable to such beneficial owner.
6. Covenants and Other Matters.
6.1 Covenants to Preserve Tax-free Status of the Distribution. The Parties
represent and warrant to, and covenant and agree with, each other as follows:
(a) Restrictions on Insession During Pre-Distribution Period.
Insession shall not take any action (such action to include, if relevant, the
issuance of Insession Common Stock upon the exercise by the holders thereof of
all options or convertible securities issued by Insession) during the Pre-
Distribution Period if, as a result of taking such action, Insession would issue
a number of shares of Insession Common Stock (including by way of the exercise
of stock options or the issuance of restricted stock) that would cause TSAI to
cease to have Tax Control of Insession, unless prior to the consummation of such
transaction TSAI has determined, in its sole and absolute discretion, that such
transaction would not jeopardize the Tax-Free Status of the Distribution.
Notwithstanding the foregoing provisions of this Section 6.1(a), Insession shall
be permitted to issue stock options and restricted stock awards to its employees
so long as (i) Insession repurchases sufficient shares of issued and outstanding
Insession Common Stock on or prior to the date such options are exercisable or
restricted stock is vested (or deemed vested) to insure that, assuming the
exercise of all exercisable options and vesting of such restricted stock, TSAI
would not cease to have Tax Control of Insession and (ii) Insession provides
TSAI with prior written notification of the procedures by which Insession
intends to comply with its obligation described in clause (i) above and TSAI
approves of such procedures (which approval shall not be unreasonably withheld).
All of the restrictions on Insession contained in this Section 6.1 shall apply
to Insession during the Pre Distribution Period as well as the other periods
specified in this Section 6.1.
(b) Proposed Acquisition Transactions. Until the first day after the
two-year anniversary of the Distribution Date, Insession shall not enter into
any Proposed Acquisition Transaction or, to the extent Insession has the right
to prohibit any Proposed Acquisition Transaction, permit any Proposed
Acquisition Transaction to occur unless prior to the consummation of such
Proposed Acquisition Transaction TSAI has determined, in its sole and absolute
discretion, that such Proposed Acquisition Transaction would not jeopardize the
Tax-Free Status of the Distribution.
(c) Continuation of Active Trade or Business. Until the first day
after the two-year anniversary of the Distribution Date:
(i) Insession shall continue to conduct the Active Trade or
Business.
(ii) Subject to clause (c)(iii) below, Insession shall not (A)
liquidate, dispose of, or otherwise discontinue the conduct of any portion
of the Active Trade or Business with a Value in excess of one million
dollars or (B) dispose of any business or assets that would cause Insession
to be operated in a manner inconsistent in any material respect with the
business purposes for the Distribution as set forth in the Representation
Letters
and IRS Ruling described in Section 5.4(a), in each case unless TSAI has
determined, in its sole and absolute discretion, that such liquidation,
disposition, or discontinuance would not jeopardize the Tax-Free Status of
the Distribution.
(iii) Insession shall not under any circumstances liquidate,
dispose of, or otherwise discontinue the conduct of any portion of the
Active Trade or Business if such liquidation, disposition or discontinuance
would breach Section 6.1(d). Insession shall continue the active conduct of
the Active Trade or Business primarily through officers and employees of
Insession or its Subsidiaries (and not primarily through independent
contractors) who are not also officers or employees of TSAI or of any TSAI
Affiliates. Notwithstanding the foregoing:
(A) except with respect to any corporation or other entity
the status of which as the direct owner of an active trade or business is
material to the Tax-Free Status of the Distribution, liquidations of any of
Insession's Subsidiaries into Insession or one or more Subsidiaries
directly or indirectly controlled by Insession shall not be deemed to
breach this Section 6.1(c); and
(B) Insession shall not be prohibited from liquidating,
disposing of or otherwise discontinuing the conduct of one or more trades
or businesses that constituted part of the Active Trade or Business, or any
portion thereof, provided that, in the case of this clause (B), the
aggregate Value of such trades or businesses, or portions thereof, so
liquidated, disposed of or discontinued shall not exceed one million
dollars. For purposes of the preceding sentence and Section 6.1 (c)(ii)
above, asset retirements, sale-leaseback arrangements and a discontinuance
of product lines within a trade or business shall not be deemed a
liquidation, disposition or discontinuance of a trade or business or
portion thereof if the active conduct of such trade or business is
continued.
(iv) Solely for purposes of this Section 6.1(c), Insession shall
not be treated as directly or indirectly controlling a Subsidiary unless
Insession owns, directly or indirectly, shares of capital stock of such
Subsidiary constituting Tax Control.
(d) Continuity of Business.
(i) Until the first day after the two-year anniversary of the
Distribution Date, (A) Insession shall not voluntarily dissolve or
liquidate, and (B) neither Insession nor any Subsidiaries directly or
indirectly controlled by Insession shall sell, transfer, or otherwise
dispose of or agree to dispose of assets (including, for such purpose, any
shares of capital stock of such Subsidiaries) that, in the aggregate,
constitute more than (x) 60% of the gross assets of Insession or (y) 60% of
the consolidated gross assets of Insession and such Subsidiaries, unless
prior to the consummation of such transaction TSAI has determined, in its
sole and absolute discretion, that such transaction would not jeopardize
the Tax-Free Status of the Distribution. The amount of gross assets of
Insession and such Subsidiaries shall be based on the fair market value of
each such asset as of the applicable Distribution Date.
(ii) Sales, transfers or other dispositions by Insession or any
of its Subsidiaries to Insession or one or more Subsidiaries directly or
indirectly controlled by Insession shall not be included in any
determinations under this Section 6.1(d) of whether such 60% or more of the
gross assets of Insession or 60% of the consolidated gross assets of
Insession and such Subsidiaries have been sold, transferred or otherwise
disposed of.
(iii) Solely for purposes of this Section 6.1(d), Insession
shall not be treated as directly or indirectly controlling a Subsidiary
unless Insession owns, directly or indirectly, shares of capital stock of
such Subsidiary constituting Tax Control.
(e) Intercompany Indebtedness. From the Distribution until the first
day after the two-year anniversary of the Distribution Date, Insession shall
not, and shall not permit any of its Subsidiaries to, create, incur, assume or
allow to exist any indebtedness with TSAI or any TSAI Affiliate, other than
indebtedness in the ordinary course of business or hereunder or under any
Ancillary Agreement.
(f) Miscellaneous Actions. Until the first day after the two-year
anniversary of the Distribution Date, Insession shall not take, or permit any of
its Subsidiaries to enter into any transaction or series of transactions
involving a corporate acquisition or divestiture or sale or purchase of its
capital stock or capital stock derivatives or agree to enter into any such
transactions or substantially similar transactions that to the knowledge of
Insession would be reasonably likely to jeopardize the Tax Free Status of the
Distribution, including any transaction that would be reasonably likely to be
inconsistent with any representation made in the Representation Letters, unless
prior to the consummation of such action or transaction TSAI has determined, in
its sole discretion based on the advice of its outside tax advisers, that such
transaction would not jeopardize the Tax-Free Status of the Distribution.
Notwithstanding the foregoing, if and to the extent that any transaction is
described in and permitted pursuant to Sections 6.1(h), (i), and (j) such
transaction shall not be prohibited by this Section 6.1(f).
(g) Permitted Actions and Transactions. Notwithstanding the foregoing,
the provisions of Section 6.1 shall not prohibit Insession from implementing any
transaction upon which the IRS has granted a favorable ruling in, or which is
described in reasonable detail in, any private letter ruling granted to TSAI or
Insession by the IRS.
(h) Notice of Subsequent Insession Actions. Each of Insession and TSAI
shall furnish the other with a copy of any ruling requests or other documents
delivered to the IRS that relates to the Distribution or that could otherwise be
reasonably expected to have an effect on the Tax-Free Status of the
Distribution.
(i) Specific Cooperation Obligations.
(i) Each of Insession and TSAI shall cooperate with the other
and shall take (or refrain from taking) all such actions as the other may
reasonably request in connection with obtaining any TSAI determination
referred to in Section 6.1. Such cooperation shall include, without
limitation, providing any information and/or representations reasonably
requested by the other to enable either party (or counsel for
such party) to obtain and maintain any Subsequent Tax Opinion/Ruling that
would permit any action described in Section 6.1 to be taken by Insession
or an Affiliated Company of Insession. From and after any Representation
Date in connection with obtaining any such determination or the receipt of
a Subsequent Tax Opinion/Ruling and until the first day after the two-year
anniversary of the date of such determination or receipt, neither Party
shall take (nor shall it refrain from taking) any action that would have
caused such representation to be untrue unless the other Party has
determined, in its sole and absolute discretion, that such action would not
jeopardize the Tax-Free Status of the Distribution.
(ii) If Insession notifies TSAI that it desires to take one of
the actions described in Section 6.1 and TSAI concludes that such action
might jeopardize the Tax-Free Status of the Distribution, TSAI shall, at
the request of Insession, elect either to (i) use all commercially
reasonable efforts to obtain a Subsequent Tax Opinion/Ruling that would
permit Insession to take the specified action, and Insession shall
cooperate in connection with such efforts, or (ii) provide all reasonable
cooperation to INSESSION in connection with Insession obtaining such a
Subsequent Tax Opinion/Ruling in form and substance reasonably satisfactory
to TSAI; provided, however, that the reasonable out-of-pocket costs and
expenses incurred by TSAI or Insession of obtaining any such Subsequent Tax
Opinion/Ruling shall be borne by Insession.
(iii) If TSAI, at any time prior to the Distribution Date,
ceases to own Insession Common Stock constituting Tax Control and such
failure was not caused by (A) any breach by Insession of any of its
representations, warranties, covenants or other agreements made pursuant to
this Agreement or otherwise, or (B) the failure of TSAI to acquire
additional shares of Insession Common Stock under the terms of the
Insession Stock Option, Insession shall cooperate with TSAI and shall take
(or refrain from taking) all actions as TSAI may reasonably request so as
to permit TSAI to regain ownership of Insession Common Stock which
constitutes Tax Control and would not jeopardize the Tax-Free Status of the
Distribution.
(iv) If, at any time prior to the Distribution Date, TSAI ceases
to own Insession Common Stock constituting Tax Control and such failure was
caused by any breach by Insession of any of its representations,
warranties, covenants or other agreements made pursuant to this Agreement
or otherwise, in addition to any monetary damages or other indemnification
obligations owing pursuant to this Agreement, Insession shall promptly take
(or refrain from taking) all actions, including, but not limited to, the
purchase of Insession Common Stock in the open market, necessary so as to
permit TSAI to regain ownership of Insession Common Stock which constitutes
Tax Control and would not jeopardize the Tax-Free Status of the
Distribution.
(j) Notice Regarding Certain Actions or Transactions.
(i) Until all restrictions set forth in Section 6.1 have
expired, Insession shall give TSAI written notice of any intention to
effect or permit an action or transaction described in Section 6.1 and
which is prohibited thereunder at such time within a period of time
reasonably sufficient to enable TSAI (A) to make the determination referred
to in
Section 6.1 or (B) to prepare and seek any Subsequent Tax Opinion/
Ruling in connection with such proposed action or transaction. Each such
notice by Insession shall set forth the terms and conditions of the
proposed action or transaction, including, without limitation, as
applicable, the nature of any related action proposed to be taken by the
Board of Directors of Insession, the approximate number of shares of
Insession Common Stock proposed to be transferred or issued, the
approximate value of Insession's assets (or assets of any of Insession's
Subsidiaries) proposed to be transferred, the proposed timetable for such
action or transaction, and the number of shares of Insession Common Stock
otherwise then owned by the other party to the proposed action or
transaction, all with sufficient particularity to enable TSAI to make any
such required determination, including information required to prepare and
seek a Subsequent Tax Opinion/Ruling in connection with such proposed
action or transaction.
(ii) Within 30 days after TSAI receives such written notice from
Insession as required under Section 6.1(j), TSAI shall evaluate such
information and notify Insession in writing of (A) such determination or
(B) of TSAI's intent to seek a Subsequent Tax Opinion/Ruling and the
proposed date for submission of the request therefor, which date shall not
be more than 45 days after the date TSAI so notifies Insession of TSAI's
intent to seek a Subsequent Tax Opinion/Ruling, provided that such 45-day
period shall be appropriately extended for any period of noncompliance by
Insession with this Section. If TSAI makes a determination that an action
or transaction described in Section 6.1 would jeopardize the Tax-Free
Status of the Distribution, such notice to Insession shall set forth, in
reasonable detail, the reasons therefor. TSAI shall notify Insession
promptly, but in any event within two days, after the receipt of a
Subsequent Tax Opinion/Ruling.
6.2 Other Agreements. TSAI and Insession agree to execute or cause to be
executed by the appropriate parties and deliver, as appropriate, such other
agreements, instruments and other documents as may be necessary or desirable in
order to effect the purposes of this Agreement and the Ancillary Agreements.
6.3 Further Instruments. At the request of Insession, and without further
consideration, TSAI will execute and deliver, and will cause its applicable
Subsidiaries to execute and deliver, to Insession and its Subsidiaries such
other instruments of transfer, conveyance, assignment, substitution and
confirmation and take such action as Insession may reasonably deem necessary or
desirable in order more effectively to transfer, convey and assign to Insession
and its Subsidiaries and confirm Insession's and its Subsidiaries' title to all
of the assets, rights and other things of value contemplated to be transferred
to Insession and its Subsidiaries pursuant to this Agreement, the Ancillary
Agreements, and any documents referred to therein, to put Insession and its
Subsidiaries in actual possession and operating control of the assets relating
to the Insession Business and to permit Insession and its Subsidiaries to
exercise all rights with respect thereto (including, without limitation, rights
under contracts and other arrangements as to which the consent of any third
party to the transfer thereof shall not have previously been obtained). At the
request of TSAI and without further consideration, Insession will execute and
deliver, and will cause its applicable Subsidiaries to execute and deliver, to
TSAI and its Subsidiaries all instruments, assumptions, novations, undertakings,
substitutions or
other documents and take such other action as TSAI may reasonably deem necessary
or desirable in order to have Insession fully and unconditionally assume and
discharge the liabilities contemplated to be assumed by Insession under this
Agreement or any document in connection herewith and to relieve the TSAI Group
of any liability or obligation with respect thereto and evidence the same to
third parties. Neither TSAI nor Insession shall be obligated, in connection with
the foregoing, to expend money other than reasonable out-of-pocket expenses,
attorneys' fees and recording or similar fees. Furthermore, each Party, at the
request of the other Party, shall execute and deliver such other instruments and
do and perform such other acts and things as may be necessary or desirable for
effecting completely the consummation of the transactions contemplated by this
Agreement.
6.4 Agreement for Exchange of Information.
(a) Generally. Each of TSAI and Insession agrees to provide, or cause
to be provided, to each other, at any time before or after the Distribution
Date, as soon as reasonably practicable after written request therefor, any
Information in the possession or under the control of such Party that the
requesting Party reasonably needs (i) to comply with reporting, disclosure,
filing or other requirements imposed on the requesting Party (including under
applicable securities laws) by a Governmental Authority having jurisdiction over
the requesting Party, (ii) for use in any other judicial, regulatory,
administrative or other proceeding or in order to satisfy audit, accounting,
claims, regulatory, litigation or other similar requirements, (iii) to comply
with its obligations under this Agreement or any Ancillary Agreement or (iv) in
connection with the ongoing businesses of TSAI or Insession, as the case may be;
provided, however, that in the event that any Party determines that any such
provision of Information could be commercially detrimental, violate any law or
agreement, or waive any attorney-client privilege, the Parties shall take all
reasonable measures to permit the compliance with such obligations in a manner
that avoids any such harm or consequence.
(b) Internal Accounting Controls; Financial Information. After the
Separation Date, (i) each Party shall maintain in effect at its own cost and
expense adequate systems and controls for its business to the extent necessary
to enable the other Party to satisfy its reporting, accounting, audit and other
obligations, and (ii) each Party shall provide, or cause to be provided, to the
other Party and its Subsidiaries in such form as such requesting Party shall
request, at no charge to the requesting Party, all financial and other data and
information as the requesting Party determines necessary or advisable in order
to prepare its financial statements and reports or filings with any Governmental
Authority.
(c) Ownership of Information. Any Information owned by a Party that
is provided to a requesting Party pursuant to this Section 6.6 shall be deemed
to remain the property of the providing Party. Unless specifically set forth
herein, nothing contained in this Agreement shall be construed as granting or
conferring rights of license or otherwise in any such Information.
(d) Record Retention. To facilitate the possible exchange of
Information pursuant to this Section 6.4 and other provisions of this Agreement
after the Distribution Date, each Party agrees to use its reasonable commercial
efforts to retain all Information in its
respective possession or control on the Distribution Date substantially in
accordance with the policies of TSAI as in effect on the Separation Date.
However, except as set forth in the Tax Sharing Agreement, at any time after the
Distribution Date, each Party may amend its respective record retention policies
at such Party's discretion; provided, however, that if a Party desires to effect
the amendment within three years after the Distribution Date, the amending Party
must give 30 days prior written notice of such change in the policy to the other
Party to this Agreement.
(e) Destruction of Information. No Party will destroy, or permit any
of its Subsidiaries to destroy, any Information that exists on the Separation
Date (other than Information that is permitted to be destroyed under the current
record retention policies of TSAI) and that falls under the categories listed in
Section 6.4(a), without first using its reasonable commercial efforts to notify
the other Party of the proposed destruction and giving the other Party the
opportunity to take possession of such Information prior to such destruction.
(f) Limitation of Liability. No Party shall have any liability to any
other Party in the event that any Information exchanged or provided pursuant to
this Section 6.4 is found to be inaccurate, in the absence of gross negligence
or willful misconduct by the Party providing such Information. No Party shall
have any liability to any other Party if any Information is destroyed or lost
after reasonable commercial efforts by such Party to comply with the provisions
of Section 6.4(d).
(g) Other Agreements Providing for Exchange of Information. The
rights and obligations granted under this Section 6.4 are subject to any
specific limitations, qualifications or additional provisions on the sharing,
exchange or confidential treatment of Information set forth in this Agreement
and any Ancillary Agreement.
(h) Production of Witnesses; Records; Cooperation. After the
Distribution Date, except in the case of a legal or other proceeding by one
Party against another Party (which shall be governed by such discovery rules as
may be applicable under Section 6.10 or otherwise), each Party hereto shall use
its reasonable commercial efforts to make available to each other Party, upon
written request, the former, current and future directors, officers, employees,
other personnel and agents of such Party as witnesses and any books, records or
other documents within its control or which it otherwise has the ability to make
available, to the extent that any such person (giving consideration to business
demands of such directors, officers, employees, other personnel and agents) or
books, records or other documents may reasonably be required in connection with
any legal, administrative or other proceeding in which the requesting Party may
from time to time be involved, regardless of whether such legal, administrative
or other proceeding is a matter with respect to which indemnification may be
sought hereunder. The requesting Party shall bear all costs and expenses in
connection therewith.
6.5 Auditors and Audits; Annual and Quarterly Statements and Accounting.
Each Party agrees that, for so long as TSAI is required in accordance with
United States generally accepted accounting principles to consolidate
Insession's results of operations and financial position:
(a) Selection of Auditors. Insession shall not select a different
accounting firm from that used by TSAI to serve as its (and its Subsidiaries')
independent certified public accountants ("Insession's Auditors") for purposes
of providing an opinion on its consolidated financial statements without TSAI's
prior written consent.
(b) Date of Auditors' Opinion and Quarterly Reviews. Insession shall
use its reasonable commercial efforts to enable the Insession Auditors to
complete their audit such that they will date their opinion on Insession's
audited annual financial statements on the same date that TSAI's independent
certified public accountants ("TSAI's Auditors") date their opinion on TSAI's
audited annual financial statements, and to enable TSAI to meet its timetable
for the printing, filing and public dissemination of TSAI's annual financial
statements. Insession shall use its reasonable commercial efforts to enable the
Insession Auditors to complete their quarterly review procedures such that they
will provide clearance on Insession's quarterly financial statements on the same
date that TSAI's Auditors provide clearance on TSAI's quarterly financial
statements.
(c) Annual and Quarterly Financial Statements. Insession shall
provide to TSAI on a timely basis all Information that TSAI reasonably requires
to meet its schedule for the preparation, printing, filing, and public
dissemination of TSAI's annual and quarterly financial statements. Without
limiting the generality of the foregoing, Insession will provide all required
financial Information with respect to Insession and its Subsidiaries to
Insession's Auditors in a sufficient and reasonable time and in sufficient
detail to permit Insession's Auditors to take all steps and perform all reviews
necessary to provide sufficient assistance to TSAI's Auditors with respect to
financial Information to be included or contained in TSAI's annual and quarterly
financial statements. Similarly, TSAI shall provide to Insession on a timely
basis all financial Information that Insession reasonably requires to meet its
schedule for the preparation, printing, filing, and public dissemination of
Insession's annual and quarterly financial statements. Without limiting the
generality of the foregoing, TSAI will provide all required financial
Information with respect to TSAI and its Subsidiaries to TSAI's Auditors in a
sufficient and reasonable time and in sufficient detail to permit TSAI's
Auditors to take all steps and perform all reviews necessary to provide
sufficient assistance to Insession's Auditors with respect to Information to be
included or contained in Insession's annual and quarterly financial statements.
(d) Identity of Personnel Performing the Annual Audit and Quarterly
Reviews. Insession shall authorize Insession's Auditors to make available to
TSAI's Auditors both the personnel who performed or will perform the annual
audits and quarterly reviews of Insession and work papers related to the annual
audits and quarterly reviews of Insession, in all cases within a reasonable time
prior to Insession's Auditors' opinion date, so that TSAI's Auditors are able to
perform the procedures they consider necessary to take responsibility for the
work of Insession's Auditors as it relates to TSAI's Auditors' report on TSAI's
financial statements, all within sufficient time to enable TSAI to meet its
timetable for the printing, filing and public dissemination of TSAI's annual and
quarterly statements. Similarly, TSAI shall authorize TSAI's Auditors to make
available to Insession's Auditors both the personnel who performed or will
perform the annual audits and quarterly reviews of TSAI and work papers related
to the annual audits and quarterly reviews of TSAI, in all cases within a
reasonable time prior to TSAI's Auditors' opinion date, so that Insession's
Auditors are able to perform the
procedures they consider necessary to take responsibility for the work of TSAI's
Auditors as it relates to Insession's Auditors' report on Insession's
statements, all within sufficient time to enable Insession to meet its timetable
for the printing, filing and public dissemination of Insession's annual and
quarterly financial statements.
(e) Access to Books and Records. Insession shall provide TSAI's
internal auditors and their designees access to Insession's and its
Subsidiaries' books and records so that TSAI may conduct reasonable audits
relating to the financial statements provided by Insession pursuant hereto as
well as to the internal accounting controls and operations of Insession and its
Subsidiaries. TSAI shall provide Insession's internal auditors and their
designees access to TSAI's and its Subsidiaries' books and records so that
Insession may conduct reasonable audits relating to the financial statements
provided by TSAI pursuant hereto as well as to the internal accounting controls
and operations of TSAI and its Subsidiaries.
(f) Conflict with Third-Party Agreements. Nothing in Sections 6.4 and
6.5 shall require Insession to violate any agreement with any third party
regarding the confidentiality of confidential and proprietary information
relating to that third party or its business; provided, however, that in the
event that Insession is required under Sections 6.4 and 6.5 to disclose any such
Information, Insession shall use all commercially reasonable efforts to seek to
obtain such third party's consent to the disclosure of such information.
6.6 Notice of Change in Accounting Principles. Until the earlier of (i) a
Change of Control of TSAI or (ii) the first day after the second anniversary of
the Distribution, Insession shall give TSAI as much prior notice as reasonably
practical of any proposed determination of, or any significant changes in, or
accounting principles from those in effect on the Separation Date and Insession
will consult with TSAI and, if requested by TSAI, Insession will consult with
TSAI's independent public accountants with respect thereto. Until the earlier
of (i) a Change of Control of Insession or (ii) the first day after the second
anniversary of the Distribution, TSAI shall give Insession as much prior notice
as reasonably practical of any proposed determination of, or any significant
changes in, or accounting principles from those in effect on the Separation Date
and TSAI will consult with Insession and, if requested by Insession, TSAI will
consult with Insession's independent public accountants with respect thereto.
6.7 Consistency with Past Practices. At all times, TSAI and Insession
will conduct the Insession Business before the Separation Date in the ordinary
course, consistent with past practices.
6.8 Payment of Expenses. Except as otherwise provided in this Agreement,
any of the Ancillary Agreements or any other agreement between the Parties
relating to the Separation, the IPO or the Distribution, all costs and expenses
of either Party in connection with the Separation, the IPO and the Distribution
shall be paid by the Party that incurs such costs and expenses.
(a) Certain Expenses Relating to the Separation. TSAI shall be
responsible for the payment of all costs, fees and expenses relating to the
Separation including, but not limited to, the payment of (a) the costs, fees and
expenses of all of Insession's financial, legal,
accounting and other advisors incurred in connection with the Separation and (b)
any out-of-pocket fees, costs and expenses incurred by Insession in connection
with the Separation.
(b) Certain Expenses Relating to the IPO. Insession shall be
responsible for the payment of all costs, fees and expenses relating to the IPO,
including, but not limited to, the payment of (a) the costs, fees and expenses
of all of TSAI's financial, legal, accounting and other advisors incurred in
connection with the IPO and (b) any out-of-pocket fees, costs and expenses
incurred by TSAI in connection with the IPO. TSAI shall be entitled to receive
from the proceeds of the IPO reimbursement of its out-of-pocket expenses
attributable to the IPO.
(c) Certain Expenses Relating to the Distribution. TSAI shall be
responsible for the payment of all costs, fees and expenses relating to the
Distribution including, but not limited to, the payment of (a) the costs, fees
and expenses of all of Insession's financial, legal, accounting and other
advisors incurred in connection with the Distribution and (b) any out-of-pocket
fees, costs and expenses incurred by Insession in connection with the
Distribution.
(d) Certain Expenses Relating to IRS Ruling. Insession and TSAI shall
allocate the responsibility for the payment of all costs, fees and expenses
relating to the IRS Ruling including, but not limited to, the payment of (a) the
costs, fees and expenses of all of Insession's financial, legal, accounting and
other advisors incurred in connection with the IRS Ruling and (b) any out-of-
pocket fees, costs and expenses incurred by Insession in connection with the IRS
Ruling.
6.9 Foreign Subsidiaries. TSAI and Insession shall cause each of their
foreign subsidiaries to execute such local transfer agreements, assignments,
assumptions, novations and other documents as shall be necessary to effect the
purposes of this Agreement with respect to their respective operations outside
the United States.
6.10 Dispute Resolution.
(a) Mediation. If a dispute, controversy or claim ("Dispute") arises
between the Parties relating to the interpretation or performance of this
Agreement or the Ancillary Agreements, or the grounds for the termination
hereof, appropriate senior executives (i.e. at least V.P. level) of each Party
who shall have the authority to resolve the matter shall meet to attempt in good
faith to negotiate a resolution of the Dispute prior to pursuing other available
remedies. The initial meeting between the appropriate senior executives shall
be referred to herein as the "Dispute Resolution Commencement Date."
Discussions and correspondence relating to trying to resolve such Dispute shall
be treated as confidential information developed for the purpose of settlement
and shall be exempt from discovery or production and shall not be admissible.
If the senior executives are unable to resolve the Dispute within 30 days from
the Dispute Resolution Commencement Date, and either Party wishes to pursue its
rights relating to such Dispute, then the Dispute will be mediated by a mutually
acceptable mediator appointed pursuant to the mediation rules of the American
Arbitration Association ("AAA") within 30 days after written notice by one party
to the other demanding non-binding mediation. Neither Party may unreasonably
withhold consent to the selection of a mediator or the location of the
mediation. Both Parties will share the costs of the mediation equally, except
that each Party shall bear its
own costs and expenses, including attorney's fees, witness fees, travel
expenses, and preparation costs. The Parties may also agree to replace mediation
with some other form of non-binding or binding ADR.
(b) Arbitration. Any Dispute which the parties cannot resolve through
mediation within 90 days of the Dispute Resolution Commencement Date, unless
otherwise mutually agreed, shall be submitted to final and binding arbitration
under the then current Commercial Arbitration Rules of the AAA, by an arbitrator
in ▇▇▇▇ County, Illinois. Such arbitrator shall be selected by the mutual
agreement of the Parties or, failing such agreement, shall be selected according
to the aforesaid AAA rules. The arbitrator will be instructed to prepare and
deliver a written, reasoned opinion stating his decision within 30 days of the
completion of the arbitration. The prevailing Party in such arbitration shall
be entitled to expenses, including costs and reasonable attorneys' and other
professional fees, incurred in connection with the arbitration (but excluding
any costs and fees associated with prior negotiation or mediation). The
decision of the arbitrator shall be final and non-appealable and may be enforced
in any court of competent jurisdiction. The use of any ADR procedures will not
be construed under the doctrine of laches, waiver or estoppel to adversely
affect the rights of either Party.
(c) Court Action. Any Dispute regarding the following is not required
to be negotiated, mediated or arbitrated prior to seeking relief from a court of
competent jurisdiction: breach of any obligation of confidentiality;
infringement, misappropriation, or misuse of any intellectual property right;
any other claim where interim relief from the court is sought to prevent serious
and irreparable injury to one of the parties or to others. However, the Parties
to the Dispute shall make a good faith effort to negotiate and mediate such
Dispute, according to the above procedures, while such court action is pending.
(d) Continuity of Service and Performance. Unless otherwise agreed in
writing, the Parties will continue to provide service and honor all other
commitments under this Agreement and each Ancillary Agreement during the course
of dispute resolution pursuant to the provisions of this Section 6.9 with
respect to all matters not subject to such dispute, controversy or claim.
6.11 Governmental Approvals. To the extent that the Separation requires
any Governmental Approvals, the Parties will use their reasonable commercial
efforts to obtain any such Governmental Approvals.
6.12 No Representation or Warranty. TSAI does not, in this Agreement or
any other agreement, instrument or document contemplated by this Agreement, make
any representation as to, warranty of or covenant with respect to:
(a) the value of any asset or thing of value to be transferred to
Insession;
(b) the freedom from encumbrance of any asset or thing of value to be
transferred to Insession;
(c) the absence of defenses or freedom from counterclaims with respect
to any claim to be transferred to Insession;
(d) the legal sufficiency of any assignment, document or instrument
delivered hereunder to convey title to any asset or thing of value upon its
execution, deliver and filing; or
(e) merchantability, or fitness for a particular purpose.
Except as may expressly be set forth herein or in any Ancillary Agreement, all
assets to be transferred to Insession shall be transferred "AS IS, WHERE IS" and
Insession shall bear the economic and legal risk that any conveyance shall prove
to be insufficient to vest in Insession good and marketable title, free and
clear of any lien, claim, equity or other encumbrance.
6.13 Non-Solicitation of Employees. TSAI and Insession each agree not to
solicit or recruit, without the other Party's express written consent, the other
Party's employees for a period of two years following the Distribution Date. To
the extent this prohibition is waived, any recruitment efforts by either TSAI or
Insession shall be coordinated with each Party's Vice President of Human
Resources or his or her designate and appropriate management. Notwithstanding
the foregoing, this prohibition on solicitation does not apply to actions taken
by a Party either: (a) solely as a result of an employee's affirmative response
to a general recruitment effort carried out through a public solicitation or
general solicitation, or (b) as a result of an employee's initiative.
6.14 Employee Agreements. As used in this Section 6.14, "Employee
Agreement" means the Conflicts, Confidential Information and Assignment of
Inventions Agreement and corresponding agreements in foreign countries executed
by each TSAI employee.
(a) Survival of TSAI Employee Agreement Obligations and TSAI's Common
Law Rights. The TSAI Employee Agreements of all former TSAI employees
transferred to Insession as of the Distribution Date shall remain in full force
and effect according to their terms; provided, however, that none of the
following acts committed by former TSAI employees within the scope of their
Insession employment shall constitute a breach of such TSAI Employee Agreements:
(i) the use or disclosure of Confidential Information (as that
term is defined in the former TSAI employee's TSAI Employee Agreement) for
or on behalf of Insession, if such disclosure is consistent with the rights
granted to Insession and restrictions imposed on Insession under this
Agreement, any Ancillary Agreement or any other agreement between the
Parties;
(ii) the disclosure and assignment to Insession of rights in
proprietary developments authored or conceived by the former TSAI employee
after the Separation Date and resulting from the use of, or based upon
intellectual property (whether patented or not) which is transferred to
Insession by TSAI;
(iii) the rendering of any services, directly or indirectly, to
Insession to the extent such services are consistent with the assignment or
license of rights granted to Insession and the restrictions imposed on
Insession under this Agreement, any Ancillary Agreement or any other
agreement between the parties; or
(iv) solicitation of the employees of one Party by the other
Party prior to the Distribution Date (so long as such solicitation does not
violate Section 6.13). Further, TSAI retains any rights it has under
statute or common law with respect to actions by its former employees to
the extent such actions are inconsistent with the rights granted to
Insession and restrictions imposed on Insession under this Agreement, any
Ancillary Agreement or any other agreement between the Parties.
(b) Assignment, Cooperation for Compliance and Enforcement.
(i) TSAI retains all rights under the TSAI Employee Agreements of
all former TSAI employees necessary to permit TSAI to protect the rights
and interests of TSAI, but hereby transfers and assigns to Insession its
rights under the TSAI Employee Agreements of all former TSAI employees to
the extent required to permit Insession to enjoin, restrain, recover
damages from or obtain specific performance of the TSAI Employee Agreements
or obtain other remedies against any employee who breaches his/her TSAI
Employee Agreement.
(ii) TSAI and Insession agree, at their own respective cost and
expense, to use their reasonable efforts to cooperate as follows:
(A) Insession shall advise TSAI of:
(1) any violation(s) of the TSAI Employee Agreement by
former TSAI employees, and
(2) any violation(s) of the Insession Employee
Agreement which affect TSAI's rights; and
(B) TSAI shall advise Insession of any violations of the
TSAI Employee Agreement by current or former TSAI employees which
affect Insession's rights; provided, however, that the foregoing
obligations shall only apply to violations which become known to an
attorney within the legal department of the Party obligated to provide
notice of such violation.
(iii) TSAI and Insession each may separately enforce the TSAI
Employee Agreements of former TSAI employees to the extent necessary to
reasonably protect their respective interests, provided, however, that (i)
Insession shall not commence any legal action relating thereto without
first consulting with TSAI's General Counsel or his/her designee and (ii)
TSAI shall not commence any legal action relating thereto against any
former TSAI employee who is at the time an Insession employee without first
consulting with Insession's General Counsel or his/her designee. If either
Party, in seeking to enforce any TSAI Employee Agreement, notifies the
other Party that it requires, or desires, such Party to join in such
action, then the other Party shall do so. In addition, if either Party
commences or becomes a Party to any action to enforce a TSAI Employee
Agreement of a former TSAI employee, the other Party shall, whether or not
it becomes a party to the action, cooperate with the other Party by making
available its files and employees who have information or knowledge
relevant to the dispute, subject to appropriate measures to protect the
confidentiality of any proprietary or confidential information that may be
disclosed in the course of such cooperation or action and subject to any
relevant privacy laws and regulations. Any such action shall be conducted
at the expense of the Party bringing the action and the parties shall agree
on a case by case basis on compensation, if any, of the other Party for the
value of the time of such other Party's employees as reasonably required in
connection with the action.
(iv) TSAI and Insession understand and acknowledge that matters
relating to the making, performance, enforcement, assignment and
termination of employee agreements are typically governed by the laws and
regulations of the national, federal, state or local governmental unit
where an employee resides, or where an employee's services are rendered,
and that such laws and regulations may supersede or limit the applicability
or enforceability of this Section 6.14. In such circumstances, TSAI and
Insession agree to take action with respect to the employee agreements that
best accomplishes the Parties' objectives as set forth in this Section 6.14
and that is consistent with applicable law.
6.15 Cooperation in Obtaining New Agreements. TSAI understands that,
prior to the Separation Date, Insession has derived benefits under certain
agreements and relationships between TSAI and third parties, which agreements
and relationships are not being assigned or transferred to Insession in
connection with the Separation. Upon the request of Insession, TSAI agrees to
make introductions of appropriate Insession personnel to TSAI's contacts at such
third parties, and agrees to provide reasonable assistance to Insession, at
TSAI's own expense, so that Insession may enter into agreements or relationships
with such third parties under substantially equivalent terms and conditions,
including financial terms and conditions, that apply to TSAI. Such assistance
may include, but is not limited to, (i) requesting and encouraging such third
parties to enter into such agreements or relationships with Insession, (ii)
attending meetings and negotiating sessions in person or by telephone with
Insession and such third parties, and (iii) participating in buying consortiums
with Insession. TSAI also understands that certain agreements between TSAI and
third parties which are being assigned to Insession in connection with the
Separation may require the consent of the applicable third party. TSAI shall
assist Insession in seeking and obtaining the consent of such third parties to
such assignment. The parties expect that the activities contemplated by this
Section 6.15 will be substantially completed by the Distribution Date, but in no
event ▇▇▇▇ ▇▇▇▇ have any obligations hereunder after the first anniversary of
the Distribution Date.
6.16 Property Damage to Insession Assets Prior to the Separation Date. In
the event of any property damage, other than ordinary wear and tear, to any
Insession Assets held by TSAI which occurs prior to the Separation Date, TSAI
shall repair or otherwise address such damage in the ordinary course of business
consistent with past practices; provided, however, that nothing
in this clause shall restrict TSAI from disposing of any Assets in the ordinary
course of business consistent with past practices.
6.17 Use of Supplies and Promotional Materials. Notwithstanding the
Separation, Insession may use any promotional materials externally or
internally, throughout their useful life in connection with the conduct of the
Insession Business and may use any other supplies internally throughout their
useful life, to the extent that, as of the Separation Date, they are in use, in
inventory or on order provided, however, that on or prior to the Distribution
Date, Insession shall use its reasonable efforts to sticker or otherwise cover
or remove the name of TSAI or any TSAI Affiliate on promotional materials for
external use.
7. Miscellaneous.
7.1 Limitation of Liability. IN NO EVENT SHALL ANY MEMBER OF THE TSAI
GROUP OR INSESSION GROUP BE LIABLE TO ANY OTHER MEMBER OF THE TSAI GROUP OR
INSESSION GROUP FOR ANY SPECIAL, CONSEQUENTIAL, INDIRECT, INCIDENTAL OR PUNITIVE
DAMAGES OR LOST PROFITS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY
(INCLUDING NEGLIGENCE) ARISING IN ANY WAY OUT OF THIS AGREEMENT OR THE ANCILLARY
AGREEMENTS, WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES; PROVIDED, HOWEVER, THAT THE FOREGOING LIMITATIONS SHALL NOT LIMIT
EACH PARTY'S INDEMNIFICATION OBLIGATIONS FOR LIABILITIES AS SET FORTH IN THE
INDEMNIFICATION AND INSURANCE MATTERS AGREEMENT.
7.2 Entire Agreement. This Agreement, the Ancillary Agreements and the
Exhibits and Schedules referenced or attached hereto and thereto, constitute the
entire agreement between the parties with respect to the subject matter hereof
and thereof and shall supersede all prior written and oral and all
contemporaneous oral agreements and understandings with respect to the subject
matter hereof and thereof.
7.3 Governing Law. This Agreement shall be construed in accordance with
and all Disputes hereunder shall be governed by the laws of the State of
Delaware, excluding its conflict of law rules. The Delaware state courts and/or
the United States District Court for the District of Delaware shall have
jurisdiction and venue over all Disputes between the parties that are permitted
to be brought in a court of law pursuant to Section 6.9 above.
7.4 Termination. This Agreement and all Ancillary Agreements may be
terminated and the Distribution abandoned at any time prior to the Separation
Date by and in the sole discretion of TSAI without the approval of Insession.
This Agreement may be terminated at any time after the Separation Date and
before the Distribution Date by mutual consent of TSAI and Insession. In the
event of termination pursuant to this Section 7.4, no Party shall have any
liability of any kind to the other Party.
7.5 Notices. Notices, offers, requests or other communications required
or permitted to be given by either Party pursuant to the terms of this Agreement
shall be given in writing to the respective Parties to the following addresses:
if to TSAI:
Transaction Systems Architects, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (_____) ______________
if to Insession:
Insession Technologies, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (_____) ______________
or to such other address as the Party to whom notice is given may have
previously furnished to the other in writing as provided herein. Any notice
involving non-performance, termination, or renewal shall be sent by hand
delivery, recognized overnight courier or, within the United States, may also be
sent via certified mail, return receipt requested. All other notices may also
be sent by fax, confirmed by first class mail. All notices shall be deemed to
have been given and received on the earlier of actual delivery or three days
from the date of postmark.
7.6 Counterparts. This Agreement, including the Ancillary Agreement and
the Exhibits and Schedules hereto and thereto and the other documents referred
to herein or therein, may be executed in counterparts, each of which shall be
deemed to be an original but all of which shall constitute one and the same
agreement.
7.7 Binding Effect; Assignment. This Agreement shall inure to the benefit
of and be binding upon the Parties and their respective legal representatives
and successors, and nothing in this Agreement, express or implied, is intended
to confer upon any other Person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. This Agreement may be enforced separately
by each member of the TSAI Group and each member of the Insession Group.
Neither Party may assign this Agreement or any rights or obligations hereunder,
without the prior written consent of the other Party, and any such assignment
shall be void; provided, however, either Party may assign this Agreement to a
successor entity in conjunction with such Party's reincorporation.
7.8 Severability. If any term or other provision of this Agreement or the
Exhibits or Schedules attached hereto is determined by a court, administrative
agency or arbitrator to be invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to either Party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the Parties shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
Parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the fullest extent possible.
7.9 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of either Party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement or the Exhibits or Schedules attached hereto are cumulative to, and
not exclusive of, any rights or remedies otherwise available.
7.10 Amendment. No change or amendment will be made to this Agreement or
the Exhibits or Schedules attached to this Agreement except by an instrument in
writing signed on behalf of each of the parties to such agreement.
7.11 Authority. Each of the Parties represents to the other that (a) it
has the corporate or other requisite power and authority to execute, deliver and
perform this Agreement, (b) the execution, delivery and performance of this
Agreement by it have been duly authorized by all necessary corporate or other
actions, (c) it has duly and validly executed and delivered this Agreement, and
(d) this Agreement is a legal, valid and binding obligation, enforceable against
it in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general equity principles.
7.12 Interpretation. The headings contained in this Agreement, in any
Exhibit or Schedule and in the table of contents to this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized term used in any Exhibit or
Schedule but not otherwise defined therein, shall have the meaning assigned to
such term in this Agreement. When a reference is made in this Agreement to an
Article or a Section, Exhibit or Schedule, such reference shall be to an Article
or Section of, or an Exhibit or Schedule to, this Agreement unless otherwise
indicated.
7.13 Conflicting Agreements. In the event of conflict between this
Agreement and any Ancillary Agreement or other agreement executed in connection
herewith, the provisions of such other agreement shall prevail.
7.14 Subsidiaries. The Parties shall cause each of their respective
Subsidiaries to take any and all actions and execute such instruments and
documents as are necessary for the Parties to perform their respective
obligations under this Agreement and the Ancillary Agreements.
The Parties have executed and delivered this Agreement effective as of the
date set forth in the first sentence of this Agreement.
TRANSACTION SYSTEMS ARCHITECTS, INC.
By: ________________________________________
Name: ____________________________________
Title: ___________________________________
INSESSION TECHNOLOGIES, INC.
By: ________________________________________
Name: ____________________________________
Title: ___________________________________
EXHIBIT A
CERTIFICATE OF SECRETARY OF TSAI
SECRETARY'S CERTIFICATE
I, ____________________, Secretary of Transaction Systems Architects, Inc.,
a corporation organized and existing under the laws of the State of Delaware
(the "Company"), DO HEREBY CERTIFY that attached hereto are true and correct
copies of certain resolutions adopted in a telephone meeting of the Transaction
Systems Architects, Inc. Board of Directors on _________, 2000, which
resolutions have not been amended, modified, rescinded and remain in full force
and effect on the date hereof.
IN WITNESS WHEREOF, I have hereunder set my hand and affixed the seal of
Transaction Systems Architects, Inc. this __________________ day of ___________,
2000.
___________________________________
________________________, Secretary
EXHIBIT B
CERTIFICATE OF SECRETARY OF INSESSION
SECRETARY'S CERTIFICATE
I, ____________________, Secretary of Insession Technologies, Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Company"), DO HEREBY CERTIFY that attached hereto are true and correct copies
of certain resolutions adopted in a meeting of the Insession Technologies, Inc.
Board of Directors on __________, 2000, which resolutions have not been amended,
modified, rescinded and remain in full force and effect on the date hereof.
IN WITNESS WHEREOF, I have hereunder set my hand and affixed the seal of
Insession Technologies, Inc. this __________________ day of ___________, 2000.
___________________________________
________________________, Secretary