<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
September 10, 1998
Date of Report (Date of earliest event reported)
TRANSACTION NETWORK SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-23856 54-1555332
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization) File No.) Identification No.)
1939 Roland Clarke Place, Reston, Virginia 20191
(Address of principal executive offices and zip code)
(703) 453-8300
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On September 10, 1998, Transaction Network Services, Inc. (the
"Company") acquired from AT&T Corp. the right to provide services under
certain customer service contracts relating to AT&T's Transaction Access
Service (TAS) as well as certain equipment used by AT&T in furnishing this
service. The consideration paid for these assets after arm's-length
negotiations was $64.325 million in cash. The source of the funds used to
acquire these assets is a $75,000,000 revolving credit facility underwritten
by PNC Bank, National Association. Prior to this transaction, AT&T used these
assets to provide transaction access services to its transaction processing
customers. The Company intends to continue to use these assets to provide
similar services to these customers. AT&T entered into a limited
non-competition agreement with the Company with regard to these customers,
and the Company has agreed to compensate AT&T with commissions based upon
future revenues generated by referrals of certain sales prospects. In
connection with the purchase of these assets, the Company also entered into a
Service Agreement with AT&T dated as of September 10, 1998, pursuant to which
the Company agreed to purchase from AT&T a minimum of $10 million in
communications services per year during the two year period beginning
February 1, 1999.
Item 5. Other Events
The Company and AT&T entered into a settlement agreement whereby the
Company has agreed to dismiss with prejudice its complaint filed against AT&T
with the Federal Communications Commission (File No. E-98-03).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
The required financial statements for TAS are not available and will be
filed by amendment hereto no later than 60 days after the date this
report is required to be filed.
(b) Pro Forma Financial Information.
The required pro forma financial information will be filed at the time
the required financial statements for TAS are filed.
(c ) Exhibits.
2.1 Asset Purchase Agreement dated September 10, 1998 by and between
Transaction Network Services, Inc. and AT&T Corp.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TRANSACTION NETWORK SERVICES, INC.
Dated: September 23, 1998 By: /s/ Thaddeus G. Weed
--------------------
Thaddeus G. Weed
Chief Financial Officer and Treasurer
<PAGE>
Exhibit 2.1
ASSET PURCHASE AGREEMENT
between
AT&T CORP.
and
TRANSACTION NETWORK SERVICES, INC.
----------------
Dated: September 10, 1998
----------------
<PAGE>
Table of Contents
<TABLE>
<S> <C> <C>
1. Purchase and Sale of Assets....................................................................1
1.1 Equipment.................................................................................2
1.2 Software..................................................................................2
1.3 Customer Contracts........................................................................2
1.4 Receivables...............................................................................2
2. Assumption of Liabilities......................................................................3
2.1 Assumption of Liabilities by Buyer........................................................3
2.2 Excluded Liabilities......................................................................3
3. Consideration for Transfer of the Assets.......................................................4
3.1 Purchase Price............................................................................4
3.2 Allocation of Purchase Price..............................................................4
4. Closing........................................................................................4
5. Representations and Warranties of Seller.......................................................4
5.1 Seller's Organization and Authority.......................................................4
5.2 Authorization.............................................................................5
5.3 Freedom to Contract.......................................................................5
5.4 Title to Assets; Encumbrances, etc........................................................6
5.5 Customer Contracts........................................................................6
5.6 Litigation................................................................................6
5.7 Compliance with Law.......................................................................7
5.8 Intellectual Property.....................................................................7
5.9 Brokers...................................................................................7
5.10 Equipment Condition.......................................................................7
6. Representations and Warranties of Buyer........................................................7
6.1 Buyer's Organization and Authority........................................................7
6.2 Authorization of Agreement................................................................8
6.3 Freedom to Contract.......................................................................8
6.4 Brokers...................................................................................9
7. Further Agreements of the Parties..............................................................9
7.1 Public Announcements......................................................................9
7.2 Expenses..................................................................................9
7.3 Indemnification for Fees of Brokers and Finders...........................................9
7.4 Customer Contracts.......................................................................10
7.5 Software License.........................................................................11
7.6 Further Assurances.......................................................................11
7.7 Restrictive Covenants....................................................................12
7.8 FCC Proceeding...........................................................................13
7.9 Service Agreement........................................................................14
7.10 Bulk Sales Law...........................................................................14
7.11 Transition...............................................................................14
7.12 Transfer Taxes...........................................................................17
7.13 Audit....................................................................................18
7.14 Receivables and Billing..................................................................18
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
8. Indemnification...............................................................................20
8.1 Indemnification by Seller................................................................20
8.2 Indemnification by Buyer.................................................................20
8.3 Period of Indemnity......................................................................21
8.4 Limitations..............................................................................21
8.5 Notice to the Indemnitor.................................................................22
8.6 Rights of Parties to Settle or Defend....................................................22
8.7 Exclusive Remedies.......................................................................23
9. Miscellaneous.................................................................................23
9.1 Entire Agreement.........................................................................23
9.2 Governing Law............................................................................23
9.3 Headings.................................................................................23
9.4 Notices..................................................................................24
9.5 Severability.............................................................................25
9.6 Amendment; Waiver........................................................................25
9.7 Assignment and Binding Effect............................................................25
9.8 No Benefit to Others.....................................................................25
9.9 Counterparts.............................................................................26
9.10 Certain Definitions......................................................................26
9.11 Glossary.................................................................................27
9.12 Consent to Jurisdiction and Service of Process...........................................28
9.13 Interpretation...........................................................................29
SCHEDULES
Schedule 1.1 Equipment
Schedule 1.3 Customer Contracts
Schedule 3.1 Wire Transfer Information
Schedule 3.2 Allocation of Purchase Price
Schedule 5.4
Schedule 5.5(a)
Schedule 5.5(b) 1998 Customer Revenues
Schedule 7.11(b) Transition Services
Schedule 7.11(c) Transition Fees
Part 1 Communications Fees
Part 2 Operations Fees
Schedule 7.11(d) Form of Customer Letter
Schedule 7.11(f) Customer Referral Compensation Schedule
Schedule 9.10 List of Individuals Constituting AT&T
Knowledge
EXHIBITS
Exhibit A Settlement Agreement, Release And Covenant Not To Sue
Exhibit B Service Agreement
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT made as of the 10th day of September, 1998, by
and between AT&T Corp., a New York corporation ("Seller"), and Transaction
Network Services, Inc., a Delaware corporation ("Buyer").
WHEREAS, Seller is engaged, among other things, in providing
transaction access service to customers (the "Service");
WHEREAS, upon the terms and conditions set forth herein, Seller desires
to sell and Buyer desires to purchase certain of the assets relating to the
Service, as specified herein, for the consideration described herein; and
WHEREAS, certain terms used in this Agreement are defined in Section
9.10 hereof and a glossary of the defined terms used herein appears in Section
9.11 hereof.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto do
hereby agree as follows:
1. Purchase and Sale of Assets. Upon the terms and subject to the conditions
set forth in this Agreement, at the closing (the "Closing") of the
transactions contemplated hereby (the "Contemplated Transactions"), Seller
shall sell, transfer, convey, assign and deliver to Buyer, and Buyer shall
purchase and acquire from Seller, the following assets of Seller relating to
the Service, as the same shall exist on the Closing Date (collectively, the
"Assets"):
<PAGE>
1.1 Equipment. All of Seller's right, title and interest in and to
the equipment described on Schedule 1.1 (collectively, the "Equipment"). The
parties understand that the actual equipment may deviate slightly from
Schedule 1.1, which deviation shall not exceed five percent (5%) in value and
shall not have a material adverse effect on Buyer's ability to provide the
Service.
1.2 Software. A royalty free, fully paid license to certain Software
in accordance with Section 7.5.
1.3 Customer Contracts. Subject to Section 7.4, Seller's rights and
interest in the contracts listed on Schedule 1.3. (collectively, the "Customer
Contracts"). Copies of such Customer Contracts are contained in the Appendix to
this Agreement.
1.4 Receivables. Subject to Section 7.4, all of Seller's right,
title and interest in and to all revenues and receivables under the Customer
Contracts associated with the Services provided after the Closing. All
revenues and receivables under the Customer Contracts associated with
services provided prior to the Closing shall remain the property of Seller.
Seller also shall be entitled to receive twenty percent (20%) of any
shortfall of the minimum annual commitment collected by Buyer under the
Customer Contract between Seller and Banctec, Inc., dated January 11, 1996,
for services provided to the Customer during the current contract year.
<PAGE>
2. Assumption of Liabilities.
2.1 Assumption of Liabilities by Buyer. At the Closing, Buyer shall
assume and thereafter pay, perform, satisfy and discharge the following
obligations and liabilities of Seller (collectively, the "Assumed
Liabilities"):
(a) Obligations Under Customer Contracts. The liabilities and
obligations of Seller under the Customer Contracts.
(b) Liabilities After Closing. All liabilities and
obligations arising from or in connection with the Service or the Assets
after the Closing Date.
2.2 Excluded Liabilities. Except as otherwise provided for herein,
Buyer is not assuming or agreeing to pay, perform, assume or discharge, or
otherwise be responsible for, any debts, liabilities or obligations of Seller
with respect to the Service, fixed or contingent, known or unknown
(collectively, the "Excluded Liabilities"); and, without limiting the
generality of the foregoing, except as otherwise provided herein, will not
assume or pay: (a) any contingent or existing liabilities resulting from
Seller's performance or breach of any agreement, contract, commitment or
lease prior to the Closing, or (b) any obligations or liabilities with
respect to any federal, state or local law or regulation, or any right of any
employee or third party, arising out of the generation, storage use,
transportation, discharge or disposal of any hazardous waste or hazardous
substance prior to the Closing in connection with the Service.
<PAGE>
3. Consideration for Transfer of the Assets.
3.1 Purchase Price. In consideration for the sale and transfer of
the Assets, on the terms and subject to the conditions set forth in this
Agreement, Buyer agrees to (i) pay in cash by wire transfer of immediately
available funds at Closing to the account set forth on Schedule 3.1,
$64,325,000 and (ii) assume the Assumed Liabilities (collectively, the
"Purchase Price").
3.2 Allocation of Purchase Price. Buyer and Seller agree to allocate
the Purchase Price ( and all other capitalizable costs) among the Assets for
tax purposes in accordance with Schedule 3.2. Buyer and Seller will file all
tax returns (including amended returns and claims for refund) in a manner
consistent with such allocation and shall cooperate in the preparation of
Treasury Form 8594 for timely filing with each of their respective federal
income tax returns and any comparable foreign, state or local tax filings.
4. Closing. Upon the terms and conditions set forth herein, the Closing
shall take place at the offices of Seller located at 295 North Maple Avenue,
Basking Ridge, New Jersey 07920, at 9:00 a.m. local time on the date on which
this Agreement has been executed and delivered as first set forth above. The
date and time upon which the Closing occurs is referred to herein as the
"Closing Date."
5. Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer as follows:
5.1 Seller's Organization and Authority. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of New York and has all requisite corporate power and lawful authority
to carry on the Service as it is currently being conducted. Seller is duly
qualified or licensed to do business as a foreign corporation and is in good
standing as a foreign corporation in each jurisdiction in which the
ownership, operation or lease of the Assets or the conduct of the Service
requires qualification or licensing to do business as a foreign corporation
and in which the failure so to qualify could have a Material Adverse Effect.
<PAGE>
5.2 Authorization. Seller has all requisite corporate power and
authority to execute and deliver the Transaction Agreements, to consummate
the Contemplated Transactions and to perform fully its obligations hereunder
and thereunder. The execution, delivery and performance of the Transaction
Agreements by Seller and the consummation by Seller of the Contemplated
Transactions have been duly authorized by all necessary corporate action of
Seller, and no other board of directors, shareholder or other corporate
proceeding by or on behalf of Seller is necessary to authorize the execution,
delivery or performance of the Transaction Agreements, or the consummation of
the Contemplated Transactions. The Transaction Agreements constitute the
valid and legally binding obligation of Seller, enforceable against Seller in
accordance with their terms, subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting creditors' rights generally; and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding at
law or in equity).
5.3 Freedom to Contract. Except as set forth on Schedule 5.3, the
execution, delivery and performance of the Transaction Agreements by Seller
and the consummation by Seller of the Contemplated Transactions will not: (i)
violate or conflict with any provision of the certificate of incorporation or
by-laws of Seller, each as amended; (ii) violate any of the terms, conditions
or provisions of any law, rule, statute (other than the Hart Scott Rodino
Act)), regulation, order, writ, injunction, judgment or decree of any
Governmental Authority; or (iii) conflict with or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or
both) a default under any of the terms, conditions or provisions of any
contract (other than Customer Contracts which shall be treated in accordance
with the provisions of Section 7.4). Except as set forth on Schedule 5.3, no
authorization, approval, order, license, permit, franchise or consent of, and
no registration, declaration or filing with, any Governmental Authority, is
required in connection with Seller's execution, delivery and performance of
the Transaction Agreements and the consummation of the Contemplated
Transactions.
5.4 Title to Assets; Encumbrances, etc. (i) Except as set forth on
Schedule 5.4, Seller has good title to all of the Assets, free and clear of
any mortgage, pledge, security interest, title defect or objection, lien,
charge or
<PAGE>
encumbrance of any kind, including without limitation, any lease, license or
other right of occupancy, possession or use, or any conditional sales
contract or other title or interest retention arrangement (collectively,
"Liens"); except for Liens securing Taxes, assessments, governmental charges
or levies, or the claims of materialmen, carriers, landlords and like
persons, all of which are not yet due and payable, and Liens set forth on
Schedule 5.4 (collectively, the "Permitted Liens"). (ii) The instruments of
transfer executed and delivered by Seller at the Closing will be effective to
vest in Buyer good title to the Assets, free and clear of any and all Liens,
other than Permitted Liens. (iii) No third party has any rights to purchase
any of the Assets, or any interest therein or portion thereof, including
rights of first offer or first refusal.
5.5 Customer Contracts. (a) Except as set forth on Schedule 5.5(a),
(i) Schedule 1.3 sets forth all of the Customer Contracts between Seller and
any of its customers of the Service that are currently in effect, (ii)
neither Seller nor to Seller's Knowledge any other party to any of the
Customer Contracts is in material default of any of its respective
obligations thereunder, (iii) Seller has not received any written notice that
it is in default under any of the Customer Contracts, (iv) Seller has not
given written notice that any other party is in default under any of the
Customer Contracts, (v) Seller has not received written notice of termination
of any of the Customer Contracts; (vi) the copies of the Customer Contracts
in the Appendix to this Agreement are true, complete and correct copies of
the Customer Contracts in all material respects; and (vii) Seller has not
issued any invoices or otherwise demanded or collected payment during
calendar year 1998 for any shortfall below the respective minimum revenue or
transaction volume commitment set forth in any Customer Contract. (b) The
revenues reflected on Schedule 5.5(b) are accurate in all material respects.
5.6 Litigation. Except as set forth on Schedule 5.6, there is no
action, suit, inquiry, litigation, proceeding or investigation by or before
any Governmental Authority, pending or, to Seller's Knowledge, threatened,
against Seller relating to the Service or the Customer Contracts, which could
reasonably be expected to have a Material Adverse Effect. Seller is not
subject to any judgment, order or decree entered in any lawsuit or proceeding
that could reasonably be expected to have a Material Adverse Effect on
Buyer's ability to conduct the Service after the Closing Date.
<PAGE>
5.7 Compliance with Law. Except as set forth in Schedule 5.7, Seller
is not in violation of any applicable federal, state, local or foreign law,
rule, regulation, or ordinance, or any judgment, writ, decree, injunction,
order or any other requirement of any Governmental Authority that could
reasonably be expected to have a Material Adverse Effect on Buyer's ability
to conduct the Service after the Closing Date.
5.8 Intellectual Property. Seller has sufficient rights and legal
authority to grant Buyer the rights and license to the Software being granted
pursuant to Section 7.5. There are no existing, or to Seller's Knowledge
threatened, claims of any third party for infringement relating to the
Software.
5.9 Brokers. Seller has not, directly or indirectly, employed or
utilized the services of any investment banker, broker, finder, consultant or
other intermediary in connection with the Transaction Agreements or the
Contemplated Transactions.
5.10 Equipment Condition. The Equipment, taken as a whole, at the
Closing, is in good operating condition (excepting normal wear and tear and
such defects as would not have a material adverse effect), usable in the
regular and ordinary course of providing the Service.
6. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows:
6.1 Buyer's Organization and Authority. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and lawful authority to
execute and deliver the Transaction Agreements, to consummate the
Contemplated Transactions and to perform fully its obligations hereunder and
thereunder.
<PAGE>
6.2 Authorization of Agreement. The execution, delivery and
performance of the Transaction Agreements by Buyer and the consummation by
Buyer of the Contemplated Transactions have been duly authorized by all
necessary corporate action of Buyer, and no other board of directors,
stockholder or other corporate proceedings by or on behalf of Buyer is
necessary to authorize the execution, delivery or performance of the
Transaction Agreements or the consummation of the Contemplated Transactions.
The Transaction Agreements constitute the valid and legally binding
obligations of Buyer, enforceable against Buyer in accordance with their
terms, subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting creditors'
rights generally; and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in
equity).
6.3 Freedom to Contract. Except as set forth on Schedule 6.3, the
execution, delivery and performance of the Transaction Agreements by Buyer
and the consummation by Buyer of the Contemplated Transactions will not: (i)
violate or conflict with any provisions of the certificate of incorporation
or by-laws of Buyer, each as amended; (ii) violate any of the terms,
conditions or provisions of any law, rule, statute (other than the Hart Scott
Rodino Act), regulation, order, writ, injunction, judgment or decree of any
Governmental Authority; or (iii) conflict with or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or
both) a default under any of the terms, conditions or provisions of any
material contract of Buyer. Except as set forth on Schedule 6.3, no
authorization, approval, order, license, permit, franchise or consent of, and
no registration, declaration or filing with, any Governmental Authority, is
required in connection with Buyer's execution, delivery and performance of
the Transaction Agreements and the consummation of the Contemplated
Transactions.
6.4 Brokers. Buyer has not, directly or indirectly, employed or
utilized the services of any investment banker, broker, finder, consultant or
other intermediary in connection with the Transaction Agreements or the
Contemplated Transactions.
7. Further Agreements of the Parties.
<PAGE>
7.1 Public Announcements. Neither Seller nor Buyer shall, without
the prior written approval of the other party, permit any of their respective
officers, directors or employees to make any public statement (other than
non-written discussions with analysts and investors) or issue any press
release with respect to (i) the Service as provided by the other party, or
(ii) the Contemplated Transactions, unless such statement or release shall be
jointly issued by Seller and Buyer or such statements are required by law,
rule or regulation (provided that the other party shall, to the extent
practicable, be given an opportunity to review and consent to such statement
or release).
7.2 Expenses. The parties to this Agreement shall, except as
otherwise specifically provided herein, bear their respective expenses
incurred in connection with the preparation, execution and performance of the
Transaction Agreements and the consummation of the Contemplated Transactions,
including, without limitation, all fees and expenses of agents,
representatives, counsel and accountants.
7.3 Indemnification for Fees of Brokers and Finders. Buyer, on the
one hand, and Seller, on the other, agree to indemnify and save the other
harmless from any claim or demand for commission or other compensation by any
broker, finder, agent or similar intermediary claiming to have been employed
by or on behalf of Buyer, on the one hand, or Seller, on the other hand.
<PAGE>
7.4 Customer Contracts.
(a) Benefits of Customer Contracts. If any Customer Contract is not
assignable by Seller to Buyer, Seller shall give Buyer the financial benefit
(and to the extent practicable such other benefits) of the Customer Contract
to the same extent as if Seller had not been excluded from assigning such
agreement to Buyer, and Buyer shall act as Seller's subcontractor and shall
perform all of the obligations and assume all of the liabilities under such
Customer Contracts and indemnify Seller pursuant to Section 8.2(b). Nothing
in this Agreement shall be construed as an attempt to assign any Customer
Contract that is by its terms not assignable without the consent of the other
party.
(b) Notices Received. During the term of the applicable Customer
Contract, as soon as practicable, but in any event within ten business days
of receipt from a customer party to a Customer Contract (a "Customer") of any
notice, demand or other communication with respect to the Service or such
Customer Contract, Seller shall deliver to Buyer a copy of such notice,
demand or other communication.
(c) Notice to be Given. During the term of the applicable Customer
Contract, as soon as practicable, but in any event within ten business days
of receipt from Buyer of the content of any notice, demand or other
communication which Buyer reasonably requires to be delivered to a Customer
with respect to the Service or such Customer Contract, Seller shall, as
contracting party, deliver to such Customer a notice, demand or other
communication to such effect. Except as specified by Buyer, or except as
agreed to by Buyer in its reasonable discretion, during the term of the
applicable Customer Contract, Seller shall not deliver any other notice,
demand or other communication to a Customer with respect to the Service or
such Customer Contract, other than communications with respect to Seller's
accounts receivable.
(d) Enforcement of Customer Contracts. Seller, without additional
consideration, other than reimbursement of its direct costs, shall provide
such cooperation as Buyer shall reasonably request with respect to
enforcement of any Customer Contract, including serving as, or joining as, a
plaintiff in any such action, provided,
<PAGE>
however, that any such action shall be conducted at Buyer's sole cost and
expense. Seller shall not institute any action to enforce any Customer
Contract (other than actions to collect Seller's accounts receivables)
without Buyer's prior written consent, which consent shall not be
unreasonably withheld.
7.5 Software License. Seller hereby grants to Buyer a royalty-free,
fully paid, personal, non-exclusive, non-transferable (except as provided
below) right to use the Software solely for the purpose of providing the
Service to GTECH Corporation in connection with the California State Lottery.
Such right to use shall include the right to modify such Software and prepare
derivative works based on such Software, provided that any such modification
or derivative work shall be deemed Software and subject to this Section 7.5.
The rights to the Software contained in this Section 7.5 may only be assigned
in connection with a transfer of responsibility to provide the Service to
GTECH Corporation in connection with the California State Lottery.
7.6 Further Assurances. From and after the Closing Date, Seller, on
the one hand, and Buyer, on the other hand, agree to execute and deliver such
further documents and instruments and to do such other acts and things as
Buyer or Seller, as the case may be, may reasonably request in order to
effectuate the Contemplated Transactions. Following the Closing, the parties
will cooperate with each other in connection with tax audits and in the
defense of any legal proceedings, consistent with the other provisions for
defense of claims provided in Article 8.
<PAGE>
7.7 Restrictive Covenants.
(a) Limited Noncompetition. Seller and its Affiliates will not,
during the current term and for nine (9) months after the expiration of the
current term of each applicable Customer Contract, solicit the Customer
thereto to replace the services provided to such Customer under such Customer
Contract with substantially similar services. The restriction set forth in
the preceding sentence shall terminate and be of no force or effect if Buyer
or any of its Affiliates competes with Seller by selling long distance
services or toll free services other than for access to the Buyer's network.
(b) No Disparaging Remarks. Seller, Buyer and their respective
officers, directors, agents and representatives shall not, for a period of
three years from the date hereof, make any statements or take any action that
would be injurious to Buyer's or Seller's business reputation in any material
respect.
(c) If Seller or Buyer breaches, or threatens to commit a breach of,
any of the provisions of Sections 7.7(a) , 7.7(b) and 7.8 (the "Restrictive
Covenants"), Buyer or Seller shall have the following rights and remedies,
each of which rights and remedies shall be independent of the others and
severally enforceable, and each of which is in addition to, and not in lieu
of, any other rights and remedies available to Buyer or Seller under law or
in equity:
(i) The right and remedy to have the Restrictive
Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened
breach of the Restrictive Covenants would cause irreparable
injury to Buyer or Seller and that money damages would not
provide an adequate remedy to Buyer or Seller.
(ii) Seller and Buyer acknowledge and agree that
the Restrictive Covenants are reasonable and valid in
geographical and temporal scope and in all other respects.
If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or
unenforceable,
<PAGE>
the remainder of the Restrictive Covenants shall not thereby
be affected and shall be given full effect, without regard to
the invalid portions.
(iii) If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable
because of the duration or geographic scope of such
provision, such court shall have the power to reduce the
duration or scope of such provision, as the case may be, and,
in its reduced form, such provision shall then be
enforceable.
(iv) Buyer and Seller intend to and hereby confer
jurisdiction to enforce the Restrictive Covenants
upon the courts of any jurisdiction within the
geographical scope of such Restrictive Covenants. If the
courts of any one or more of such jurisdictions hold the
Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of
Buyer and Seller that such determination not bar or in any
way affect Buyer's or Seller's right to the relief provided
above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to
breaches of such Restrictive Covenants in such other
respective jurisdictions, such Restrictive Covenants as
they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
7.8 FCC Proceeding. Buyer completely releases and discharges Seller
and its Affiliates, and their successors and assigns, past and present, and
their directors, officers, shareholders, agents, employees, and
representatives, past and present, and each of them, in their individual and
corporate capacities, from any obligations for Losses with respect to or
arising out of or relating in any way to the matters set forth in that
certain complaint proceeding filed by Buyer with the Federal Communications
Commission, File No. E98-03 (the "FCC Proceeding"). At the Closing, Buyer
shall execute a release in the form annexed as Exhibit A hereto (the
"Settlement Agreement"). Buyer shall dismiss with prejudice the FCC
Proceeding as soon as practicable after the Closing and shall not pursue any
litigation (or file any charge or otherwise correspond with any Governmental
Authority (except as provided in the Settlement Agreement) or participate in
any recovery, relief or other award) against Seller or its Affiliates with
respect to or arising out of or relating in any way to the matters set forth
in the FCC Proceeding.
<PAGE>
7.9 Service Agreement. At the Closing, Buyer's Affiliate, TNS
Datalink, Inc., and Seller shall enter into a Service Agreement (the "Service
Agreement") in the form annexed as Exhibit B hereto.
7.10 Bulk Sales Law. The Contemplated Transactions shall be
consummated without compliance with any applicable bulk sales law ("Bulk
Sales Laws"). If by reason of any applicable Bulk Sales Law, any claims are
asserted by creditors of Seller, such claims shall be the responsibility of
Buyer in the case of claims arising under any of the Assumed Liabilities, or
the responsibility of Seller in the case of claims arising under any of the
Excluded Liabilities.
7.11 Transition.
(a) Transition Plan. Within forty-five (45) days of the
Closing Date, Buyer shall prepare and submit to Seller a transition plan for
each of the Customers of the Service. Each Customer transition plan shall
provide reasonable detail for transitioning the provisioning of Service from
Seller's facilities to Buyer's facilities in a manner that will minimize
Customer inconvenience and will avoid any disruption of Service.
(b) Transition Period. Buyer will assume responsibility to
project manage all aspects of each Customer transition including final
decision-making authority regarding Customer cut-over. Seller will assist
Buyer in the transition by providing the transition services described in
Schedule 7.11(b) in accordance with this Section 7.11 ("Transition
Services"). Following the Closing, Buyer shall be entitled to receive the
Transition Services from Seller commencing as of the Closing and continuing
until all Customers of the Service have been removed from Seller's facilities
and the transition of Service to Buyer's facilities has been completed,
subject to Seller's right to terminate Transition Services pursuant to
Section 7.11(c).
<PAGE>
(c) Transition Fees. Buyer shall promptly pay to Seller the
charges specified in Schedule 7.11(c), Part 1 for all Communications Services
provided by Seller in connection with the Transition Services
("Communications Fees") commencing as of the Closing and continuing until all
Customers of the Service have been removed from Seller's facilities and the
transition of Service to Buyer's facilities has been completed, and shall
also pay the fees specified in Schedule 7.11(c), Part 2 associated with
operations services ("Operations Fees"), until all customers of the Service
have been removed from Seller's facilities and the transition of Service to
Buyer's facilities has been completed, which fees shall be applied as follows:
(i) commencing as of the Closing, Buyer shall
promptly pay Seller the Communications Fees and Operations
Fees specified on Schedule 7.11(c) for the Transition
Services provided to Buyer, which Communications Fees and
Operations Fees shall change on the dates specified on
Schedule 7.11(c), provided that in the event that Seller
has caused a delay in the removal of all Customers of the
Service from Seller's facilities by January 15, 1999, the
scheduled increase of the Operations Fees on January 16,
1999 shall be delayed by the number of days equal to the
length of delay caused by Seller and the "B" rates
specified on Rate Schedule 3 of Schedule 7.1(c), Part 2,
shall apply commencing on January 16, 1999 during the
period of such delay; and (ii) if all Customers of the
Service have not been removed from Seller's facilities and
the transition of Service to Buyer's facilities has not
been completed by June 1, 1999, Seller, at its sole
discretion, shall have the right to discontinue supplying
Buyer with the Transition Services and to remove the
Equipment from Seller's facilities or to continue supplying
Buyer with the Transition Services for which Buyer shall
pay Seller the Communications Fees and the Operations Fees
specified on Schedule 7.11(c) in connection with the
Transition Services provided to Buyer until all Customers
of the Service have been removed from Seller's facilities
and the transition of Service to Buyer's facilities has
been completed, provided that in the event that Seller has
caused a delay in the removal of all Customers of the
Service from Seller's facilities by June 1, 1999 the
scheduled increase of the Operations Fees on June 1, 1999
shall be delayed by the number of days equal to the length
of delay caused by Seller. Notwithstanding anything herein
to the contrary, Seller shall
<PAGE>
not be deemed to have caused a delay under this Section
7.11 or any other Section of this Agreement, during the
standard intervals or reasonable time required to process
orders or perform any other function in connection with the
transition of Customers from Seller's facilities to Buyer's
facilities. Any Operations Fees shall be invoiced by Seller
once per month and shall be paid by Buyer within thirty
days (30) of the date upon which Buyer receives the
invoice. Any Operations Fees that are not paid when due
shall accrue extended payment interest at a rate equal to
150% of the "prime rate" (but in no event higher than the
highest rate permitted by applicable law) from the day
following the date payment was due until such payment is
received by Seller. For purposes hereof, the "prime rate"
shall be the publicly announced prime rate or commercial
lending rate , however described, for loans in New York
City of Citibank, N.A., in effect on the day following the
date payment was due.
(d) Transition Efforts. Following the Closing Date, Buyer
and Seller shall use reasonable efforts to encourage each Customer of the
Service to be switched to Buyer's facilities as promptly as reasonably
possible. In this regard, Seller will provide written notification by
overnight mail, in the form of Schedule 7.11(d), to each Customer within ten
(10) business days of the Closing Date in an effort to encourage each
Customer to switch to Buyer's facilities. Until all Customers of the Service
are switched to Buyer's facilities, Buyer and Seller shall cooperate in the
transition of the operation of the Service. Buyer and Seller shall provide
the other with such information and other reasonable assistance with respect
to the Service as each shall reasonably request.
(e) Assistance. Following the Closing, Seller shall, upon
the reasonable request of Buyer, provide such assistance as is reasonably
necessary or desirable to assist in the completion of the transition of the
Service from Seller to Buyer. Further, Buyer shall cooperate with Seller in
the resolution of any disputes relating to the Service based upon or arising
from facts or event occurring prior to the Closing.
<PAGE>
(f) Access. Following the Closing, Seller shall provide
Buyer with reasonable access to customer mailing lists, sales materials and
records (including materials and records relating to sales prospects as well
as outstanding proposals to potential customers for the Service), original
contracts and collections records relating to the Service, and shall permit
Buyer to duplicate or otherwise make copies of or to take extracts of such
materials and records. Sales prospects which have been developed by Seller
through submitted proposals (including but not limited to incremental
revenues realized through a proposed extension to an existing Customer
Contract, as measured by an actual increase in monthly revenue over the
average of the six months of Service revenues preceding Closing under such
Customer Contract), will be deemed to fall within the definition of "AT&T
Referrals" for the purpose of compensation in accordance with Schedule
7.11(f), provided, however, that "AT&T Referrals" shall not include prospects
which are already customers of the Service (except as specified above) or
current customers of any of Buyer's services as of the Closing unless such
prospect is for an application not already provided by Buyer to that
customer. The determination of whether such application is not already
provided by either Seller or Buyer will be made in good faith by mutual
agreement of Seller and Buyer on a case-by-case basis. Seller shall provide
Buyer with a list of "AT&T Referrals" within thirty (30) days following the
Closing.
7.12 Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other taxes and fees (including any penalties and interest
related thereto but excluding taxes on Seller's income) incurred in
connection with the Contemplated Transactions, including any transfer or
similar taxes imposed by any state or subdivision, shall be borne and paid by
Buyer, and the Buyer will, at its own expense, file all necessary tax returns
and other documentation with respect to all such taxes and fees, and if
required by applicable law, Seller shall join in the execution of any such
tax returns and other documentation.
7.13 Audit. Buyer has stated that it may desire to have audited
financial statements prepared with respect to the Service. Seller agrees to
cooperate in good faith with Buyer in having Buyer retain Seller's auditors
prepare audited financial statements, provided that it is expressly
understood and agreed that all costs and expenses for such audit shall be
borne by Buyer. If desired by Buyer, Seller will make the appropriate
introductions to a
<PAGE>
representative of Seller's auditors for purposes of Buyer engaging such
auditors for the audit of Seller's financial statements with respect to the
Service. Seller shall cooperate with Buyer in having the audit performed in
an expeditious manner and completed within seventy-five (75) days of Closing.
7.14 Receivables and Billing. For as long as Seller is owed any
amount under the Customer Contracts (other than (i) the "Disputed Accounts",
as defined below, and (ii) such other accounts as in the future should
reasonably be deemed to be uncollectible), the parties agree to the following
practices and procedures with respect to the billing and collection of
accounts receivable.
(a) Buyer has not acquired any interests in Seller's
accounts receivable with respect to the Service. All amounts due for the
Service provided to the Customers pursuant to the Customer Contracts prior to
the Closing shall continue to belong to the Seller, and all amounts due for
the Service provided to the Customers pursuant to the Customer Contracts
following the Closing shall belong to the Buyer. Following the Closing,
Seller shall in accordance with Section 7.11(b) and Schedule 7.11(b) continue
to prepare and transmit bills to the Customers of the Service for all amounts
due pursuant to the Customer Contracts until such billing service is
terminated in accordance with Section 7.11(b), following which Buyer shall
prepare and transmit bills to the Customers of the Service for all amounts
due pursuant to the Customer Contracts. So long as Seller is preparing and
transmitting such bills, Seller shall direct that payments be made to such
account or accounts (or address or addresses) as Seller may designate from
time to time. Upon Buyer beginning to prepare and transmit such bills, Buyer
may direct that payments be made to such account or accounts (or address or
addresses) as Buyer may designate from time to time. If necessary, Seller
shall join in sending such directions to the Customers.
(b) All bills for the Service provided pursuant to the
Customer Contracts shall be prepared and sent in substantially the form, with
substantially the same content and on substantially the same time schedule as
the bills with respect to the Service were prepared and sent prior to the
Closing. All bills issued pursuant to the Customer Contracts shall include
amounts due to Seller with respect to the Service and amounts due to Buyer
with
<PAGE>
respect to the Service without distinction as to whom such amount is due
being set forth on the billing statement. Except for Customer accounts in
dispute at Closing as evidenced by a written notice of dispute from the
Customer (the "Disputed Accounts"), all amounts received from Customers
pursuant to the Customer Contracts shall be applied first to the oldest
amounts due under the Customer Contracts. All amounts received from Customers
having a Disputed Account shall be applied to such Customer's account as
directed by the Customer or directed by the final order of a court or
arbitrator or the binding direction of any other tribunal. Neither Seller nor
Buyer shall assert any right of set-off or hold-back or otherwise attempt to
apply any amounts received with respect to the Customer Contracts to any
amount owed to Seller or Buyer, as the case may be, by such Customer on any
account or claim other than the account maintained pursuant to the Customer
Contracts.
(c) Each party collecting amounts due to the other party
from the Customers pursuant to the Customer Contracts shall within twenty
days of the last day of the month during which such payment is received
deliver a report to the other party detailing the payments received which are
due to the other party. The two reports will be reconciled each month with
the amounts due to each party nettedto establish a net balance owed from one
party to the other. Each month, the party owing a net balance to the other
party shall transmit the net balance owed for that month to such other party,
which payment shall be made within thirty days of the end of the applicable
month. Each party shall provide the other party with account information for
wire transfers of such payments and may change such account information on
five days written notice.
(d) Each party shall exercise reasonable and customary
diligence with respect to the collection of the accounts due with respect to
the Customer Contracts, but neither party shall be required to engage a
collection agency or otherwise take extraordinary measures or incur other
than reasonable and customary expenses with respect to the collection of
accounts. Buyer shall not be obligated to file suit for the collection of
amounts due to Seller from Customers, but Seller shall retain the right to
institute such action, and Buyer shall provide Seller with such assistance as
Seller shall reasonably require, provided that Seller shall reimburse Buyer
for its direct expenses in providing such assistance. Except as provided in
Section 7.4(d), Seller shall not be obligated to file suit for the
<PAGE>
collection of amounts due to Buyer from Customers, but Buyer shall retain the
right to institute such action, and Seller shall provide Buyer with such
assistance as provided in Section 7.4(d).
8. Indemnification.
8.1 Indemnification by Seller. Seller shall indemnify Buyer and its
officers, directors, employees, assigns, successors and Affiliates
(collectively, the "Buyer Indemnified Parties") and hold them harmless
against and in respect of any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs, damages, losses, liabilities, taxes
and deficiencies and penalties and interest thereon and costs and expenses,
including reasonable attorneys' fees and expenses (collectively, "Losses") to
the extent resulting from (a) any breach of any representation or warranty,
or nonfulfillment of any covenant or agreement of Seller in the Transaction
Agreements, or (b) the Excluded Liabilities.
8.2 Indemnification by Buyer. Buyer shall indemnify Seller and its
officers, directors, employees, assigns, successors and Affiliates
(collectively, the "Seller Indemnified Parties" and, together with the Buyer
Indemnified Parties, the "Indemnified Parties") and hold them harmless
against and in respect of any and all Losses to the extent resulting from (a)
any breach of any representation or warranty or nonfulfillment of any
covenant or agreement of Buyer in the Transaction Agreements, or (b) the
Assumed Liabilities.
8.3 Period of Indemnity. All representations and warranties of the
parties contained in the Transaction Agreements shall survive the execution
and delivery of the Transaction Agreements and shall continue in full force
and effect for twelve (12) months after the Closing Date and thereafter shall
terminate except to the extent necessary for a claim for indemnification that
was asserted prior to the expiration of such period to be fully determined.
All covenants or agreements which by their terms are to be performed after
the Closing Date, including but not limited to each party's obligations under
the Customer Contracts, shall survive until fully discharged.
<PAGE>
8.4 Limitations.
(a) No claim for indemnity shall be asserted by, and no
liability for such indemnity shall be enforced against, either party unless a
Claim Notice (as hereinafter defined) has been given by the Indemnified Party
to the other party (the "Indemnitor") prior to the expiration of the period
for asserting such claim under Section 8.3. All indemnification rights under
this Agreement are without duplication.
(b) No indemnity shall be payable to the Buyer Indemnified
Parties with respect to any claim under Section 8.1 (a), or to the Seller
Indemnified Parties with respect to any claim under Section 8.2(a), resulting
from any breach of any representation or warranty (i) with respect to any
Loss of less than $250,000, and (ii) unless and until the aggregate of all
Losses due from Buyer or Seller, as the case may be, exceed $250,000, in
which event all Losses so due in excess of such $250,000 shall be paid in
full by Seller or Buyer, as the case may be. The aggregate amount payable by
the Seller with respect to claims under Section 8.1(a) or by the Buyer with
respect to claims under 8.2(a) resulting from any breach of any
representation or warranty shall not exceed $2 million. Notwithstanding the
above, the aggregate amount payable by the Seller with respect to claims
under Section 8.1(a) or by the Buyer with respect to claims under Section
8.2(a) resulting from a breach of a representation or warranty contained in
Section 5.2, 5.3(ii), 5.4(i), 5.4(iii), 6.2, or 6.3(ii) shall not be subject
to the $2 million limitation.
8.5 Notice to the Indemnitor. Promptly after the assertion of any
claim by a third party or occurrence of any event which may give rise to a
claim for indemnification from an Indemnitor under this Article 8, the
Indemnified Party shall notify the Indemnitor in writing of such claim (the
"Claim Notice"). The Claim Notice shall describe the asserted liability in
reasonable detail, and shall indicate the amount (estimated, if necessary and
to the extent feasible) of the Loss that has been or may be suffered by the
Indemnified Party. Failure by the Indemnified Party to give a Claim Notice to
the Indemnitor in accordance with the provisions of this Section 8.5 shall
not relieve the Indemnitor of its obligations hereunder except to the extent
that the Indemnitor has been actually prejudiced by such failure.
<PAGE>
8.6 Rights of Parties to Settle or Defend. The Indemnitor may elect
to compromise or defend, at its own expense, by its own counsel any asserted
liability; provided, that the Indemnitor may not settle such asserted
liability without the written consent of the Indemnified Party if such
settlement imposes any obligation on the Indemnified Party, involves any
admission of wrongful conduct on the part of the Indemnified Party or imposes
any restriction on the Indemnified Party. If the Indemnitor elects to
compromise or defend such asserted liability, it shall within 30 calendar
days upon being given the Claim Notice (or sooner, if the nature of the
asserted liability so requires) notify the Indemnified Party of its intent to
do so, and the Indemnified Party shall cooperate in the compromise of, or
defense against, such asserted liability. If the Indemnitor elects to defend
any claim, the Indemnified Party shall make available to the Indemnitor any
books, records or other documents within its control that are reasonably
necessary or appropriate for such defense. If the Indemnitor elects not to
defend the asserted liability or fails to notify the Indemnified Party of its
election as herein provided, the Indemnified Party may defend (at the
reasonable expense of the Indemnitor) such asserted liability as the
Indemnified Party considers appropriate; provided, that it may not settle
such asserted liability without the written consent of the Indemnitor. The
parties agree to cooperate fully with one another in the defense, settlement
or compromise of any asserted liability. In any event, the Indemnified Party
and the Indemnitor may participate, at their own expense, in the defense of
such asserted liability.
8.7 Exclusive Remedies. The parties hereto acknowledge that the
indemnity rights set forth in this Article 8 are intended to be their
exclusive monetary remedies in connection with this Agreement and the
Contemplated Transactions; provided that nothing in this Section 8.7 shall
limit in any way the availability of specific performance, injunctive relief
or other equitable remedies to which a party may otherwise be entitled.
9. Miscellaneous.
9.1 Entire Agreement. The Transaction Agreements (together with the
Schedules and Exhibits hereto) and the confidentiality agreement, entered
into between Buyer and Seller signed June 11, 1998 contain, and are
<PAGE>
intended as, a complete statement of all of the terms of the arrangements
between the parties with respect to the matters provided for herein and
therein, and supersede any previous agreements and understandings between the
parties with respect to those matters.
9.2 Governing Law. The Transaction Agreements shall be governed by,
and construed and enforced in accordance with, the laws of the State of New
York, without regard to its principles of conflicts of law.
9.3 Headings. The section headings of the Transaction Agreements are
for reference purposes only and are to be given no effect in the construction
or interpretation of the Transaction Agreements.
9.4 Notices. All notices and other communications under the
Transaction Agreements shall be in writing and shall be deemed given when
delivered personally, mailed by registered or certified mail, return receipt
requested, sent by recognized overnight delivery service or, to the extent
receipt is confirmed, by telecopy, telefax, or other electronic transmission
service to the parties at the following addresses (or to such other address
as a party may have specified by notice given to the other party pursuant to
this provision):
If to Seller, to:
AT&T Corp.
55 Corporate Drive
Room 15A09
Bridgewater, NJ 08807
ATTN: Kathleen Earley, VP Networked Commerce
Services
with a copy to:
AT&T Corp.
295 N. Maple Avenue
Room 3235C2
Basking Ridge, NJ 07920
ATTN: Sanford Tannenbaum, General Attorney
If to Buyer, to:
Transaction Network Services, Inc.
<PAGE>
1939 Roland Clarke Place
Reston, VA 20191
Attn: General Counsel
fax: 703.453.8397
with a copy to:
Jeffrey E. Jordan, Esq.
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
fax: 202.857.6395
9.5 Severability. Any provision of the Transaction Agreements which
is invalid or unenforceable shall be ineffective to the extent of such
invalidity or unenforceability but such invalidity or unenforceability shall
not affect in any way the remaining provisions hereof or thereof provided
that such invalidity or unenforceability does not deny any party the material
benefits of the transactions for which it has bargained.
9.6 Amendment; Waiver. No provision of the Transaction Agreements
may be amended or modified except by an instrument or instruments in writing
signed by the parties hereto. Any party may waive compliance by another with
any of the provisions of the Transaction Agreements. No waiver of any
provision hereof or thereof shall be construed as a waiver of any other
provision. Any waiver must be in writing and signed by the party granting the
waiver.
9.7 Assignment and Binding Effect. Neither party hereto may assign
any of its rights or delegate any of its duties under the Transaction
Agreements without the prior written consent of the other party; provided,
that Buyer and Seller may assign any of its rights or delegate any of its
duties to any entity controlling or controlled by Buyer or Seller, subject to
Buyer or Seller remaining primarily liable and responsible for the
performance of all of its duties and obligations under the Transaction
Agreements. All of the terms and provisions of the Transaction Agreements
shall be binding on the respective successors and permitted assigns of the
parties. Notwithstanding anything above, Buyer may not assign any of its
rights or delegate any of its duties under the Transaction
<PAGE>
Agreements, without the prior written consent of Seller, to an entity
controlling or controlled by Buyer if that entity is a telecommunications
common carrier or it controls or is controlled by a telecommunications common
carrier.
9.8 No Benefit to Others. The representations, warranties, covenants
and agreements contained in the Transaction Agreements are for the sole
benefit of the parties hereto and their respective successors and assigns and
they shall not be construed as conferring and are not intended to confer any
rights on any other persons.
9.9 Counterparts. This Agreement may be executed in counterparts,
all of which shall be deemed an original, and each party thereto may become a
party hereto by executing a counterpart hereof. This Agreement and any
counterpart so executed shall be deemed to be one and the same instrument.
9.10 Certain Definitions. The following terms, as used herein, have
the following meanings:
"Affiliate," with respect to any person, means any person directly
or indirectly controlling, controlled by or under common control
with such person.
"Business Day" means any day excluding Saturday, Sunday and any day
which is a legal holiday under the laws of the State of New York on
which banking institutions located in such state are closed.
"Communications Services" means the services provided by
Seller pursuant to the Service Agreement.
"Governmental Authority" means any government or political subdivision
thereof, whether federal, state, local or foreign, and any agency,
department, division, court, tribunal or instrumentality of any such
government or political subdivision.
"Knowledge" means, with respect to Seller, the actual knowledge of the
individuals set forth on Schedule 9.10.
"Material Adverse Effect or Material Adverse Change" means any change
or effect that is, or is reasonably likely to be, materially adverse
to the Service and the Assets, taken as a whole.
"Software" means certain custom software utilized on the TAS2/Hypercom
network to provide the Service to GTECH Corporation in connection with
California State Lottery.
<PAGE>
"Transition Fees" means the fees payable during the Transition Period
pursuant to Section 7.11(c).
"Transaction Agreements" means this Agreement, the
Settlement Agreement and the Service Agreement.
<PAGE>
9.11 Glossary. The following capitalized terms are defined in the
following sections of this Agreement:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Affiliate 9.10
Assets 1
Assumed Liabilities 2.1
Bulk Sales Laws 7.10
Business Day 9.10
Buyer Preamble
Communications Fees 7.11(c)
Communications Services 9.10
Claim Notice 8.5
Closing 1
Closing Date 4
Contemplated Transactions 1
Customer Contracts 1.3
Customer 7.4(b)
Disputed Accounts 7.14(b)
Equipment 1.1
Excluded Liabilities 2.2
Governmental Authority 9.10
Indemnified Party 8.2
Indemnitor 8.4
Knowledge 9.10
Liens 5.4
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Losses 8.1
Material Adverse Effect 9.10
Operations Fees 7.11(c)
Permitted Liens 5.4
Purchase Price 3.1
Restrictive Covenants 7.7(c)
Seller Preamble
Service Preamble
Service Agreement 7.9
Settlement Agreement 7.8
Software 9.10
Transition Fees 9.10
Transition Services 7.11(b)
Transaction Agreements 9.10
</TABLE>
9.12 Consent to Jurisdiction and Service of Process. Any legal
action, suit or proceeding arising out of or relating to the Transaction
Agreements or the Contemplated Transactions may be instituted in any state or
federal court located in New York County, State of New York, and each party
agrees not to assert, by way of motion, as a defense, or otherwise, in any
such action, suit or proceeding, any claim that it is not subject personally
to the jurisdiction of such courts, that its property is exempt or immune
from attachment or execution, that the action, suit or proceeding is brought
in an inconvenient forum, that the venue of the action, suit or proceeding is
improper or that the Transaction Agreements or the subject matter hereof or
thereof may not be enforced in or by such court. Each party further
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding. Any and all service of process and any other notice in
any such action, suit or proceeding shall be effective against any party if
given personally or by registered or certified mail, return receipt
requested, or by any other means of mail that requires a signed receipt,
postage prepaid, mailed to such party as herein provided, or by personal
service
<PAGE>
on such party with a copy of such process mailed to such party by first class
mail or registered or certified mail, return receipt requested, postage
prepaid. Nothing herein contained shall be deemed to affect the right of any
party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party in any jurisdiction
other than New York in connection with actions initiated by third parties in
such other jurisdictions.
9.13 Interpretation. Article titles, headings to sections and any
table of contents are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation hereof.
The Schedules and Exhibits referred to herein shall be construed with and as
an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. As used herein, "include", "includes" and "including"
are deemed to be followed by "without limitation" whether or not they are in
fact followed by such words or words of like import; "writing", "written" and
comparable terms refer to printing, typing, lithography and other means of
reproducing words in a visible form; references to a person are also to its
successors and assigns; except as the context may otherwise require,
"hereof", "herein", "hereunder" and comparable terms refer to the entirety
hereof and not to any particular article, section or other subdivision hereof
or attachment hereto; references to any gender include the other; except as
the context may otherwise require, the singular includes the plural and vice
versa; references to any agreement or other document are to such agreement or
document as amended and supplemented from time to time; references to
"Article", "Section" or another subdivision or to an "Exhibit" or "Schedule"
are to an article, section or subdivision hereof or an "Exhibit" or
"Schedule" hereto.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Asset
Purchase Agreement as of the date first above written.
AT&T CORP.
By: /s/ Kathleen B. Earley
Name: Kathleen B. Earley
Title: VP - Networked Commerce Services
TRANSACTION NETWORK SERVICES, INC.
By: /s/ John J. McDonnell, Jr.
Name: John J. McDonnell, Jr.
Title: President and CEO
