NTSP Netspend Holdings, Inc. (MM)

Director Compensation

        The Company reimburses non-employee directors for their out-of-pocket expenses related to their service on the Board. Each director who is not an employee of the Company or designated by the JLL Funds or the Oak Funds receives an annual retainer of $190,711. In addition, the lead director receives an annual supplemental retainer of $15,914, the chair of the Audit Committee receives an annual supplemental retainer of $15,914, the chair of the Compensation Committee receives an annual supplemental award of $10,609 and the chair of the Nominating and Corporate Governance Committee receives an annual supplemental retainer of $5,305. In previous years, directors could elect to receive the value of any cash compensation in equity securities in the form of Restricted Shares, which are generally subject to a one-year vesting period. For 2013, all annual retainers are to be paid in equal monthly installments in advance.

Indemnification and Exculpation of Directors and Officers

        The Company is incorporated under the laws of the State of Delaware. Section 102(b)(7) of the DGCL authorizes a corporation to provide in its certificate of incorporation that a director of the corporation will not be personally liable to a corporation or its stockholders for monetary damages for breach or alleged breach of the director's "duty of care." While this statute does not change directors' duty of care, it enables corporations to limit available relief to equitable remedies such as injunction or rescission. The statute has no effect on a director's duty of loyalty or liability for acts or omissions not in good faith or involving intentional misconduct or knowing violations of law, illegal payment of dividends or stock redemptions or repurchases, or for any transaction from which the director derives an improper personal benefit. As permitted by the statute, the Company has adopted provisions in its certificate of incorporation that have the effect of eliminating, to the fullest extent permissible under Delaware law, the personal liability of its directors to the Company and its stockholders for monetary damages for breach of their duty of care.

        Section 145 of the DGCL provides that a Delaware corporation may indemnify any persons who are, or are threatened to be made, parties to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such person is or was an officer, director, employee or agent of such corporation, or is or was serving at the request of such person as an officer, director, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys' fees), and, other than in case of an action brought by or on behalf of the corporation, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided that such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the corporation's best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. The Company's bylaws provide for indemnification of its directors and to the full extent permitted by Delaware law (subject to certain conditions). The Company has entered into agreements with its directors that require it to indemnify such persons against out-of-pocket costs actually and reasonably incurred (including expenses of a derivative action) and advance expenses to such person in connection with any proceeding, whether threatened, pending or completed, to which any such person is or may be made a party by reason of the fact that such person is or was a director or an officer of the company or any of its affiliated enterprises. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder. Section 145 of the DGCL provides for indemnification in terms sufficiently broad to permit the Company to indemnify such individuals, under certain circumstances, for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933. The Company has also obtained policies insuring it and its directors and officers against certain liabilities, including liabilities under the Securities Act of 1933.

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        The Merger Agreement provides for certain indemnification and insurance rights in favor of any person who is or prior to the Effective Time becomes, or has been at any time prior to the date of the Merger Agreement, an officer or director, employee, or agent of the Company, any of its subsidiaries or any of their respective predecessors. To review additional information regarding insurance and indemnification rights, see "The Merger Agreement—Directors' and Officers' Insurance and Indemnification."

Employee Matters

        During a twelve-month period after the Effective Time, the Merger Agreement provides that TSYS will cause the Surviving Corporation to (i) maintain the base salary or base wages of each employee of the Company and its subsidiaries in an amount that is no less favorable than the base salary or base wages such employee had immediately prior to the Effective Time and (ii) maintain employee benefits (other than equity-based plans) that are substantially comparable in the aggregate to either (x) the employee benefits provided by the Company (other than equity-based plans) in effect on the Effective Time or (y) the employee benefits (other than equity-based plans) in effect for similarly situated employees of TSYS, at TSYS' election. In addition, TSYS will, or will cause the Company or the Surviving Corporation to honor all the Company's employment, severance, change in control, retention, transition and termination agreements, as in effect prior to the Effective Time. Furthermore, to the extent employees of the Company and its subsidiaries become eligible to participate in any employee benefit plans or arrangements maintained by TSYS or any of its subsidiaries, then for all purposes service with the Company or any of its subsidiaries prior to the Effective Time shall be treated as service with the TSYS or any of its subsidiaries (except in regards to any benefit accrual or eligibility for early retirement under any defined benefit plan or eligibility for retiree welfare benefit plans or if it would result in the duplication of benefits).

Agreements with JLL Funds

        JLL Partners Fund IV, L.P. and JLL Partners Fund V, L.P. (collectively, the "JLL Funds") collectively own [    •    ] shares of Company common stock as of the record date. Two of the Company's board members, Francisco J. Rodriguez and Alexander R. Castaldi, are managing directors of JLL Partners Inc., which is the management company associated with the JLL Funds. The JLL Funds or one or more of their affiliates are parties to the following agreements.

        ACE Addendum.     The JLL Funds own approximately 97% of ACE, the Company's largest distributor. In connection with the execution of the Merger Agreement and as required by TSYS, the Company entered into an addendum to its existing services agreement with ACE which, among other things, extends the terms of such agreement for five years and contemplates a $3 million cash payment to ACE payable upon consummation of the merger and an increase in the annual marketing allowance payable to ACE. The terms of the ACE extension, which was required by TSYS, were negotiated under the supervision of and approved by a special committee of Disinterested Directors consisting of non-management Board members who are not affiliated with either the Oak Funds or the JLL Funds. The ACE extension will become effective only upon consummation of the merger.

        Voting Agreement.     In connection with the execution of the Merger Agreement, the JLL Funds entered into the Voting Agreement pursuant to which, among other things, the JLL Funds agreed to vote their shares in favor of the adoption of the Merger Agreement.

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Agreement with Oak Funds

        Oak Investment Partners X, L.P. and Oak X Affiliates Fund, L.P. (collectively, the "Oak Funds") own [    •    ] shares of Company common stock as of the record date. Two of the Company's board members, Andrew W. Adams and Ann Huntress Lamont, are employees of Oak Management Corporation, which is the investment manager of each of the Oak Funds. In addition, Ann Huntress Lamont is a managing member of the general partner of each of the Oak Funds. Such general partners maintain investment and voting control over the shares held or controlled by each of the Oak Funds. In connection with the execution of the Merger Agreement, the Oak Funds entered into the Voting Agreement pursuant to which, among other things, the Oak Funds agreed to vote their shares in favor of the adoption of the Merger Agreement.

Future Arrangements

        To the best knowledge of the Company, except for those agreements described in this proxy statement between the Company and its executive officers and directors and those agreements entered into between TSYS, Sub and one of the executive officers, as described above, no other employment, equity contribution or other agreement, arrangement or understanding between any executive officer or director of the Company, on the one hand, and TSYS or the Company, on the other hand, existed as of the date of this proxy statement. Under the arrangements, TSYS expects that Mr. Henry will continue to serve as the Chief Executive Officer of the Surviving Corporation, Mr. Harris will continue to serve as the President of the Surviving Corporation, and Ms. Hatzopoulos and Mr. DeVoglaer, along with a number of other key employees, will also continue in their roles with the Surviving Corporation.

Material U.S. Federal Income Tax Consequences of the Merger

        The following is a general discussion of the material U.S. federal income tax consequences of the merger to U.S. holders (as defined below) of shares of Company common stock whose shares are exchanged for cash pursuant to the merger. This discussion does not address U.S. federal income tax consequences with respect to non-U.S. holders. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury regulations promulgated under the Code, judicial decisions and administrative rulings and published positions of the Internal Revenue Service (the "IRS"), each as in effect as of the date of this proxy statement. These authorities are subject to change, with possible retroactive effect, and any such change could affect the accuracy of the statements and conclusions set forth in this discussion. This discussion does not describe any tax consequences arising under the laws of any local, state or non-U.S. jurisdiction and does not consider any aspects of U.S. federal tax law other than income taxation. We have not sought, and do not intend to seek, any ruling from the IRS with respect to the statements made and the conclusions reached in this discussion, and no assurance can be given that the IRS will agree with the views expressed herein, or that a court will not sustain any challenge by the IRS in the event of litigation.

        For purposes of this discussion, the term "U.S. holder" means a beneficial owner of shares of Company common stock that is, for U.S. federal income tax purposes:

•

a citizen or individual resident of the United States;



•

a corporation (or any other entity or arrangement treated as a corporation) organized in or under the laws of the United States, any state thereof or the District of Columbia;



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an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or



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a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons have the authority to control

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all substantial decisions of the trust or (ii) the trust has a valid election in effect under applicable Treasury regulations to be treated as a "United States person."

        This discussion applies only to U.S. holders of shares of Company common stock who hold such shares as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). Further, this discussion does not purport to consider all aspects of U.S. federal income taxation that might be relevant to U.S. holders in light of their particular circumstances and does apply to any holder of Company common stock that may be subject to special treatment under the U.S. federal income tax laws, including:

•

a bank or other financial institution;



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a tax-exempt organization;



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a retirement plan or other tax-deferred account;



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an entity treated as a partnership, a S corporation or other pass-through entity for U.S. federal income tax purposes (or an investor in a partnership, S corporation or other pass-through entity);



•

an insurance company;



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a mutual fund;



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a real estate investment trust;



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a dealer or broker in stocks and securities, or currencies;



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a trader in securities that elects mark-to-market treatment;



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a holder of shares of Company common stock subject to the alternative minimum tax provisions of the Code;



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a holder of shares of Company common stock that received such shares through the exercise of an employee stock option, through a tax qualified retirement plan or otherwise as compensation;



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a U.S. holder that has a functional currency other than the U.S. dollar;



•

a person that holds shares of Company common stock as part of a hedge, straddle, constructive sale, conversion or other integrated transaction; or



•

certain former U.S. citizens or long-term residents.

        If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds shares of Company common stock, the tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partner and the partnership. A partner of a partnership that holds shares of Company common stock should consult its own tax advisors regarding the tax consequences of exchanging such shares for cash pursuant to the merger.

        The exchange of shares of Company common stock for cash pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes, and may also be a taxable transaction under applicable state, local, non-U.S. and other tax laws. In general, a U.S. holder who receives cash in exchange for shares of Company common stock pursuant to the merger will recognize gain or loss equal to the difference, if any, between (1) the amount of cash received and (2) the U.S. holder's adjusted tax basis in such shares. Gain or loss will be determined separately for each block of Company common stock (generally, shares of Company common stock acquired at the same cost in a single transaction) held by such U.S. holder. Such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if such U.S. holder's holding period for the shares of Company common

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stock is more than one year as of the date of the merger. Long-term capital gains of certain non-corporate holders, including individuals, are generally subject to U.S. federal income tax at preferential rates. The deductibility of capital losses is subject to limitations.

Information Reporting and Backup Withholding Tax

        Payments made to a U.S. holder in exchange for shares of Company common stock pursuant to the merger generally will be subject to information reporting and may be subject to backup withholding tax at the applicable rate (currently 28%). To avoid backup withholding, a U.S. holder must provide a valid taxpayer identification number and comply with certain certification procedures (generally, by providing a properly completed IRS Form W-9) or otherwise establish an exemption from backup withholding tax.

        Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a U.S. holder will be allowed as a credit against such holder's U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the IRS.

Additional Tax on Investment Income

        Certain U.S. holders that are individuals, estates or trusts and whose income exceeds certain thresholds will be subject to a 3.8% Medicare contribution tax on unearned income, including, among other things, capital gains from the sale or taxable disposition of shares of Company common stock, subject to certain limitations and exceptions. U.S. holders should consult their tax advisors with respect to the potential application of this additional tax.

         Holders of Company common stock should consult their own tax advisors to determine the specific tax consequences to them of the merger, including federal estate, gift and other non-income tax consequences, and tax consequences under state, local, non-U.S. and other tax laws.

Regulatory Approvals and Notices

United States Antitrust Compliance

        Under the HSR Act, certain transactions may not be consummated until specified information and documentary material ("Premerger Notification and Report Forms") have been filed with the FTC and the Antitrust Division and certain waiting period requirements have been satisfied. These requirements of the HSR Act apply to the acquisition of Company common stock in the merger.

        Under the HSR Act, the merger may not be completed until the expiration of a prescribed waiting period under the HSR Act following the filing by TSYS, as the ultimate parent entity of Sub, and the Company of Premerger Notification and Report Forms concerning the merger with the FTC and the Antitrust Division, unless the waiting period is earlier terminated by the FTC and the Antitrust Division. Pursuant to the HSR Act, TSYS and the Company filed on March 5, 2013 Premerger Notification and Report Forms with the FTC and the Antitrust Division in connection with the purchase of shares of Company common stock. Accordingly, the required waiting period under the HSR Act with respect to the merger will expire at 11:59 p.m., New York time, on April 4, 2013, unless earlier terminated by the FTC and the Antitrust Division or unless the FTC or the Antitrust Division issues a Request for Additional Information and Documentary Material (a "Second Request") prior to that time. If prior to the expiration of the waiting period either the FTC or the Antitrust Division issues a Second Request, the waiting period with respect to the merger would be extended until 30 calendar days following the date of substantial compliance by TSYS, as the ultimate parent entity of Sub, and the Company with that request, unless the FTC or the Antitrust Division terminates the extended waiting period before its expiration. After the expiration of the 30 calendar day waiting

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period, the consummation of the merger can be prevented by the FTC or Antitrust Division only by court order or with TSYS' consent. In practice, complying with a Second Request can take a significant period of time.

        The FTC and the Antitrust Division will scrutinize the legality under the antitrust laws of Sub's proposed acquisition of the Company. At any time before or after the closing of the merger, if the Antitrust Division or the FTC believes that the merger would violate the U.S. federal antitrust laws by substantially lessening competition in any line of commerce affecting U.S. consumers, the agency having clearance to investigate the transaction has the authority to seek a federal court order to enjoin the transaction or, if the merger has occurred, requiring disposition of such Company common stock, or the divestiture of substantial assets of Sub, the Company, or any of their respective subsidiaries or affiliates or requiring other conduct relief. United States state attorneys general and private persons may also bring legal action under the antitrust laws seeking similar relief or seeking conditions to the completion of the merger. While TSYS and the Company believe that consummation of the merger would not violate any antitrust laws, there can be no assurance that a challenge to the merger on antitrust grounds will not be made or, if a challenge is made, what the result will be. If any such action by the FTC, the Antitrust Division, or any state or any other person is commenced and results in an order that has the effect of enjoining or otherwise preventing the consummation of the merger, Sub may not be obligated to consummate the merger.

State Regulation of Licensed Money Transmitters

        Because one of the Company's subsidiaries is licensed as a money transmitter, the merger is also subject to the receipt of necessary approvals from various U.S. state and District of Columbia regulatory authorities. These state and District of Columbia licensing laws and regulations (generally referred to as "money transmitter licensing laws") generally require that, prior to the direct or indirect acquisition of control of a licensed money transmitter, the licensee and/or acquirer must, in some cases, notify or obtain the approval of the applicable regulatory authority prior to such acquisition of control. In this regard, the Company's, TSYS' and Sub's respective obligations to effect the merger under the Merger Agreement are conditioned on obtaining all required approvals from, or making all required filings with and providing all required notices to, certain state and District of Columbia regulatory authorities with respect to the indirect change of control of the Company's subsidiary that is a money transmitter. The Company anticipates that notifications and/or approvals of the indirect change of control of the Company's subsidiary that is a licensed money transmitter will need to be made to or obtained from the following jurisdictions in connection with the merger: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Virginia, Washington, West Virginia and Wyoming.

        In connection with this condition, under the terms of the Merger Agreement the Company, TSYS and Sub are required to use reasonable best efforts to do all things and take all actions reasonably necessary, proper or advisable to consummate the merger, including making all filings and obtaining all approvals required under applicable money transmitter licensing laws. The Company and TSYS are in the process of providing the necessary notices and/or making the necessary filings to obtain the necessary approvals. TSYS and the Company have agreed that, if any necessary approval has not been obtained by June 19, 2013, TSYS and the Company will use reasonable best efforts to identify possible alternatives reasonably satisfactory to TSYS that eliminate the need to obtain such approvals, including, without limitation, entering into certain alternate arrangements described in the Merger Agreement. For a detailed description of the parties' respective obligations under the Merger Agreement with respect to regulatory consents and approvals see "The Merger Agreement—Reasonable Best Efforts; Notification."

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Litigation Relating to the Merger

        There are two putative class action lawsuits currently pending in connection with TSYS' proposed acquisition of the Company. A putative class action entitled Litwin v. NetSpend Holdings, Inc. et al. was filed on February 22, 2013 in the Court of Chancery of the State of Delaware, but was voluntarily dismissed by the plaintiff by order granted on March 1, 2013. On February 25, 2013, a putative class action lawsuit entitled Bushansky v. NetSpend Holdings,  Inc. et al. was filed in the District Court of Travis County, Texas. On March 1, 2013, a putative class action lawsuit was filed in the Court of Chancery of the State of Delaware, entitled Koehler v. NetSpend Holdings, Inc. et al.

        The Bushansky and Koehler actions name as defendants the Company, our Board, TSYS, and Sub. Both of these actions were brought individually and on behalf of a putative class of the Company's stockholders, and each alleges that the members of the Board breached their fiduciary duties in connection with TSYS' proposed acquisition of the Company by depriving the Company's stockholders of the full and fair value of their ownership interest in the Company. The Bushansky action further alleges that the Company has failed to inform the Company's stockholders of material facts regarding the proposed acquisition. Both actions additionally allege that the Company, TSYS, and Sub aided and abetted the alleged breaches by the Board. Both lawsuits seek equitable relief, including, among other things, to enjoin consummation of TSYS' acquisition of the Company, rescission of the related Merger Agreement, and an award of all costs, including reasonable attorneys' fees and other expenses. The Koehler action also seeks an award of compensatory damages and/or recissory damages.

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THE MERGER AGREEMENT

         This section describes the material terms of the Merger Agreement. The description in this section and elsewhere in this proxy statement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A and is incorporated by reference into this proxy statement. This summary does not purport to be complete and may not contain all of the information about the Merger Agreement that is important to you. We encourage you to read the Merger Agreement carefully and in its entirety. This section is not intended to provide you with any factual information about us. Such information can be found elsewhere in this proxy statement and in the public filings we make with the SEC, as described in the section entitled, "Where You Can Find More Information", beginning on page 116.

Explanatory Note Regarding the Merger Agreement

        The Merger Agreement has been provided solely to inform investors of its terms. The Merger Agreement contains various representations, warranties and covenants made by the Company to TSYS and Sub and made by TSYS and Sub to the Company. The representations, warranties and covenants contained in the Merger Agreement were made as of specific dates only for the purposes of such agreement, were the product of negotiations among the Company, TSYS and Sub, and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Merger Agreement that are not reflected in the Merger Agreement, including in the Disclosure Schedule that the Company delivered to TSYS and Sub in connection with the signing of the Merger Agreement. The Disclosure Schedule contains information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, the representations, warranties and covenants were made solely for the benefit of the parties to the Merger Agreement and certain representations and warranties in the Merger Agreement are intended solely to allocate risk, if those statements prove to be inaccurate, between the Company, on the one hand, and TSYS and Sub, on the other hand, rather than to establish matters of fact. Additionally, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement. Accordingly, the representations and warranties in the Merger Agreement may not constitute the actual state of facts about the Company, TSYS or Sub and should not be relied upon as disclosure about the Company, TSYS or Sub.

The Merger

        The Merger Agreement provides that, following completion of the merger and subject to the terms and conditions of the Merger Agreement, and in accordance with the applicable provisions of the DGCL, at the Effective Time:

•

Sub will be merged with and into the Company, and the separate corporate existence of Sub will cease;



•

the Company will continue as the Surviving Corporation after the merger under the name "NetSpend Holdings, Inc."; and



•

the Surviving Corporation will continue to be governed by the laws of the state of Delaware.

        At the Effective Time, the certificate of incorporation of Sub as in effect immediately prior thereto will be the certificate of incorporation of the Surviving Corporation, and the bylaws of Sub as in effect immediately prior thereto will be the bylaws of the Surviving Corporation until thereafter changed or amended in accordance with the provisions thereof, the certificate of incorporation or the applicable provisions of the DGCL.

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Board of Directors and Officers

        Pursuant to the terms of the Merger Agreement, the directors of Sub immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation, until their respective successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal, in accordance with the Surviving Corporation's certificate of incorporation and bylaws.

        The persons designated by TSYS prior to the Closing Date shall be the initial officers of the Surviving Corporation and will hold office until their earlier death, disability, resignation or removal, or until their respective successors are duly elected and qualified.

Conversion of Shares

Treatment of Common Stock

        At the Effective Time, each share of Company common stock issued and outstanding immediately prior to the Effective Time (excluding (i) shares held in the treasury of the Company and each share owned by TSYS, Sub or any other direct or indirect wholly owned subsidiary of TSYS or the Company and (ii) shares held by holders who have neither voted in favor of the merger nor consented thereto in writing and who have properly exercised and not withdrawn a demand for appraisal rights or otherwise lost appraisal rights with respect thereto in accordance with Section 262 of the DGCL ("Dissenting Shares")) will be converted into the right to receive from the Surviving Corporation an amount in cash, without interest, equal to $16.00 (the "merger consideration").

        All such shares of Company common stock that have been converted into the right to receive the merger consideration will no longer be outstanding and will automatically be cancelled and retired, and each holder of any such shares of Company common stock will cease to have any rights with respect thereto, except the right to receive the merger consideration, without interest, upon surrender of such shares of Company common stock.

Treatment of Series A Convertible Preferred Stock

        Each share of Series A Convertible Preferred Stock issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares) will be converted into the right to receive from the Surviving Corporation, an amount in cash, without interest, equal to $160.00 (which is the product of (i) ten, which is the number of shares of Company common stock into which a share of Series A Convertible Preferred Stock is convertible, and (ii) the merger consideration).

        All such shares that have been converted into the right to receive the merger consideration will no longer be outstanding and will automatically be cancelled and retired and each holder of any such shares will cease to have any rights with respect thereto, except the right to receive the Preferred Stock merger consideration with respect to which each share of Series A Convertible Preferred Stock is convertible, without interest, upon surrender of such shares.

        At or before Closing, TSYS or Sub will deposit (or cause to be deposited) with the paying agent cash in an aggregate amount sufficient to pay the aggregate merger consideration for all shares of Company common stock and the aggregate Preferred Stock merger consideration for all shares of Series A Convertible Preferred Stock.

Treatment of Options

        Each vested Option as of the Effective Time (including certain options for which the vesting is to be all or partially accelerated in connection with the merger) will be canceled, terminated and converted at the Effective Time into the right to receive a cash payment (less any applicable federal or

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withholding taxes and without interest) equal to, for each share of Company common stock subject to the vested Option, the excess, if any, of (x) the merger consideration over (y) the exercise price payable in respect of each share of Company common stock issuable under such Option. Vested Options with an exercise price that is equal to or greater than the merger consideration shall be cancelled at the Effective Time without any cash payment being made to the holder of such Option. Options with only a performance-based vesting condition for which such performance vesting condition has not been satisfied at or prior to the Effective Time shall be cancelled at the Effective Time without any cash payment being made to the holder of such Option. The only holder of such an option is Daniel Henry, the Chief Executive Officer of the Company. Each time-based unvested Option as of the Effective Time shall be assumed by TSYS and converted into a Converted Option that represents the right to acquire the number of shares of TSYS common stock equal to the product of (x) the number of shares of Company common stock subject to the unvested Option multiplied by (y) the conversion ratio. The Converted Options will generally continue to be governed by the same material terms and conditions as were applicable to the unvested Option immediately prior to the Effective Time (including any relevant provisions regarding vesting and vesting acceleration events).

Treatment of Restricted Shares

        Each Restricted Share that will be vested as of the Effective Time (including certain Restricted Shares for which the vesting is to be partially accelerated in connection with the merger) will be canceled and terminated in exchange for the right to receive a cash payment (less any applicable federal or withholding taxes and without interest) equal to the merger consideration. Each unvested Restricted Share as of the Effective Time will be converted into Converted Restricted Shares with respect to a number of shares of TSYS common stock equal to the product of (x) the number of unvested Restricted Shares multiplied by (y) the conversion ratio. The Converted Restricted Shares will generally continue to be governed by the same material terms and conditions as were applicable to the unvested Restricted Share immediately prior to the Effective Time (including any relevant provisions regarding vesting and acceleration events). In general, Converted Restricted Shares that were to have vested under their original terms, in whole or in part, based on the achievement of certain performance conditions shall, following the Effective Time, be modified so that all performance conditions shall no longer apply and such Converted Restricted Shares shall vest on December 31, 2015, provided that the holder remains continuously employed with TSYS or one of its subsidiaries through such date, provided that (1) certain unvested performance-based Restricted Shares held by some of our executives will remain performance-based following their conversion into Converted Restricted Shares and (2) certain unvested performance-based Restricted Shares held by some of our executives will be forfeited in connection with the merger.

Employee Stock Purchase Plan

        Pursuant to the Merger Agreement, prior to the Effective Time, the Company will take all actions necessary to (i) terminate the Company's Employee Stock Purchase Plan (the "ESPP") as of immediately prior to the Closing Date, (ii) ensure that no new offering period under the ESPP is commenced on or after the date of the Merger Agreement, (iii) prohibit ESPP participants from altering their payroll deductions from those in effect on the date of the Merger Agreement and (iv) provide that the amount of the accumulated contributions of each participant under the ESPP shall be applied to the purchase of Company Common Stock upon the conclusion of the purchase period expiring March 31, 2013. The forgoing discussion assumes that the Effective Time will not occur during the first quarter of 2013.

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Representations and Warranties

        In the Merger Agreement, the Company has made representations and warranties to TSYS and Sub with respect to, among other things:

•

corporate matters related to the Company and its subsidiaries, such as organization, standing, and power;



•

its capital structure;



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authority relative to the Merger Agreement;



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required consents and approvals, and no violations of organizational or governance documents;



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its financial statements, SEC filings, internal controls and financial reporting;



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absence of undisclosed liabilities;



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accuracy of information supplied for purposes of the proxy statement;



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absence of certain changes or events;



•

litigation;



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required permits and compliance with laws;



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tax matters;



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employee benefit plans and labor matters;



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environmental matters;



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affiliate transactions;



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intellectual property matters;



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the inapplicability of state takeover statutes;



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properties and title to tangible assets;



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non-competition and non-solicitation provisions;



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the opinion of its financial advisor;



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brokers' and finders' fees;



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insurance;



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material contracts; and



•

card association matters, security breaches, and outages.

        Some of the representations and warranties in the Merger Agreement made by the Company are qualified as to "materiality" or "Material Adverse Effect." For purposes of the Merger Agreement, a "Material Adverse Effect" means any event, change, circumstance, effect, occurrence, condition, state of facts or development, either individually or in the aggregate with any such other item, that is materially adverse to (I) the business, assets, liabilities, condition (financial or other) or results of operations of the Company and its subsidiaries taken as a whole, or (II) the ability of the Company to consummate the transactions contemplated by the Merger Agreement. The definition of "Material Adverse Effect" provides that in no event will any of the following, and no event, change, circumstance, effect, occurrence, condition, state of facts or development (individually or in the aggregate) arising out

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of or resulting from, any of the following, will constitute or be taken into account in determining whether a Material Adverse Effect has occurred or may occur:

(a)

a decrease in the market price or the trading volume of shares of Company common stock, in and of itself, or any failure by the Company to meet any published public estimates of the Company's revenue, earnings or other financial performance or results of operations for any period, in and of itself, or any failure by the Company to meet any internal budgets, plans or forecasts of its revenues, earnings or other financial performance or results of operations, in and of itself (but not, in each case, the facts or occurrences giving rise or contributing to any such changes or failures, which may be taken into account in determining whether there is a Material Adverse Effect);



(b)

general political, tax, economic or business conditions in the United States or any country or region in the world in which the Company or any of its subsidiaries does business, or any changes therein, or general financial, securities, credit or capital market conditions, including interest rates or exchange rates, or any changes therein, and including, in each case, any such event, change, circumstance, effect, occurrence, condition, state of facts or development arising out of or resulting from acts of war (whether or not declared) or the commencement, continuation or escalation of a war, acts of armed hostility or terrorism;



(c)

changes in U.S. GAAP, applicable law or authoritative interpretations thereof;



(d)

any change or effect generally affecting the industries or business segments in which the Company operates;



(e)

any hurricane, earthquake, flood or other natural disasters or acts of God;



(f)

any change or effect attributable to the execution or announcement of the Merger Agreement or the performance by the Company of its express obligations under the Merger Agreement (including compliance with its covenants set forth in the Merger Agreement), other than (1) the termination of relationships with any individual, corporation, partnership, joint venture, limited liability company, association, trust, unincorporated organization, entity or group (as defined in the Exchange Act) (each, a "Person") or group of related Persons (each, a "Core Counterparty") under the contracts with certain Core Counterparties set forth in the Disclosure Schedule (collectively, the "Core Business Contracts"), or (2) any inaccuracy or breach of the representation relating to authority and non-contravention;



(g)

the performance by TSYS or any of its affiliates of its or their express obligations under the Merger Agreement or the transactions contemplated by the Merger Agreement; or



(h)

any action or omission by the Company taken at the express written request or with the prior written consent of TSYS;

provided that any event, change, circumstance, effect, occurrence, condition, state of facts or development described in clauses (b) through (e) above will not be excluded to the extent that such event, change, circumstance, effect, occurrence, condition, state of facts or development disproportionately and adversely affects the Company as compared to other Persons engaged in the businesses in which the Company engages.

        In the Merger Agreement, TSYS and Sub have made customary representations and warranties to the Company with respect to:

•

corporate matters, such as organization, standing, and power;



•

the ownership and operations of TSYS and Sub;



•

authority relative to the Merger Agreement;

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•

required consents and approvals, and no violations of organizational or governance documents;



•

accuracy of information supplied for purposes of the proxy statement;



•

financial capacity, including the Commitment Letter and the debt financing;



•

litigation;



•

brokers' fees;



•

inapplicability of DGCL Section 203 and ownership of the securities of the Company; and



•

solvency of TSYS and the Surviving Corporation as of the Effective Time.

        None of the representations and warranties of the parties to the Merger Agreement contained in the Merger Agreement or in any other document, instrument or certificate delivered pursuant to or in connection with the Merger Agreement will survive the (i) Effective Time or (ii) subject to certain exceptions, the termination of the Merger Agreement. This limitation does not apply to any covenant or agreement of the parties to the Merger Agreement contained in the Merger Agreement or in any document or instrument delivered pursuant to or in connection with the Merger Agreement by its terms applies in whole or in part after the Effective Time.

Conduct of Business by the Company Pending the Merger

        The Merger Agreement provides that, except as otherwise expressly contemplated by the Merger Agreement or as set forth in the Disclosure Schedule, during the period from the date of the Merger Agreement to the earlier to occur of (i) the date of the termination of the Merger Agreement or (ii) the Effective Time, the Company will, and will cause each of its subsidiaries to, in all material respects carry on its business in the regular and ordinary course consistent with past practice and use its reasonable best efforts to preserve intact its current business organization and management, retain the services of its key officers and employees and preserve its business relationships with third parties.

        During the period from the date of the Merger Agreement to the earlier of the termination of the Merger Agreement and the Effective Time, except (w) as otherwise expressly contemplated by the Merger Agreement, as set forth in specific line items in the Company's 2013 budget (previously provided to TSYS), or as set forth in the Disclosure Schedule, (x) as required by applicable law or the terms of any contract of the Company or any subsidiary of the Company, (y) as may be required to comply with any order or any written notice from any domestic (federal or state), foreign or supranational, court, arbitrator, commission, governmental body, regulatory or administrative agency or tribunal (a "Governmental Entity") or (z) as consented to in writing by TSYS (which consent will not be unreasonably withheld or delayed with respect to matters referred to in clauses (f), (i), (j) and (p) below) and subject to the obligations of each party described under "Reasonable Best Efforts; Notification" below and the termination provisions in the Merger Agreement, the Company will not:

(a)

(x) declare, set aside or pay any dividends (whether in cash, assets, stock, property or other securities) on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, (y) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (z) purchase, redeem or otherwise acquire, directly or indirectly, any shares of capital stock of the Company or any of its subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities (except for the withholding of shares of Company common stock in connection with taxes payable in respect of the exercise of Options or the conversion of Restricted Shares pursuant to their terms);

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(b)

(x) issue, deliver, sell, pledge, dispose of or otherwise encumber any shares of its capital stock, any other voting securities or equity equivalent or any securities convertible into or exchangeable for, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities or other equity equivalent or any stock appreciation rights, "phantom" stock rights, performance units, or other rights that are linked to the value of the Company common stock or to any subsidiary of the Company (other than (i) the issuance of Company common stock upon the exercise of Options, (ii) the conversion of Restricted Shares, (iii) the issuance of Options or Restricted Shares to new hires and employees receiving promotions in amounts consistent with its past practices; provided , that in no event will (I) the aggregate number of Options issued pursuant to this clause (iii) exceed 75,000 or (II) the aggregate number of Restricted Shares issued pursuant to this clause (iii) exceed 37,500, (iv) the issuance of Company common stock upon the conversion of the Series A Convertible Preferred Stock in accordance with the existing terms of such Series A Convertible Preferred Stock outstanding as of the date of the Merger Agreement, or (v) in connection with the ESPP and for pledges of the stock of the subsidiaries of the Company which are required or may be required under the existing terms of the credit agreement), (y) amend, waive or otherwise modify the terms of any such rights, warrants or options, or (z) accelerate the vesting of any Options or Restricted Shares (other than acceleration which occurs pursuant to the terms thereof as in effect on the date of the Merger Agreement in connection with the merger);



(c)

amend its certificate of incorporation or bylaws or other organizational documents, or alter through merger, consolidation, liquidation, reorganization, restructuring or in any other fashion, the corporate structure or ownership of any subsidiary of the Company;



(d)

(i) acquire or agree to acquire, except for purchases of inventory in the ordinary course of business consistent with past practice, by merging or consolidating with, or by purchasing a substantial portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any assets (tangible or intangible) that have a value in excess of $2 million individually or $10 million in the aggregate or (ii) enter into any new line of business;



(e)

sell, lease or otherwise dispose of or mortgage, pledge or encumber, any of its property or assets (tangible or intangible and including company intellectual property rights that are material to the Company or any of its subsidiaries, or create any lien (other than by operation of law in the ordinary course of business) of any kind with respect to such property or assets, except sales of obsolete assets or inventory in the ordinary course of business consistent with past practice;



(f)

(x) enter into, renew, amend or otherwise modify in any material respect in a manner which is adverse to the Company, or unilaterally terminate other than in accordance with its terms, any material contract listed in the Disclosure Schedule (other than (i) the Core Business Contracts or (ii) contracts with respect to capital expenditures, each of which are addressed separately) it being understood that extensions of existing contracts will not constitute material modifications or amendments of such contracts for purposes of the foregoing, or (y) waive, release or assign, in any material respect in a manner which is adverse to the Company, any rights under any material contract listed in the Disclosure Schedule (other than the Core Business Contracts);



(g)

(i) incur any indebtedness (including for this purpose any indebtedness evidenced by notes, debentures, bonds, capitalized leases or other similar instruments, or secured by any lien on any property, obligations under any title retention agreement and obligations under letters of

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credit or similar credit transaction), (ii) other than any customer overdraft programs in the ordinary course consistent with past practice, make any loans, advances or capital contributions to, or investments in, or receive any capital contributions from, any Person other than to or in the Company or any wholly owned subsidiary of the Company and except signing, milestone, progress or other similar bonus payments to customers in connection with the sale of the products of the Company and its subsidiaries, consistent with past practice or the creation of accounts payable in the ordinary course of business consistent with past practice or (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for any obligations of another Person, enter into any "keep well" or other agreement to maintain the financial condition of another Person or cancel or forgive any debts owed to it by any Person other than the Company or any of its wholly owned subsidiaries (except if determined in good faith not to be collectible or consistent with past practice) or waive any rights or claims of material value, except for (A) indebtedness incurred in the ordinary course of business and consistent with past practice under the Company's credit agreement which at any time will not exceed $90 million, (B) as required by existing contracts, (C) indebtedness for borrowed money incurred to replace, renew, extend, or refinance any existing indebtedness for borrowed money on terms materially no less favorable than those of the Company's credit agreement, or (D) guarantees by the Company of indebtedness for borrowed money of subsidiaries of the Company, which indebtedness is incurred in compliance with this clause;

(h)

except as may be required as a result of a change in law or in U.S. GAAP (or any interpretation thereof) after the date hereof, change any of the accounting principles, methods or practices used by it;



(i)

commence, waive, release, settle or compromise any material pending or threatened suit, action or claim, other than suits, actions or claims requiring payments by the Company or any of its subsidiaries of no more than $1,500,000 individually and $5,000,000 in the aggregate (excluding any amounts that may be paid under existing insurance policies); provided, however, that in no event will the Company or any of its subsidiaries waive, release, settle or compromise any pending or threatened suit, action or claim (regardless of the dollar amount involved) if such waiver, release, settlement or compromise (A) imposes any material restriction on, or otherwise materially adversely affects, the business or operations of the Company, its subsidiaries or the Surviving Corporation or (B) relates to the failure of funds on hand with a financial institution that sponsors the Company or one or more of its subsidiaries as a participant in a card association or issues cards (or maintains deposits) in connection with a prepaid, payroll or other card program marketed or distributed by the Company or one or more of its subsidiaries (an "Issuing Bank") to correspond in any material respect with the loaded value attributable to cards issued by such Issuing Bank in connection with the business or operations of the Company or any of its subsidiaries; provided, further, that nothing in this clause will affect the litigation covenant in the Merger Agreement;



(j)

(x) increase in any manner the compensation and employee benefits (including severance benefits) of any of its current or former directors, executive officers and other key employees or pay any pension or retirement allowance not required by law or any existing plan or agreement to any such persons, (y) become a party to, amend or commit itself to any employee benefit plan or any employment, change-in-control, retention, and severance agreement pursuant to which the Company or any of its subsidiaries has or would have any obligation to provide compensation and/or benefits (each, a "Material Employment Agreement"), other than, in the case of (x) (A) annual merit adjustments to the compensation of employees and independent directors of the Company in the ordinary course of business consistent with past practice and in any event not to exceed, in the aggregate, 3% total

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compensation for such Persons, (B) increases in the compensation of employees who are not executive officers or directors of the Company or any of its subsidiaries made in connection with transfers and promotions in the ordinary course of business consistent with past practice and (C) the establishment of terms of employment (including compensation) of newly hired employees other than executive officers in the ordinary course of business consistent with past practice, and in the case of (y), amendments to an existing employee benefit plan or Material Employment Agreement required to cause such plans or agreements to not be subject to Section 409A of the Code or, if subject to Section 409A of the Code, to not result in the application of the additional tax thereunder (provided, that any such amendment does not materially expand the benefits to be received thereunder), or (z) except to the extent required by law, voluntarily accelerate the vesting of any compensation or benefit; provided, however, that the Company and any of its subsidiaries may pay (i) cash bonuses and other cash incentive compensation (including, but not limited to, sales commissions) in respect of calendar year 2012 in the aggregate amount set forth on the Disclosure Schedule to their respective employees, including their executive officers, at the times contemplated by their bonus and incentive compensation arrangements as in effect as of the date hereof prior to the Effective Time, and (ii) sales commissions in respect of calendar year 2013 in the ordinary course of business consistent with past practice;

(k)

except as may be required by applicable law or U.S. GAAP (w) change its material tax accounting policies or practices, (x) make, change or revoke any material tax election, (y) settle any material audit, examination or litigation with respect to taxes, or (z) surrender any right to claim a material tax refund;



(l)

change fiscal years;



(m)

authorize, recommend, propose or announce an intention to adopt a plan of complete or partial liquidation, dissolution, recapitalization, restructuring or other reorganization of the Company or any material subsidiary of the Company or complete any of the actions that would be contemplated by any such plan, or organize any new subsidiary (other than actions in connection with the winding down of NetSpend Payment Services);



(n)

enter into any material collective bargaining agreement;



(o)

make or agree to make any new capital expenditures in excess of 110% of the amounts of such expenditures as reflected in the capital expenditure budgets set forth in the Disclosure Schedule;



(p)

commence or settle any claims, with respect to any material IP Rights (as defined in the Merger Agreement), which would reasonably be expected to result in the receipt or expenditure of more than $1,500,000 individually and $5,000,000 in the aggregate by the Company or any of its subsidiaries; provided, however, that in no event will the Company or any of its subsidiaries waive, release, settle or compromise any pending or threatened suit, action or claim (regardless of the dollar amount involved) if such waiver, release, settlement or compromise imposes any restriction on, or otherwise adversely affects, the business or operations of the Company, its subsidiaries or the Surviving Corporation, other than as required by applicable law;



(q)

enter into any lease of any real property, except any renewals or replacements of existing leases in the ordinary course consistent with past practice;



(r)

enter into any contract that purports to limit, curtail or restrict the ability of the Company or any of its existing or future subsidiaries or affiliates to compete in any geographic area or line of business or limit the Persons to whom the Company or any of its existing or future subsidiaries or affiliates may sell products or services;

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(s)

modify, amend, cancel, terminate renew or extend, or request any change in, or agree to any change in, or waive, release or assign, in any material respect in a manner which is adverse to the Company, any rights under any Core Business Contract;



(t)

write up, write down or write off the book value of any of its assets, other than (i) in the ordinary course of business and consistent with past practice or (ii) as may be required by U.S. GAAP;



(u)

(i) modify, amend or change any of the Company's or its subsidiaries' credit review or underwriting guidelines for Persons through which the Company or any of its subsidiaries distributes, markets, offers or makes available cards for sale or distribution to cardholders or other end-users ("Distributors") in a manner which is materially less restrictive than those in place as of the date hereof, or (ii) other than in compliance with the Company's or its subsidiaries' credit review or underwriting guidelines (including the exceptions criteria and process contemplated thereby), authorize any new Distributor or vendor or card program to process transactions through the Company's or its subsidiaries' processing system or otherwise enter into a Distributor contract or relationship with any new Distributor;



(v)

knowingly take or fail to take any action in breach of the Merger Agreement that is intended to materially delay or prevent the consummation of the transactions contemplated thereby (other than as required by law); and



(w)

authorize, or agree in writing or otherwise to take, any of the foregoing actions.

No Fundamental TSYS Changes

        TSYS and Sub have agreed that, except as expressly contemplated or permitted by the Merger Agreement or as required by applicable law, during the period from the date of the Merger Agreement to the Effective Time, neither TSYS or Sub will, without the prior written consent of the Company, knowingly (a) take any action that would reasonably be expected to result in any of the Company's conditions to the merger to not be satisfied, (b) take any action, or fail to take any action, in either case the result of which would reasonably be expected to materially and adversely impair or materially delay the consummation of the transactions contemplated by the Merger Agreement or (c) agree to, or make any commitment to, take certain actions specified in the Merger Agreement. Specifically, TSYS and Sub (A) will not acquire or agree to acquire any business of any Person or otherwise acquire or agree to acquire any assets of any Person if such business or assets materially compete with the business of the Company such that the acquisition would reasonably be expected to materially and adversely impair or materially delay the receipt by TSYS or Sub of any consents from any Governmental Entities required in connection with the transactions, (B) will not enter or agree to enter into any definitive agreement for the acquisition of any business, or take any other action otherwise prohibited by the Commitment Letter, in either case, that would reasonably be expected to materially interfere with TSYS' ability to satisfy any condition to funding in the Commitment Letter or otherwise comply with its financing covenants under the Merger Agreement, and (C) will maintain sufficient unrestricted cash on hand and/or financing available through its existing credit facilities so that, upon funding of the available financing, TSYS and Sub will have funds sufficient to pay all amounts required to be paid in connection with the consummation of the transactions contemplated by the Merger Agreement.

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Directors' and Officers' Insurance and Indemnification

        The Merger Agreement provides for certain indemnification and insurance rights in favor of any person who is or prior to the Effective Time becomes, or has been at any time prior to the date of the Merger Agreement, an officer or director, employee, or agent of the Company, any of its subsidiaries or any of their respective predecessors.

        For a period of six years after the Effective Time, TSYS will cause the Surviving Corporation and its subsidiaries (and their respective successors) to establish and maintain provisions in its certificate of incorporation, bylaws or other organizational documents concerning the indemnification and exculpation of the former and current officers, directors, employees, and agents of the Company and its subsidiaries that are no less favorable to those persons than the provisions of the certificate of incorporation, bylaws and other organizational documents of the Company and its subsidiaries as are in effect as of the date of the Merger Agreement. From and after the Effective Time the Surviving Corporation will assume those certain indemnification rights contracts between the Company and/or its subsidiaries and certain of their respective directors and officers which are set forth in the Disclosure Schedule, and the Surviving Corporation, from and after the Effective Time, will not amend or modify any such contracts assumed in any manner that would adversely affect any rights of the director or officer party thereto. TSYS will guaranty the payment and performance by the Surviving Corporation of, and will cause the Surviving Corporation to honor its obligations under, this provision without limit as to time.

        For a period of 6 years after the Effective Time, TSYS will cause to be maintained in effect, without any lapse in coverage, the policies of directors' and officers' liability insurance and fiduciary liability insurance maintained by the Company and its subsidiaries as of the date of the Merger Agreement (provided that TSYS may instead substitute policies of at least the same coverage and amounts containing terms and conditions that are no less advantageous to the present and former director and officer of the Company or any of its subsidiaries (each such present and former director or officer, together with such person's heirs, executors or administrators, an "Indemnified Party" and collectively, the "Indemnified Parties") than the current policies) with respect to matters arising at or before the Effective Time; provided, however, that (i) in lieu of the purchase of such insurance by TSYS, the Company will, at TSYS' option and expense, if reasonably available, prior to the Effective Time, purchase a 6-year extended reporting period endorsement under its existing directors' and officers' liability insurance coverage, and (ii) during this period, TSYS will not be required to procure any coverage in excess of the amount that can be obtained for the remainder of the period for an annual premium of 300% of the current annual premium paid by the Company for its existing coverage. Notwithstanding the foregoing, the Company may elect in lieu of the foregoing insurance, prior to the Effective Time, to obtain and fully pay for a policy (providing coverage for the Indemnified Parties and such officers) with a claims period of at least 6 years from the Effective Time from an insurance carrier with the same or better credit rating as the Company's current insurance carrier with respect to directors' and officers' liability insurance in an amount and scope no less favorable than the Company's existing policies with respect to matters existing or occurring at or prior to the Effective Time, provided that the cost of such policy does not exceed 300% of the aggregate amount per annum that the Company and its subsidiaries paid for such coverage in the last full fiscal year. If such "tail" policy has been obtained by the Company prior to the Effective Time, TSYS and the Surviving Corporation will maintain such policy in full force and effect for its full term and will continue to honor the Company's obligations thereunder.

        The Surviving Corporation will (and TSYS will use its reasonable best efforts to cause the Surviving Corporation to) indemnify and hold harmless, to the fullest extent a Delaware corporation is permitted to indemnify its directors and officers under applicable law, each Indemnified Party against any costs or expenses (including reasonable attorneys' fees), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement (to the extent such settlement is consented to by the

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Surviving Corporation) in connection with any actual or threatened claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of, relating to or in connection with (i) any acts or omissions occurring or alleged to occur at or prior to the Effective Time in their capacities as officers or directors of the Company or any of its subsidiaries or taken by them at the request of the Company or any of its subsidiaries (including, without limitation, acts or omissions in connection with such persons serving as an officer, director or other fiduciary in any other entity (including as trustee of any employee benefit plan) if such service was at the request or for the benefit of the Company or any of its subsidiaries) or (ii) any acts or omissions occurring in connection with the adoption and approval of the Merger Agreement, the merger or the transactions contemplated by the Merger Agreement. The Surviving Corporation will (and TSYS will use its reasonable best efforts to cause the Surviving Corporation to) pay all reasonable expenses, including reasonable attorneys' fees, that may be incurred by any Indemnified Party in enforcing these indemnity obligations to the same extent as (and subject to the requirements of) comparable expense reimbursement provisions of the Company's bylaws as in effect on the date of the Merger Agreement (or to such greater extent as any amendment to the Company's bylaws after the Effective Time may permit).

        TSYS and the Surviving Corporation have joint and several liability with respect to the foregoing indemnification and insurance obligations.

Access to Information

        The Company will (and will cause each of its subsidiaries to) provide to TSYS and to TSYS' subsidiaries and their respective officers, employees, accountants, counsel, financial advisors, financing sources and other representatives, during the period from the date of the Merger Agreement to the earlier of the Effective Time and the termination of the Merger Agreement, upon reasonable prior notice and during normal business hours, reasonable access to all of their respective properties, facilities, agents, personnel, books, contracts, commitments and records, subject to certain limitations provided in the Merger Agreement. In addition, subject to certain exceptions the Company will, and will cause each of its subsidiaries to, furnish reasonably promptly to TSYS (a) a copy of each report, schedule, registration statement and other document filed or furnished by it during such period pursuant to the requirements of federal or state securities laws and (b) all other information concerning its business, properties and personnel as TSYS may reasonably request, subject in each case, to certain limitations provided in the Merger Agreement. The Company will also consult in good faith on a regular and frequent basis with representatives of TSYS and Sub with regard to material operational developments and the general status of ongoing operations.

Reasonable Best Efforts; Notification

        Each of the Company, TSYS and Sub has agreed to use its reasonable best efforts to take, or cause to be taken, all reasonable actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things reasonably necessary, proper or advisable to consummate and make effective, as promptly as practicable, the merger, including (i) the identification and obtaining of all necessary actions or nonactions, waivers, consents and approvals from Governmental Entities and the making of all necessary registrations, declarations or filings and the taking of all reasonable steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any Governmental Entity, including the filing under the HSR Act and any required filings, notices or consents with state banking departments or similar agencies required in connection with a change of control of any subsidiary of the Company that holds a money transmitter license, (ii) the obtaining of all necessary consents, approvals or waivers from third parties, (iii) subject to the Merger Agreement, the defending of any lawsuits or other legal proceedings, whether judicial or administrative, challenging the Merger Agreement or the consummation of the merger, including, when reasonable, seeking to have any stay or temporary restraining order entered by any court or other Governmental Entity

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vacated or reversed, and (iv) the execution and delivery of any additional instruments necessary to consummate the merger and to fully carry out the purposes of the Merger Agreement. With respect to the obligations to obtain a consent or an approval relating to a change of control of the money transmitter licenses held by any subsidiary of the Company (or any pending registrations for money transmitter licenses) in any jurisdiction, if such consent or approval in such jurisdiction is not obtained prior to June 19, 2013, TSYS and the Company agree to use reasonable best efforts to identify possible alternatives reasonably satisfactory to TSYS that eliminate the need to obtain such approvals or consents in such jurisdiction, including, without limitation, by (x) entering into arrangements reasonably satisfactory to TSYS (or consenting to the entry by subsidiaries of the Company into arrangements reasonably satisfactory to TSYS) with third parties that possess the necessary licenses providing the ability to create agency relationships to enable the Company and its subsidiaries and the Distributors and reloaders of cards managed by the Company and its subsidiaries to provide money transmission services for the Company and its subsidiaries from and after the Effective Time to permit the continued servicing of business relationships of subsidiaries of the Company until receipt of such consents or approvals, (y) to the extent feasible, ceasing operations of the Company and its subsidiaries, as of the Effective Time, in one or more jurisdictions to the extent the operations in such jurisdiction require the Company or any of its subsidiaries to have a money transmitter license, so long as such cessation of operations is not reasonably expected to result in the loss of 1.9% or more of the aggregate revenues of the Company and its subsidiaries for the 12-month period ending on the first anniversary of the Closing Date, and/or (z) obtaining reasonable written assurances from the applicable state banking department or similar agency that such consent or approval is forthcoming and no adverse action will be taken against the Company or any of its subsidiaries in connection with the continued conduct of the operations of the Company or any of its subsidiaries (or the Surviving Corporation or any of its subsidiaries, as applicable) in the applicable jurisdiction notwithstanding the pendency of any such approval or consent (clauses (x), (y) and (z) collectively, "Alternate Arrangements"). Each of the Company and TSYS agreed to use reasonable best efforts to implement and cause any Alternate Arrangements reasonably satisfactory to it to become effective as promptly as reasonably practicable after July 19, 2013 in order to permit the Effective Time to occur as promptly as reasonably practicable thereafter (subject to the satisfaction or waiver of the closing conditions set forth in Article VII of the Merger Agreement).

        Without limitation of the foregoing, each of TSYS and the Company undertakes and agrees to (x) use its reasonable best efforts to cooperate with each other and submit in good faith (based on the Company's past practices with respect to such filings) as soon as practicable, and in any event within 45 days after the date of the Merger Agreement, all required filings, notices or consents in connection with the money transmitter licenses for jurisdictions with the applicable state banking departments or similar agencies, and (y) file as soon as practicable, and in any event prior to 10 business days after the date of the Merger Agreement, a Notification and Report Form under the HSR Act with the FTC and the Antitrust Division.

        If any objections are asserted with respect to the transactions contemplated by the Merger Agreement under any applicable regulatory law or if any order, judgment, decree or injunction of any Governmental Entity is instituted or any private party challenging any of the transactions as violative of any regulatory law: (x) each of the parties will use its reasonable best efforts to (i) oppose or defend against any such objection, order, judgment, decree or injunction to prevent or enjoin consummation of the Merger Agreement and the transactions contemplated by the Merger Agreement and/or (ii) take such action as reasonably necessary to overturn any action by any Governmental Entity or private party to block consummation of the Merger Agreement and the transactions, including by defending any objection, order, judgment, decree or injunction brought by any Governmental Entity or private party in order to avoid entry of, or to have vacated, overturned or terminated, including by appeal if necessary, any decree, judgment, injunction or other order (whether temporary, preliminary or permanent) that would restrain, prevent or delay the Closing or the other transactions contemplated by

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the Merger Agreement, or, subject to other provisions of the Merger Agreement, in order to resolve any such objections, proposing, negotiating, committing to and effecting, by consent decree, hold separate order, trust or otherwise, the sale, divestiture or disposition of such assets or businesses of TSYS or its subsidiaries or of the Company or its subsidiaries; provided, that each of the parties will cooperate with one another in connection with all proceedings related to the foregoing and TSYS will have final decision-making authority with respect thereto; and (y) TSYS agrees to take certain actions as set forth on the Disclosure Schedule with regard to objections asserted with respect to the transactions. Notwithstanding the foregoing, the Company and its subsidiaries will not be obligated to amend or waive the provisions of any contract, or to pay any consent or similar fees or payments, or divest any assets or enter into commitments regarding the conduct of its business or licensing of technology or know-how, in each case unless such action is conditioned upon the consummation of the merger.

        Notwithstanding certain provisions of the Merger Agreement and Disclosure Schedule, nothing will require any party or its subsidiaries to (i) propose, negotiate, or offer to commit or agree to or effect by consent decree, hold separate order, or otherwise, the sale, divestiture, license, disposition or hold separate of (A) any asset of TSYS or its subsidiaries, or (B) any asset of the Company or its subsidiaries, in the case of this clause (B) only, if such sale, divestiture, license, disposition or hold separate with respect thereto would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the expected benefits of the transactions contemplated by the Merger Agreement to TSYS, (ii) (A) conduct or agree to conduct the business of TSYS or its subsidiaries in any particular manner or agree to any restrictions or limitations with respect to the business of TSYS or its subsidiaries, or (B) conduct or agree to conduct the business of the Company or its subsidiaries in any particular manner or agree to any restrictions or limitations with respect to the business of the Company or its subsidiaries if, in the case of this clause (B) only, such conduct, agreement, restrictions or limitations with respect thereto, would, individually or in the aggregate, reasonably be expected to have a material adverse effect on the expected benefits of the transactions contemplated by the Merger Agreement to TSYS, or (iii) agree to any other order, action or regulatory condition of any regulatory body, whether in an approval proceeding or another regulatory proceeding that if effected, would be adverse to TSYS, the Company or any of their respective subsidiaries and would have an effect that is material measured in relation to the Company and its subsidiaries taken as a whole (any of the foregoing, a "Burdensome Effect"). Neither the Company nor subsidiaries will propose, negotiate or offer to commit to any sale, divestiture, license, disposition or hold separate of any asset contemplated to be held by the Surviving Corporation following the consummation of the merger or agree to conduct the business of the Surviving Corporation or its subsidiaries in any particular manner or agree to any restrictions or limitations with respect to the business of the Surviving Corporation or its subsidiaries, in each case without the prior written consent of TSYS.

        Each party has agreed that it will (i) promptly notify the other party of any written communication to that party from the FTC, the Antitrust Division, any State Attorney General or any other Governmental Entity and, subject to applicable law, permit the other party and its outside counsel to review in advance any proposed written communication to any of the foregoing; (ii) not agree to participate in any substantive meeting or discussion with any Governmental Entity in respect of any filings, investigation or inquiry concerning the Merger Agreement or the merger unless it consults with the other party in advance and, to the extent permitted by such Governmental Entity, gives the other party the opportunity to attend and participate thereat, in each case to the extent reasonably practicable; and (iii) furnish as promptly as reasonably practicable the other party with copies of all correspondence, filings, and written communications (and a reasonable explanation of the substance of oral communications) between them and their affiliates and their respective representatives on the one hand, and any government or regulatory authority or members or their respective staffs on the other hand, with respect to the Merger Agreement and the merger.

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        In addition to the foregoing, each of the Company, TSYS and Sub has agreed to give notice as promptly as reasonably practicable to the other parties of (i) the occurrence or non-occurrence of any event the occurrence or non-occurrence of which would be likely to cause (A) any representation or warranty contained in the Merger Agreement made by it (and in the case of TSYS, made by Sub) to be untrue or inaccurate in any material respect or (B) any covenant, condition or agreement contained in the Merger Agreement not to be complied with or satisfied by it (and in the case of TSYS, by Sub) in any material respect; (ii) any written notice or other communication from any Governmental Entity in connection with the merger; and (iii) in the case of the Company, any change or development that is reasonably likely to have a Material Adverse Effect or materially impair or delay the ability of the Company and its subsidiaries to consummate the merger or, in the case of TSYS and Sub, any change or development that is reasonably likely to materially impair or delay the ability of TSYS or Sub to consummate the merger.

Publicity

        TSYS, Sub and the Company will use reasonable efforts to consult with each other, and provide each other the opportunity to review and comment upon, before issuing any press release with respect to the merger or the transactions contemplated by the Merger Agreement and, unless it has made reasonable efforts to do the foregoing, will not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law, court process or by obligations pursuant to any listing agreement with any national securities exchange (including NASDAQ) or regulatory or Governmental Entity to which the relevant party is subject or submits, in which case the party required to make the release or public statement will use its reasonable best efforts to allow the other party or parties reasonable time to comment on such release or public statement in advance of such issuance.

Employee Matters

        For a period of not less than twelve-months after the Effective Time, the Merger Agreement provides that TSYS will cause the Surviving Corporation to (i) maintain the base salary or base wages of each employee of the Company and its subsidiaries in an amount that is no less favorable than the base salary or base wages such employee had immediately prior to the Effective Time and (ii) maintain employee benefits (other than equity-based plans) that are substantially comparable in the aggregate to either (x) the employee benefits provided by the Company (other than equity-based plans) in effect on the Effective Time or (y) the employee benefits (other than equity-based plans) in effect for similarly situated employees of TSYS, at TSYS' election. In addition, TSYS will, or will cause the Company or the Surviving Corporation to honor all the Company's employment, severance, change in control, retention, transition and termination agreements, as of the date of the Merger Agreement. Furthermore, to the extent employees of the Company and its subsidiaries become eligible to participate in any employee benefit plans or arrangements maintained by TSYS or any of its subsidiaries, then for all purposes service with the Company or any of its subsidiaries prior to the Effective Time shall be treated as service with the TSYS or any of its subsidiaries (except in regards to any benefit accrual or eligibility for early retirement under any defined benefit plan or eligibility for retiree welfare benefit plans, or if it would result in the duplication of benefits). In the event the employment of an employee who was an employee of the Company or its subsidiaries immediately prior to the Effective Time, is terminated by the TSYS or Surviving Corporation for any reason other than for "cause" within 90 days following the Closing Date, such employee shall be entitled to a payment within 15 days of such termination in the amount of his or her annual cash bonus that has been properly accrued on the books of the Surviving Corporation. In addition, the ESPP will be terminated in connection with the merger immediately prior to the Effective Time and contributions to such plan will be discontinued in anticipation of the plan's termination.

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Financing Covenant

        Prior to the Closing, the Company agrees to provide, and will cause its subsidiaries to provide, and will use its reasonable best efforts to cause its and its subsidiaries' respective officers, directors, employees, accountants, consultants, investment bankers, legal counsel, agents and other advisors and representatives (collectively the "Company Representatives") to provide, all customary cooperation in connection with the arrangement of the debt financing contemplated by the Commitment Letter or any alternative financing arranged by TSYS in lieu of the debt financing or any portion thereof in an amount sufficient to permit TSYS to consummate the transactions (the "alternative financing" and together with the debt financing, the "available financing"), as may be reasonably requested by TSYS, in order to satisfy the requirements set forth in the Commitment Letter and otherwise to consummate the available financing.

        Among other things, the Company has agreed to furnish TSYS and each of the lenders, underwriters, placement agents, and initial purchasers, as applicable, party to the Commitment Letter or any alternative financing, as promptly as reasonably practicable, but in any event by the time required pursuant to the terms of the Commitment Letter, with the historical and pro forma financial statements and financial and other data regarding the Company and its subsidiaries necessary to satisfy certain conditions of the Commitment Letter, including all financial statements and financial and other data of the type required by Regulation S-X and Regulation S-K under the Securities Act of 1933 (subject to certain exceptions provided in the Commitment Letter) for registered offerings of debt securities and of the type and form customarily included in a registered offering of debt securities under the Securities Act of 1933 to consummate the available financing at the time the available financing is to be consummated; provided that TSYS will be responsible for, and the Company's obligations are subject to, timely provision of any post-Closing pro forma cost savings, synergies, capitalization, ownership or other pro forma adjustments desired to be incorporated into any pro forma financial information. In addition to the items specified in the Merger Agreement, the Company will also take all other corporate actions, subject to the occurrence of the Closing, as may be reasonably necessary to permit the consummation of the financing; provided, that nothing in the Merger Agreement will require such cooperation to the extent it would interfere unreasonably with the business or operations of the Company or its subsidiaries.

        Notwithstanding the foregoing, (v) none of the Company or any of its subsidiaries nor any of their respective representatives will be required to pay any commitment or other similar fee or incur prior to the Effective Time any other liability or obligation in connection with the financings contemplated by the Commitment Letter or other available financing, (w) none of the Company, its subsidiaries or their respective officers, directors or employees will be required to execute or enter into or perform any agreement with respect to the financing contemplated by the Commitment Letter or other available financing that is not contingent upon the Closing Date or that would be effective prior to the Effective Time (and for the avoidance of doubt, the boards of directors or other equivalent governing bodies of TSYS, Sub and/or the Surviving Corporation will enter into or provide any resolutions, consents, approvals or other closing arrangements on behalf of the Company and its subsidiaries as may be required by the lenders pursuant to the Commitment Letter at, or as of, the Closing Date), (x) the Company will not be required to make any representations, warranties or certifications as to which, after the Company's use of reasonable best efforts to cause such representation, warranty or certification to be true, the Company has in its good faith determined that such representation, warranty or certification is not true, (y) the Company will not be required to become subject to any obligations or liabilities with respect to such agreements or documents prior to the Closing, and (z) nothing will obligate the Company or any of its subsidiaries to provide, or cause to be provided by the Company representatives or otherwise, any information or take any action to the extent it would result in a violation of law or loss of any attorney-client privilege. The Company and the Company representatives will be given a reasonable opportunity to review and comment on any materials that are

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to be presented during any meetings conducted in connection with the available financing, to the extent such materials relate to the Company or its subsidiaries, and TSYS will consider any additions, deletions or changes suggested thereto by the Company and the Company representatives.

        TSYS has agreed to indemnify and hold harmless the Company, its subsidiaries and the Company representatives from and against any and all liabilities, losses, damages, claims, costs, expenses, interest, awards, judgments and penalties suffered or incurred by them in connection with the arrangement of the debt financing contemplated by the Commitment Letter or other available financing and the performance of their respective obligations with respect to the financing covenants in the Merger Agreement (the "Financing Covenants") and any information utilized in connection therewith (except with respect to matters arising out of a material misstatement in or failure to state a material fact pertinent to the information provided by or on behalf of the Company pursuant to Financing Covenant or any fraud or any intentional misrepresentation with respect to any such information). TSYS will, promptly upon written request by the Company, reimburse the Company and its subsidiaries for all reasonable and documented out-of-pocket costs and expenses incurred by the Company or its subsidiaries (including those of its accountants, consultants, legal counsel, agents and the other Company representatives) in connection with the cooperation required by the Financing Covenant.

        Notwithstanding other provisions of the Merger Agreement, each of TSYS and Sub has agreed to use, and will cause their respective subsidiaries to use, their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable to arrange and consummate the debt financing on the terms and conditions described in the Commitment Letter or other available financing.

        TSYS will keep the Company informed on a current basis in reasonable detail of the status of its efforts to arrange the debt financing or any other available financing. Subject to the terms and upon satisfaction of the conditions set forth in the Commitment Letter or other available financing, TSYS and Sub will use their reasonable best efforts to cause the lenders and the other Persons providing such debt financing to provide the available financing on the Closing Date, provided that nothing in the Merger Agreement will require TSYS, Sub or any of its subsidiaries to litigate or initiate any other action or proceeding against any financing party. In the event any portion of the available financing becomes unavailable on the terms and conditions (including any "flex" provisions) contemplated in the Commitment Letter, and such portion is reasonably required to consummate the merger and the transactions contemplated by the Merger Agreement, (A) TSYS will immediately notify the Company and (B) TSYS and Sub will use, and will cause their respective subsidiaries to use, their reasonable best efforts to arrange to obtain alternative financing, upon terms and conditions not materially less favorable to TSYS and its subsidiaries than the terms and conditions set forth in the Commitment Letter, as promptly as practicable following the occurrence of such event. TSYS will promptly notify the Company in writing (I) if TSYS has actual knowledge of any breach or default (or any event or circumstance that, with or without notice, lapse of time or both, would reasonably be expected to give rise to any breach or default) by any party to the Commitment Letter, or (II) of the receipt by TSYS or Sub of any written notice or other written communication from any financing party with respect to any actual breach, default, termination or repudiation by any party to the Commitment Letter. TSYS and Sub will not consent to (1) any amendment or modification to, or any waiver of any provision under, the Commitment Letter if such amendment, modification or waiver imposes new or additional conditions, or otherwise expands any of the conditions, to the receipt of the debt financing, extends the timing of the funding of the commitments thereunder, or reduces the aggregate cash amount of the funding commitments thereunder, or otherwise amends, modifies or waives, any provision of the Commitment Letter, in any such case where such amendment, modification or waiver described in this clause (1) would reasonably be expected to prevent, materially delay or materially adversely affect the ability of TSYS and Sub to consummate the transactions contemplated by the Merger Agreement, including the merger (provided, that TSYS and Sub may replace or amend the Commitment Letter to

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add lenders, lead arrangers, bookrunners, syndication agents or similar entities that have not executed the Commitment Letter as of the date hereof) or (2) early termination of the Commitment Letter unless it has been replaced by alternative financing in accordance with the Financing Covenant. TSYS will furnish to the Company a copy of any amendment, modification, waiver or consent of or relating to the debt commitment promptly upon execution thereof (which may contain certain redacted provisions). TSYS and Sub will use, and will cause their respective subsidiaries to use, reasonable best efforts to maintain the effectiveness of the Commitment Letter until the transactions contemplated by the Merger Agreement, including the merger, are consummated. Notwithstanding anything contained in the Merger Agreement, in no event will TSYS or Sub be required (y) to amend or waive any of the terms or conditions of the Merger Agreement or (z) to consummate the merger any earlier than the date set forth in the Merger Agreement.

Confidentiality Agreement

        On November 14, 2012, the Company and TSYS entered into the Confidentiality Agreement. Under the Confidentiality Agreement, each party has agreed, among other things, to keep non-public information furnished to them or to their representatives by or on behalf of the other party confidential and to use such information solely for purposes of evaluating a possible transaction (subject to certain exceptions) until two years after the date of the Confidentiality Agreement. The Confidentiality Agreement also contains certain "standstill" provisions, which prohibit TSYS from making acquisition proposals, acquiring equity securities of the Company, and certain other actions relating to the Company or its equity for a period of one year. Under the Confidentiality Agreement, each party has agreed that, for a period of one year from the date of the Confidentiality Agreement and subject to certain limited exceptions, it will not solicit the employment of any of the officers or key employees of the other party without obtaining prior written consent.

Litigation and Proceedings

        The Company will give TSYS the opportunity to participate, at TSYS' expense, in the defense or settlement of any stockholder litigation with respect to any lawsuits or other legal proceedings brought against the Company or the members of the Board and any other lawsuit or proceeding, whether judicial or administrative, relating to or challenging the Merger Agreement or the transactions contemplated by the Merger Agreement. The Company has agreed that it will not settle or offer to settle any litigation or other legal proceeding against the Company or members of the Board or executive officers, by any stockholder of the Company or otherwise, relating to the Merger Agreement or the merger without the prior written consent of TSYS (which consent will not be unreasonably withheld).

Restriction on Solicitation of Acquisition Proposals

        The Company will, and will cause its subsidiaries and its and their respective representatives to, immediately cease or cause to be terminated any and all activities, discussions or negotiations with any Person with respect to an Acquisition Proposal.

        An "Acquisition Proposal" is defined to mean any inquiry, proposal, offer, plan, arrangement or other expression or indication of interest relating to any Acquisition Transaction. An "Acquisition Transaction" is defined to mean any transaction or series of related transactions (other than the merger) involving: (A) the purchase or other acquisition (including through a merger, consolidation, recapitalization, reorganization, reclassification, business combination or other similar transaction) by any Person or "group" (as defined in or under Section 13(d) of the Exchange Act), directly or indirectly, of more than 20% of the Company common stock and Series A Convertible Preferred Stock together on an as-converted basis outstanding as of the consummation of such purchase or other acquisition, or any tender offer or exchange offer by any Person or "group" (as defined in or under

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Section 13(d) of the Exchange Act) that, if consummated in accordance with its terms, would result in such Person or "group" beneficially owning more than 20% of the Company common stock and Series A Convertible Preferred Stock together on an as-converted basis outstanding as of the consummation of such tender or exchange offer; (B) a merger, consolidation, recapitalization, reorganization, reclassification, business combination or other similar transaction involving the Company pursuant to which the stockholders of the Company immediately preceding such transaction hold less than 80% of the voting equity interests in the surviving or resulting entity of such transaction; (C) a sale, transfer, lease, license, exchange, mortgage, pledge, transfer or acquisition or disposition of more than 20% of the consolidated net revenues, net income or assets (measured by the fair market value thereof) of the Company and its subsidiaries taken as a whole; or (D) a liquidation, dissolution or other winding up of the Company and its subsidiaries, taken as a whole.

        In addition, except as expressly permitted in the Merger Agreement, at all times during the period between the execution of the Merger Agreement and the earlier of the termination of the Merger Agreement and the Effective Time, the Company and its subsidiaries will not, and they will not authorize any of their respective representatives to, directly or indirectly:

(i)

solicit, initiate or induce the making, submission or announcement of, or knowingly encourage, facilitate or assist, an Acquisition Proposal;



(ii)

furnish to any Person (other than TSYS, Sub or any designees of TSYS or Sub) any information or data relating to the Company or any of its subsidiaries, or afford to any Person (other than TSYS, Sub or any designees of TSYS or Sub) access to the business, properties, assets, books, records or other information, or to any personnel, of the Company or any of its subsidiaries, in any such case in connection with or in response to an Acquisition Proposal;



(iii)

participate or engage in discussions or negotiations with any Person with respect to, or that may lead to, an Acquisition Proposal;



(iv)

approve, adopt, endorse or recommend an Acquisition Proposal;



(v)

enter into any letter of intent, memorandum of understanding or other contract contemplating or otherwise relating to an Acquisition Transaction, that may lead to an Acquisition Transaction or that requires the Company to abandon, terminate or breach its obligations under the Merger Agreement or fail to consummate the merger or any of the other transactions contemplated by the Merger Agreement; or



(vi)

resolve, propose or agree to do any of the foregoing.

        The Company must promptly (and, in any event, within 24 hours) notify TSYS in the event that the Company receives any inquiries, discussions, negotiations, proposals or expressions of interest with respect to an Acquisition Proposal, which notice will include a copy, if in writing, or a summary thereof, if oral, of such Acquisition Proposal and the identity of the person or group of persons making such Acquisition Proposal. The Company will keep TSYS reasonably informed on a prompt and timely basis of the status and details of any such Acquisition Proposal and with respect to any change to the material terms of any such Acquisition Proposal within 24 hours of any such change. The Company will not, and will cause its subsidiaries not to, enter into any contract with any Person subsequent to the date of the Merger Agreement, and neither the Company nor any of its subsidiaries is or will become party to any contract, in each case, that prohibits the Company from providing such information to TSYS.

        In addition, notwithstanding anything to the contrary set forth in the Merger Agreement, prior to the receipt of the Stockholder Approval, if (i) the Company or its representatives receive an unsolicited bona fide written Acquisition Proposal that the Board determines in good faith, after consultation with its outside legal counsel and financial advisors, constitutes, or would reasonably be expected to lead to,

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a Superior Proposal, (ii) the Board concludes in good faith, after consultation with its outside legal counsel and financial advisors, that the failure to take action with respect to such Acquisition Proposal would be inconsistent with the Board's fiduciary obligations to the Company's stockholders under applicable law, (iii) such Acquisition Proposal was not the result of a breach of the Merger Agreement and (iv) the Company provides to TSYS the certain information required by the Merger Agreement to be delivered by the Company to TSYS, then, so long as the foregoing conditions in the immediately preceding clauses (i)-(iv) remain satisfied, the Company may take the following actions: (x) furnish information to the third party making such Acquisition Proposal (a "New Bidder"), provided that (A) the Company receives from the New Bidder an executed confidentiality agreement (the terms of which are no less favorable to the Company in any substantive respect than those contained in the Confidentiality Agreement, except that (I) such confidentiality agreement may not include any provision calling for an exclusive right to negotiate with the Company and may not restrict the Company in any way from complying with the Merger Agreement, including prohibiting the Company from providing information or written materials to TSYS and (II) such confidentiality agreement need not contain any "standstill" or other comparable provisions, and (B) the Company will promptly (and in any event within 24 hours) provide to TSYS any non-public information concerning the Company or any of its subsidiaries that is provided to any such New Bidder which was not previously provided to TSYS or its representatives; and (y) engage in discussions or negotiations with the New Bidder and its representatives with respect to the Acquisition Proposal.

Board Recommendation

        As described above, and subject to the provisions described below, the Board has recommended that the Company stockholders adopt the Merger Agreement and the transactions in accordance with the applicable provisions of the DGCL (the "Board Recommendation"). Except as expressly permitted under the Merger Agreement, neither the Board nor any committee thereof will (i) withhold, withdraw, amend, modify or qualify in a manner adverse to TSYS, or publicly propose to withhold, withdraw, amend, modify or qualify in a manner adverse to TSYS, the Board Recommendation, (ii) approve, adopt, endorse or recommend any Acquisition Proposal or (iii) propose publicly to approve, adopt, endorse or recommend any Acquisition Proposal (any action described in clause (i), (ii), (iii) or in other limited instances provided for in the Merger Agreement, in each case whether taken by the Board or any committee thereof, being referred to as a "Board Recommendation Change").

        Nothing contained in the Merger Agreement prevents the Company and the Board from (i) taking and disclosing any position or disclosing any information required to be disclosed under applicable law or in compliance with or otherwise complying with Rule 14d-9 or Rule 14e-2(a) promulgated under the Exchange Act, and (ii) making any disclosure to the Company's stockholders that the Board determines in good faith (after consultation with its outside legal counsel) that the failure to make such disclosure would reasonably be expected to be a breach of its fiduciary duties to the Company's stockholders under applicable law; provided however, that any disclosure of a position contemplated by Rule 14e-2(a) under the Exchange Act other than (A) a "stop, look and listen" communication limited solely to the type contemplated by Rule 14d-9 under the Exchange Act, (B) any express rejection of any applicable Acquisition Proposal or (C) any express reaffirmation of its recommendation to its stockholders in favor of the merger, will be deemed to be a Board Recommendation Change.

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Permitted Change of Recommendation or Termination for Superior Proposal

        Notwithstanding anything to the contrary set forth in the Merger Agreement, prior to receipt of the Stockholder Approval, the Board may:

(A)(x) effect a Board Recommendation Change or (y) enter into an agreement providing for an Acquisition Transaction that constitutes a Superior Proposal if:

         (I)  the Company has received a Superior Proposal that was not solicited in breach of the Merger Agreement and the Company has otherwise complied in all material respects with its material obligations regarding stockholder approval, the proxy statement, the No Solicitation and the Board Recommendation provisions of the Merger Agreement;

        (II)  the Board has determined in good faith (after consultation with its outside legal counsel and financial advisors) that the failure to take such action would be inconsistent with its fiduciary duties under applicable law;

      (III)  the Company has previously notified TSYS in writing that it intends to take such action (a "Section 6.3 Notice") (it being understood that the Section 6.3 Notice does not constitute a Board Recommendation Change for purposes of the Merger Agreement);

      (IV)  the Company has made its representatives available to discuss with TSYS' representatives any proposed modifications to the terms and conditions of the Merger Agreement during the 5 business day period following delivery of the first Section 6.3 Notice;

        (V)  if TSYS has delivered to the Company a written, binding and irrevocable offer capable of being accepted by the Company to alter the terms or conditions of the Merger Agreement during such 5 business day period, the Board has determined in good faith (after consultation with its outside legal counsel and financial advisors), after considering the terms of such offer by TSYS, that the Superior Proposal giving rise to such Section 6.3 Notice continues to be a Superior Proposal; and

      (VI)  in the case of clause (y) above, the Company concurrently terminates the Merger Agreement prior to a Stockholder Approval and pays TSYS the applicable termination fee; or

(B) effect a Board Recommendation Change other than in respect of an Acquisition Proposal if the Board has determined in good faith (after consultation with its outside legal counsel and financial advisors) that the failure to effect such Board Recommendation Change would be inconsistent with its fiduciary duties under applicable law, if:

        (x)   the Company has previously delivered to TSYS a Section 6.3 Notice (it being understood that the Section 6.3 Notice does not constitute a Board Recommendation Change for purposes of the Merger Agreement);

        (y)   the Company has made its representatives available to discuss with TSYS' representatives any proposed modifications to the terms and conditions of the Merger Agreement during the 5 business day period following delivery by the Company to TSYS of the first Section 6.3 Notice delivered to TSYS; and

        (z)   if TSYS has delivered to the Company a written, binding and irrevocable offer capable of being accepted by the Company to alter the terms or conditions of the Merger Agreement during such 5 business day period, the Board has determined in good faith (after consultation with its outside legal counsel and financial advisors), after considering the terms of such offer by TSYS that the failure to effect such Board Recommendation Change would be inconsistent with its fiduciary duties under applicable law.

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        If any Superior Proposal that is the subject of clause (A) above is revised, including any revision to price, then the Company must deliver to TSYS a new Section 6.3 Notice and again comply with the requirements of this clause (A) (with all references to five business days being treated as references to three business days).

        A "Superior Proposal" is defined as any bona fide written Acquisition Proposal for an Acquisition Transaction (with all references to 20% in the definition of Acquisition Transaction being treated as references to 50% for these purposes and the reference to 80% in the definition of Acquisition Transaction being treated as a reference to 50%) made by a third party on terms that the Board has determined in good faith (after consultation with its outside legal counsel and financial advisor), taking into account (A) any good faith proposal by TSYS to amend or modify the terms of the Merger Agreement and (B) all reasonably available legal, financial and regulatory aspects of such Acquisition Proposal and the timing and likelihood of consummation of such Acquisition Transaction, would be more favorable to the Company Stockholders (in their capacity as such) than the merger.

Conditions to the Merger

        The consummation of the merger is subject to a number of closing conditions, as described further below.

        Conditions to Each Party's Obligations.     The obligations of each party to effect the merger is subject to the satisfaction (or waiver if permissible under applicable law) on or prior to the Closing Date of the following conditions:

(a)

Stockholder Approval :    the receipt of the affirmative vote of a majority of the votes entitled to be cast by the holders of the outstanding shares of Company common stock;



(b)

No Injunction or Restraints :    no statute, rule, regulation, temporary restraining order, preliminary or permanent injunction or other order enacted, entered, promulgated, enforced or issued by any Governmental Entity or other legal restraint or prohibition preventing or imposing a Burdensome Effect in connection with (or which is reasonably likely to prevent or impose a Burdensome Effect in connection with) the consummation of the merger shall be in effect; provided , however, that prior to asserting this condition each of the parties must have used all reasonable best efforts to prevent the entry of any such injunction or other order, to have such order or injunction lifted or withdrawn, and to appeal as promptly as possible any such injunction or other order that may be entered;



(c)

HSR Approval, Required Registrations and Consents :    (i) the applicable waiting period (and any extension thereof) under the HSR Act applicable to the merger shall have expired or been terminated and (ii) all registrations and consents listed on the Disclosure Schedule and all other registrations and consents required to be made or obtained prior to the Closing (except for such other registrations or consents the failure of which to be obtained or made prior to the Closing would not, individually or in the aggregate, have or reasonably be expected to have a Material Adverse Effect (collectively, the "Required Registrations and Consents")) shall have been made or obtained, as applicable, and remain in full force and effect (without the imposition of any Burdensome Effect); provided however that any consent required in a specific jurisdiction in connection with a change in control of the Company or any of its subsidiaries holding a money transmitter licenses will not be a condition to Closing if both (A) an Alternate Arrangement reasonably acceptable to TSYS has been implemented by the Company in such jurisdiction, and (B) as a result of the implementation of such Alternate Arrangement in such jurisdiction, the failure to obtain the applicable consent with respect to such money transmitter licenses in such jurisdiction and the continued conduct of the operations of the Company, the Surviving Corporation, TSYS and its subsidiaries on the basis of the Alternate Arrangements in such jurisdiction will not be a violation of applicable law.

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        Conditions to the TSYS and Sub's Obligations.     The obligations of TSYS and Sub to effect the merger is subject to the satisfaction (or waiver if permissible under applicable law) on or prior to the Closing Date of the following additional conditions:

(a)

Representations and Warranties :    (i) the representations and warranties of the Company set forth in the Merger Agreement relating to the Company's capital structure must be true and correct in all respects as of the date of the Merger Agreement and on and at the Closing (except to the extent such representations and warranties expressly relate to a specific date, in which case such representations and warranties must be true and correct in all respects as of such date, and except where the failure of such representations and warranties to be true and correct as of the date of the Merger Agreement and at the Closing, or such specific date, as applicable, does not result in additional aggregate consideration payable by TSYS or the Sub in excess of $500,000 in the aggregate), (ii) the representations and warranties of the Company relating to the Company's organization, standing and power; authority and non-contravention; proxy statement; takeover statutes; brokers' and finders' fees; Core Business Contracts; and securities matters (relating to the loaded value attributable to cards) must be true and correct in all material respects as of the date of the Merger Agreement and as of the Closing Date as though made at the Closing (except to the extent such representations and warranties expressly relate to a specific date or as of the date of the Merger Agreement, in which case such representations and warranties must be true and correct in all material respects as of such date), it being understood that for purposes of this clause (ii), (x) the representations and warranties of the Company relating to Core Business Contracts will be deemed to be true and correct in all material respects so long as the failure of such representations or warranties to be true and correct does not and is not reasonably expected to have a material adverse effect on the Company's or any of its subsidiaries' business relationship with any Core Counterparty, including as a result of a material diminution of the aggregate rights and benefits to the Company and its subsidiaries under the Core Business Contracts with such Core Counterparty, taken as a whole, or a material increase in the aggregate obligations and duties of the Company and its subsidiaries under the Core Business Contracts with such Core Counterparty, taken as a whole, and (y) the representations and warranties of the Company relating to the loaded value attributable to cards will be deemed to be true and correct in all material respects so long as the failure of such representations or warranties to be true and correct does not and is not reasonably expected to result in losses to the Company in excess of $52.6 million, it being understood that for purposes of this clause (y) any amount paid by the Company or its subsidiaries after the date of the Merger Agreement to settle or fund any deficiencies in respect of the funds held by Issuing Banks to satisfy liabilities associated with the loaded value attributable to cards shall not be taken into account in determining the accuracy as of the Closing Date of certain representations and warranties of the Company in the Merger Agreement, and (iii) each of the representations and warranties of the Company (other than those contained in the preceding clauses (i) and (ii)) must be true and correct (without giving effect to any limitation as to "knowledge", "materiality" or "Material Adverse Effect") on the date of the Merger Agreement and at the Closing (except to the extent that such representation and warranty speaks as of a particular date, in which case such representation and warranty must be true and correct as of that date), except where the failure of the representations and warranties referred to in this clause (iii) to be so true and correct, individually or in the aggregate, has not had, and would not reasonably be expected to have a Material Adverse Effect;



(b)

Performance of Obligations :    the Company must have performed in all material respects all obligations required to be performed by it under the Merger Agreement at or prior to the Closing;

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