PREFERRED STOCK PURCHASE AGREEMENT
among
ALLIANCE DATA SYSTEMS CORPORATION
and
THE SEVERAL PURCHASERS
NAMED IN SCHEDULE I HERETO
Dated as of July 12, 1999
TABLE OF CONTENTS
Page
I. PURCHASE AND SALE OF THE PREFERRED SHARES..............................................................2
SECTION 1.01 Issuance, Sale and Delivery of the Preferred Shares...........................2
SECTION 1.02 Closing Date..................................................................2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY..........................................................2
SECTION 2.01 Organization, Qualifications and Corporate Power..............................2
SECTION 2.02 Authorization of Agreements, Etc..............................................3
SECTION 2.03 Validity......................................................................4
SECTION 2.04 Capital Stock; Subsidiaries and Investments...................................4
SECTION 2.05 Financial Statements; Absence of Undisclosed
Liabilities; No Material Adverse Change.......................................5
SECTION 2.06 Governmental Approvals........................................................6
SECTION 2.07 Third Party Approvals; Consents...............................................6
SECTION 2.08 Litigation, Etc...............................................................6
SECTION 2.09 Compliance with Laws..........................................................6
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.......................................................6
SECTION 3.01 Authorization.................................................................6
SECTION 3.02 Validity......................................................................7
SECTION 3.03 Investment Representations....................................................7
IV. CONDITIONS PRECEDENT...................................................................................8
SECTION 4.01 Conditions Precedent to the Obligations of the Purchasers.....................8
SECTION 4.02 Conditions Precedent to the Obligations of the Company.......................10
V. MISCELLANEOUS.........................................................................................10
SECTION 5.01 Survival of Agreements.......................................................10
SECTION 5.02 Brokerage....................................................................10
SECTION 5.03 Parties in Interest..........................................................10
SECTION 5.04 Notices......................................................................11
SECTION 5.05 Law Governing................................................................11
SECTION 5.06 Entire Agreement; Modifications..............................................11
SECTION 5.07 Counterparts.................................................................11
INDEX TO EXHIBITS AND SCHEDULES
EXHIBIT DESCRIPTION
A Form of Restated Certificate of
Incorporation of the Company
B Form of Shareholders Agreement Amendment
SCHEDULE DESCRIPTION
I Purchasers/Purchase Price of Preferred Shares
ii
PREFERRED STOCK PURCHASE AGREEMENT (this "AGREEMENT"), dated as of July
12, 1999, among ALLIANCE DATA SERVICES CORPORATION, a Delaware corporation
(the "COMPANY"), and the several purchasers named in Schedule I hereto (each
hereinafter referred to individually as a "PURCHASER", and collectively, as
the "PURCHASERS").
WHEREAS, the Company is party to a Stock Purchase Agreement (the
"ACQUISITION AGREEMENT"), dated as of June 8, 1999, among the Company, SPS
Payment Systems, Inc., a Delaware corporation (the "Seller"), SPS Commercial
Services, Inc., a Delaware corporation and wholly-owned subsidiary of the
Seller ("COMMERCIAL SERVICES"), and ADS Network Services, Inc., a Delaware
corporation and wholly-owned subsidiary of the Seller (together with
Commercial Services, the "SELLER SUBSIDIARIES"), pursuant to which the
Company has agreed to acquire (the "ACQUISITION") from the Seller all of the
issued and outstanding shares of capital stock of each of the Seller
Subsidiaries;
WHEREAS, subject to the terms and conditions set forth herein, in order
to finance, in part, the Acquisition, the Company wishes to issue, sell and
deliver to the Purchasers on the Closing Date (as defined in Section 1.02) an
aggregate 120,000 shares (the "PREFERRED SHARES") of its Series A Cumulative
Convertible Preferred Stock, $0.01 par value ("SERIES A PREFERRED STOCK"),
which Preferred Shares shall initially be convertible into 80,000,000 shares
of Common Stock, par value $.01 per share, of the Company ("COMMON STOCK"),
and the Purchasers, severally, wish to purchase the Preferred Shares;
WHEREAS, in connection with the sale of the Preferred Shares pursuant to
this Agreement, the Company desires to amend and restate its Certificate of
Incorporation by filing a Restated Certificate of Incorporation with the
Secretary of State of the State of Delaware substantially in the form of
Exhibit A hereto (the "RESTATED CERTIFICATE OF INCORPORATION") in order to
(i) authorize the issuance of up to 120,000 shares of Series A Preferred
Stock and (ii) increase the number of authorized shares of Common Stock to
600,000,000 shares;
WHEREAS, certain of the Purchasers are party to an Amended and Restated
Stockholders Agreement, dated as of August 30, 1996 and amended as of July
24, 1998 and further amended as of August 31, 1998 (as so amended, the
"EXISTING STOCKHOLDERS AGREEMENT"), among the Company (which is known in the
Existing Stockholders Agreement by its former name, "World Financial Network
Holding Corporation"), Limited Commerce Corp., a Delaware corporation, WCAS
Capital Partners II, L.P., a Delaware limited partnership, Welsh, Carson,
Xxxxxxxx & Xxxxx VI, L.P., a Delaware limited partnership, Welsh, Carson,
Xxxxxxxx & Xxxxx VII, L.P., a Delaware limited partnership, Welsh, Carson,
Xxxxxxxx & Xxxxx VIII, L.P., a Delaware limited partnership, WCAS Information
Partners, L.P., a Delaware limited partnership, and the several other
investors signatory thereto; and
WHEREAS, the parties to this Agreement wish to further amend (such
amendment, the "STOCKHOLDERS AGREEMENT AMENDMENT") the Existing Stockholders
Agreement to set forth certain restrictions upon the transfer of the
Preferred Shares, include the Common Stock
issuable upon conversion of the Preferred Shares in such agreement and join
each of the Purchasers who are not already party to such agreement as parties
thereto (as so amended, the STOCKHOLDERS AGREEMENT").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE PREFERRED SHARES
SECTION 1.01 ISSUANCE, SALE AND DELIVERY OF THE PREFERRED SHARES.
(a) Subject to the terms and conditions set forth herein, on the Closing
Date the Company shall issue, sell and deliver to each Purchaser, and each
Purchaser, acting severally and not jointly, shall purchase from the Company,
the number of Preferred Shares set forth opposite the name of such Purchaser
on Schedule I hereto under the caption "Preferred Shares". On the Closing
Date, the Company shall issue certificates in definitive form, registered in
the name of each such Purchaser, evidencing the Preferred Shares being
purchased by him, her or it hereunder.
(b) As payment in full for the Preferred Shares being purchased by him,
her or it hereunder, and against delivery thereof as aforesaid, on the
Closing Date, each Purchaser, acting severally and not jointly, shall pay to
the Company, by wire transfer of immediately available funds to an account
designated by the Company, the amount set forth opposite the name of each
such Purchaser on Schedule I hereto under the caption "Purchase Price of
Preferred Shares".
SECTION 1.02 CLOSING DATE. The closing of the sale and purchase of the
Preferred Shares contemplated by Section 1.01 shall take place at the offices
of Reboul, MacMurray, Xxxxxx, Xxxxxxx & Kristol, 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, as soon as practicable (but in no event later than
October 15, 1999) after the satisfaction or waiver of each of the conditions
to the obligations of the parties set forth in Sections 4.01 and 4.02 hereof,
or at such other date and time as may be mutually agreed upon among the
Purchasers and the Company (such date and time of the closing being herein
called the "CLOSING DATE").
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser as follows:
SECTION 2.01 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER. The
Company and each of its Subsidiaries (as hereinafter defined) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has the
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corporate power and authority and all material licenses, permits and
authorizations necessary to own, lease and/or operate its properties and
assets and to carry on its businesses as now being conducted, and is duly
qualified and is in good standing as a foreign corporation, and authorized to
do business in all jurisdictions in which the conduct of its business or the
ownership or operation of its properties or assets makes such qualification
or authorization necessary and in which the failure to be so qualified would
have a material adverse effect on the business, properties, assets,
liabilities, results of operations, prospects or financial condition of the
Company or such Subsidiary. The Company has the corporate power and authority
to execute and deliver this Agreement and the Stockholders Agreement
Amendment, to perform the transactions contemplated by this Agreement and the
Stockholders Agreement, and, upon the filing of the Restated Certificate of
Incorporation, to issue, sell and deliver the Preferred Shares and the shares
of Common Stock from time to time issuable upon conversion of the Preferred
Shares ("CONVERSION SHARES"). For purposes of this Agreement, the term
"SUBSIDIARY", when used with respect to the Company, shall mean any
corporation or other business entity or association, a majority of whose
outstanding securities having the right generally to vote for the election of
directors or otherwise direct the actions of such entity or association is at
the time owned, directly or indirectly, by the Company and/or one or more
other Subsidiaries of the Company.
SECTION 2.02 AUTHORIZATION OF AGREEMENTS, ETC.
(a) Except as described in Schedule 2.02(a) hereto, each of (i) the
execution and delivery by the Company of this Agreement and the Stockholders
Agreement Amendment and the performance by the Company of its obligations
hereunder and under the Stockholders Agreement, (ii) the issuance and sale by
the Company of the Preferred Shares and the issuance by the Company of the
Conversion Shares upon the conversion of the Preferred Shares and (iii) the
filing of the Restated Certificate of Incorporation have been duly authorized
by all requisite corporate action and will not (A) violate (x) any provision
of law, any order of any court or other agency of government, (y) the
Certificate of Incorporation or By-laws of the Company or the Certificate or
Articles of Incorporation, By-laws and/or other organizational documents of
any Subsidiary, or (z) any provision of any material indenture, note,
agreement or other instrument to which the Company or any of its Subsidiaries
or any of their respective properties or assets is bound, or (B) conflict
with, result in a breach of, or constitute (with due notice or lapse of time
or both) a default under any material indenture, note, agreement or other
instrument to which the Company or any of its Subsidiaries or any of their
respective properties or assets is bound, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever (a
"LIEN") upon any of the properties or assets of the Company or any of its
Subsidiaries.
(b) The issuance of the Preferred Shares has been duly authorized by the
Company and, when sold and paid for in accordance with this Agreement, the
Preferred Shares will be validly issued, fully paid and nonassessable. The
Conversion Shares have been duly reserved for issuance upon conversion of the
Preferred Shares, and will be validly issued and outstanding, fully paid and
nonassessable shares of Common Stock when issued in accordance with this
Agreement and the Restated Certificate of Incorporation. The issuance, sale
and
3
delivery of the Preferred Shares to the Purchasers hereunder is not, and the
issuance, sale and delivery of the Conversion Shares to the Purchasers upon
conversion of the Preferred Shares will not be, subject to any preemptive
rights of stockholders of the Company or to any right of first refusal, right
of first offer or other similar right (contractual or otherwise) in favor of
any person (other than preemptive rights of stockholders party to the
Existing Shareholders Agreement, as to which waivers will have been obtained
on or prior to the Closing Date).
SECTION 2.03 VALIDITY. This Agreement has been, and the Stockholders
Agreement Amendment will be, duly executed and delivered by the Company and
this Agreement constitutes, and the Stockholders Agreement will constitute,
when executed and delivered by the Company as provided in this Agreement, the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, subject, as to enforcement
of remedies, to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws from time to time in effect affecting the enforcement of
creditors' rights generally and to general equitable principles.
SECTION 2.04 CAPITAL STOCK; SUBSIDIARIES AND INVESTMENTS.
(a) As of the date hereof, the authorized capital stock of the Company
consists of 450,000,000 shares of Common Stock, of which 427,431,940 shares
are issued and outstanding, fully paid and non-assessable, and no other
shares of capital stock have ever been issued. On the Closing Date, after the
filing of the Restated Certificate of Incorporation, the authorized capital
stock of the Company will consist of 600,000,000 shares of Common stock and
120,000 shares of Series A Preferred Stock. Schedule 2.04(a) sets forth a
complete and accurate list of all of the record owners of capital stock of
the Company and also reflects the fully-diluted Common Stock ownership of the
Company. None of the outstanding shares of capital stock of the Company were
issued in violation of any preemptive rights of stockholder of the Company or
any right of first refusal or right of first offer or similar right in favor
of any person and, except as contained in the Existing Shareholders
Agreement, no such rights exist. The number of shares of Common Stock
issuable upon conversion of all outstanding securities of the Company
convertible into Common Stock, and the number of shares of Common Stock
issuable upon exercise of outstanding warrants and options to purchase Common
Stock will not be affected by the transactions contemplated by this Agreement.
(b) Except as set forth on Schedule 2.04(b), neither the Company nor any
of its Subsidiaries holds of record or beneficially, or has any right or
obligation to acquire, directly or indirectly, (i) any shares of outstanding
capital stock or securities convertible into or exchangeable for capital
stock of any other corporation or entity or (ii) any participating interest
in any partnership, joint venture or other non-corporate business enterprise.
The total authorized capital stock and par value of each of the Company's
Subsidiaries and the total issued and outstanding shares of capital stock of
each of such Subsidiary is set forth on Schedule 2.04(b). All of the issued
and outstanding shares of the capital stock of each of the Company's
Subsidiaries are duly
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and validly issued, fully paid and nonassessable and are owned of record and
beneficially by the Company, and except as set forth on Schedule 2.04(b) no
such shares are subject to any Liens.
(c) Other than as set forth in Schedule 2.04(c), (i) no subscription,
warrant, option, convertible security or other right (contingent or other) to
purchase or acquire any shares of any class of capital stock of the Company
or any of its Subsidiaries is authorized or outstanding and (ii) there is not
any commitment of the Company or any of its Subsidiaries to issue any shares,
warrants, options or other such rights or to distribute to holders of any
class of such entity's capital stock any evidences of indebtedness or assets.
Neither the Company nor any of its Subsidiaries has any obligation
(contingent or other) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof. To the best of the Company's
knowledge, other than as set forth on Schedule 2.04(c), there are no
stockholders agreements, registration rights agreements or other agreements
(whether or not the Company is a party thereto) relating to the voting or
transfer of the Company's securities.
SECTION 2.05 FINANCIAL STATEMENTS; ABSENCE OF UNDISCLOSED LIABILITIES;
NO MATERIAL ADVERSE CHANGE.
(a) The Company has delivered to the Purchasers true and complete copies
of the audited consolidated balance sheets of the Company as of December 31,
1998 and January 31, 1998 and the related statements of operations, changes
in stockholders' equity and cash flows for the eleven months ended December
31, 1998 and the year ended January 31, 1998, each certified by Deloitte &
Touche, LLP, the independent public accountants of the Company. Such
financial statements and the related notes thereto are in accordance with the
books and records of the Company and its Subsidiaries, and present fairly, in
all material respects, the consolidated financial position of the Company and
its Subsidiaries, as of such dates and the consolidated results of their
operations for the respective periods then ended in accordance with generally
accepted accounting principles, consistently applied.
(b) Except as set forth in Schedule 2.05(b) hereto, as of the date
hereof Closing Date neither the Company nor any of its Subsidiaries has any
material obligation or liability (whether accrued, absolute, contingent,
unliquidated or otherwise to the Company or any Subsidiary, whether due or to
become due and regardless of when asserted) other than: (i) liabilities set
forth or reflected on the audited balance sheet as of December 31, 1998 (or
the related notes thereto) referred to in (a) above and (ii) liabilities and
obligations which have arisen December 31, 1998 in the ordinary course of
business and consistent with past practice (none of which is a liability
arising from breach of contract, breach of warranty, tort, infringement or
lawsuit).
(c) There has been no material adverse change in the business,
properties, assets, liabilities, results of operations, prospects or
financial condition of the Company and its Subsidiaries, taken as a whole,
since December 31, 1998.
5
SECTION 2.06 GOVERNMENTAL APPROVALS. Other than filings required under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
filing of the Restated Certificate of Incorporation with the Secretary of
State of Delaware, and subject to the accuracy of the representations and
warranties of the Purchasers set forth in Article IV hereof, no registration
or filing with, or consent or approval of, or other action by, any federal,
state, foreign or other governmental agency or instrumentality is or will be
necessary for the valid execution and delivery of this Agreement or the
Stockholders Agreement Amendment or the performance of this Agreement or the
Stockholders Agreement or the issuance, sale and delivery of the Preferred
Shares or the Conversion Shares.
SECTION 2.07 THIRD PARTY APPROVALS; CONSENTS. Except as set forth on
Schedule 2.07 hereto, no permit, consent, approval, authorization of,
declaration to or filing with, any third party is required in connection with
the execution and delivery of this Agreement or the Stockholders Agreement
Amendment or the performance of this Agreement or the Stockholders Agreement
or the filing of the Restated Certificate of Incorporation or the issuance of
the Preferred Shares and/or the Conversion Shares.
SECTION 2.08 LITIGATION, ETC. Except as set forth on Schedule 2.08
hereto, there are no actions, suits, proceedings, orders, investigations or
claims pending or, to the best of the Company's knowledge, threatened against
or affecting the Company or any of its Subsidiaries, at law or in equity, or
before or by any governmental department, commission, board, bureau, agency
or instrumentality which (i) if adversely determined, could reasonably be
expected to have a material adverse affect on the business, properties,
assets, liabilities, results of operations, prospects or condition (financial
or other) of the Company and its Subsidiaries, taken as a whole or (ii) which
seek to enjoin or prevent the consummation of the transactions contemplated
by this Agreement. Neither the Company nor any of its Subsidiaries is subject
to any judgment, order or decree of any court or other (foreign or domestic)
governmental agency.
SECTION 2.09 COMPLIANCE WITH LAWS. Neither the Company nor any of its
Subsidiaries has violated any law or any governmental regulation or
requirement which violation would reasonably be expected to have a Material
Adverse Effect, and the Company has not received notice of any such violation.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, represents and warrants to
the Company as follows:
SECTION 3.01 AUTHORIZATION. The execution, delivery and performance by
such Purchaser of this Agreement and the Stockholders Agreement Amendment and
the purchase and receipt of the Preferred Shares being purchased by such
Purchaser, have been duly authorized by
6
all requisite action on the part of such Purchaser, and will not violate any
provision of law, any order of any court or other agency of government
applicable to such Purchaser, the governing instrument of such Purchaser, or
any provision of any material indenture, agreement or other instrument by
which such Purchaser or any of such Purchaser's properties or assets are
bound, or conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under any such material indenture,
agreement or other instrument, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of such Purchaser.
SECTION 3.02 VALIDITY. This Agreement and the Stockholders Agreement
Amendment have been duly executed and delivered by such Purchaser and this
Agreement and the Stockholders Agreement each constitutes the legal, valid
and binding obligation of such Purchaser, enforceable against such Purchaser
in accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws from time to time in effect affecting the enforcement of creditors'
rights generally and to general equity principles.
SECTION 3.03 INVESTMENT REPRESENTATIONS. Such Purchaser is acquiring the
Preferred Shares being purchased by him, her or it hereunder for his, her or
its own account for the purpose of investment and not with a view to or for
sale in connection with any distribution thereof. Such Purchaser further
represents that he, she or it understands that (i) the Preferred Shares have
not been registered under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), by reason of their issuance in a transaction exempt from
the registration requirements of the Securities Act pursuant to Section 4(2)
thereof, (ii) the Preferred Shares must be held indefinitely unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration, (iii) the Preferred Shares will bear a legend
to such effect, and (iv) the Company will make a notation on its transfer
books to such effect. Such Purchaser further understands the exemption from
registration afforded by Rule 144 under the Securities Act depends on the
satisfaction of various conditions and that, if applicable, Rule 144 affords
the basis of sales of the Preferred Shares only in limited amounts under
certain conditions.
Such Purchaser further represents and warrants to the Company that he,
she or it has had full opportunity to have access to and to examine the
facilities, personnel and records of the Company, that he, she or it is
capable of evaluating independently the prospects of the Company and has made
such an evaluation in connection with his, her or its investment in the
Preferred Shares being purchased by such Purchaser and had adequate financial
means to bear the risk of his, her or its investment in the Company.
7
ARTICLE IV.
CONDITIONS PRECEDENT
SECTION 4.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PURCHASERS.
The obligations of each Purchaser hereunder are, at his, her or its option,
subject to the satisfaction, on or before the Closing Date, of the following
conditions:
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on the date hereof and on
the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of such date, and the
Company shall have certified to such effect to the Purchasers in writing.
(b) PERFORMANCE. The Company shall have performed and complied with all
agreements and conditions contained herein required to be performed or
complied with by it prior to or on the Closing Date, and the Company shall
have certified to such effect to the Purchasers in writing.
(c) ALL PROCEEDINGS TO BE SATISFACTORY; WAIVERS AND CONSENTS. All
corporate and other proceedings to be taken by the Company, and all waivers
and consents to be obtained by the Company in connection with the
transactions contemplated hereby (I.E., waivers and consents in respect of
all agreements listed on Schedule 2.07), shall have been taken or obtained by
the Company and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Purchasers and their counsel.
(d) CONSUMMATION OF TRANSACTIONS. On the Closing Date, (i) each of the
other Purchasers and the Company shall have consummated the transactions
contemplated hereby with respect to such parties and (ii) each of the
conditions precedent to the Company's obligations under the Acquisition
Agreement shall have been satisfied and not waived (unless waived with the
consent of the Purchasers), and the Company shall have certified to such
effect to the Purchasers in writing (it being understood and agreed that
simultaneously with the closing of the transactions contemplated by this
Agreement, the Company shall consummate the Acquisition in accordance with
the material terms set forth in the Acquisition Documents (as hereinafter
defined).
(e) AMENDMENT AND RESTATEMENT OF THE CERTIFICATE OF INCORPORATION OF THE
COMPANY. On or prior to the Closing Date, the Restated Certificate of
Incorporation shall have been duly approved by the shareholders and Board of
Directors of the Company and duly filed with the Secretary of State of the
State of Delaware and the Purchasers and their counsel shall have received
evidence of such filing which is reasonably satisfactory to them.
8
(f) STOCKHOLDERS AGREEMENT AMENDMENT. On the Closing Date, the Company
and each of the other parties thereto (other than the Purchasers) shall have
executed and delivered the Stockholders Agreement Amendment.
(g) SUPPORTING DOCUMENTS. On or prior to the Closing Date, the
Purchasers shall have received copies of the following supporting documents:
(i) (1) copies of the Certificate of Incorporation of the
Company and all amendments thereto, certified as of a recent
date by the Secretary of State of the State of Delaware and
(2) a certificate of said Secretary dated as of a recent
date as to the due incorporation and good standing of the
Company and listing all documents of the Company on file
with said Secretary;
(ii) a certificate of the Secretary of the Company dated the
Closing Date and certifying: (1) that attached thereto is a
true and complete copy of the Bylaws of the Company as in
effect on the date of such certification; (2) that attached
thereto is a true and complete copy of resolutions adopted
by the Board of Directors of the Company authorizing the
execution and delivery of this Agreement and the
Shareholders Agreement Amendment, the performance of this
Agreement and the Shareholders Agreement, the filing of the
Restated Certificate of Incorporation, the issuance of the
Preferred Shares and the Conversion Shares and the
reservation of shares of Common Stock for issuance upon
conversion of the Preferred Shares, and that all such
resolutions are still in full force and effect and are all
the resolutions adopted by the Board of Directors of the
Company in connection with the transactions contemplated by
this Agreement; (3) that attached thereto is a true and
complete copy of resolutions adopted by the shareholders of
the Company authorizing the filing of the Restated
Certificate of Incorporation and that all such resolutions
are still in full force and effect and are all the
shareholder resolutions adopted in connection with the
transactions contemplated by this Agreement; (4) that,
except for the filing of the Restated Certificate of
Incorporation, the Certificate of Incorporation of the Buyer
has not been amended since the date of the last amendment
referred to in the certificate delivered pursuant to clause
(i)(2) above; (5) attached thereto is a true and correct
copy of the Acquisition Agreement together with all
exhibits, annexes, schedules and other material documents
executed or delivered in connection with the Acquisition
(collectively, the "ACQUISITION DOCUMENTS") and (5) as to
the incumbency and specimen signature of each officer of the
Company executing this Agreement, the Shareholders Agreement
Amendment and/or any certificate or instrument furnished
pursuant hereto;
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(iii) such additional supporting documents and other information
with respect to the operations and affairs of the Company as
the Purchasers or their counsel may reasonably request.
All such supporting documents shall be satisfactory in form and
substance to the Purchasers and their counsel.
SECTION 4.02 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The
obligations of the Company hereunder are, at its option, subject to the
satisfaction, on or before the Closing Date, of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of each Purchaser contained in this Agreement
shall be true and correct in all material respects on the Closing Date, with
the same effect as though such representations and warranties had been made
on and as of such date.
(b) PERFORMANCE. Each Purchaser shall have performed and complied with
all agreements and conditions contained herein required to be performed or
complied with by him, her or it prior to or on the Closing Date.
(c) SHAREHOLDER CONSENT. The requisite percentage of shareholders of the
Company shall have approved the filing of the Restated Certificate of
Incorporation.
ARTICLE V.
MISCELLANEOUS
SECTION 5.01 SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance of the Preferred Shares pursuant
hereto, and all statements contained in any certificate or other instrument
delivered by the Company hereunder shall be deemed to constitute
representations and warranties made by the Company.
SECTION 5.02 BROKERAGE. Each party hereto shall indemnify and hold
harmless the other against and or in respect of any claim for brokerage or
other commissions relative to this Agreement or to the transactions
contemplated hereby, based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third
party.
SECTION 5.03 PARTIES IN INTEREST. All covenants and agreements contained
in this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and assigns of the parties
hereto whether so expressed or not.
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SECTION 5.04 NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first
class registered mail, postage prepaid,
if to the Company, to it at:
00000 Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: General Counsel
if to any Purchaser to him, her or it at:
x/x Xxxxx, Xxxxxx, Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000-0000
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the other parties hereto.
SECTION 5.05 LAW GOVERNING. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
SECTION 5.06 ENTIRE AGREEMENT; MODIFICATIONS. This Agreement constitutes
the entire agreement of the parties with respect to the subject matter hereof
and may not be modified or amended except in writing.
SECTION 5.07 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[signature pages follow]
11
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ALLIANCE DATA SYSTEMS CORPORATION
By /s/ Xxxxxxx Xxxxx
--------------------------------
Name: Xxxxxxx Xxxxx
Title: EVP
WELSH, CARSON, XXXXXXXX
& XXXXX VIII, L.P.
By: WCAS VIII Associates, LLC,
its General Partner
By
--------------------------------
Name:
Title: Managing Member
WCAS INFORMATION PARTNERS, L.P.
By: WCAS Info Partners,
its General Partner
By
--------------------------------
Name:
Title: General Partner
IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.
ALLIANCE DATA SYSTEMS CORPORATION
By
--------------------------------
Name:
Title:
WELSH, CARSON, XXXXXXXX
& XXXXX VIII, L.P.
By: WCAS VIII Associates, LLC,
its General Partner
By /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: Managing Member
WCAS INFORMATION PARTNERS, L.P.
By: WCAS Info Partners,
its General Partner
By /s/ Xxxxxx X. XxXxxxxxx
--------------------------------
Name: Xxxxxx X. XxXxxxxxx
Title: General Partner
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxxx X. XxXxxxxxx
Xxxxx X. Xxxxxx
Xxxxx X. XxxXxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xx Xxxxxx
Xxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxx
Xxxxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
D. Xxxxx Xxxxxxx
By /s/ Xxxxx X. XxxXxxxx
--------------------------------
Xxxxx X. XxxXxxxx
Individually and as Attorney-in-Fact
/s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxx X. Xxxxxx
----------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxx Xxxxxxx
----------------------------------
Xxxx Xxxxxxx
/s/ Xxxx Xxxxxxx
----------------------------------
Xxxx Xxxxxxx
/s/ Xxxxxxxx X. Rather
----------------------------------
Xxxxxxxx X. Rather
SCHEDULE I
PURCHASERS / PURCHASE PRICE OF PREFERRED SHARES
PURCHASER PREFERRED SHARES PURCHASE PRICE
OF PREFERRED SHARES
Welsh, Carson, Xxxxxxxx 113,886 $113,886,000
& Xxxxx VIII, L.P.
WCAS Information Partners, L.P. 420 $420,000
Xxxxxxx X. Xxxxx 1,182.022 $1,182,022
Xxxxxxx X. Xxxxxx 1,052.312 $1,052,312
Xxxxx X. Xxxxxxxx 1,308.696 $1,308,696
Xxxxxxx X. Xxxxx 322.658 $322,658
Xxxxxx X. Xxxx 298.299 $298,299
Xxxxxx X. XxXxxxxxx 518.824 $518,824
Xxxxx X. XxxXxxxx 20.560 $20,560
Xxxxx X. Xxxxxx 35.435 $35,435
Xxxxxx X. Xxxxxxxxx 433.283 $433,283
Xxxxxxx X. xx Xxxxxx 124.932 $124,932
Xxxx X. Xxxxxxx 79.080 $79,080
Xxxxxxxx X. Xxxxxx 56.915 $56,915
Xxxxxxxxx X. Xxxxxx 11.383 $11,383
Xxxxxxx X. Xxxxxx 56.915 $56,915
D. Xxxxx Xxxxxxx 14.229 $14,299
Xxxxxxx Xxxxxx 100.000 $100,000
Xxxxx X. Xxxxxx 28.457 $28,457
Xxxx Xxxxxxx 10.000 $10,000
Xxxx Xxxxxxx 20.000 $20,000
Xxxxxxxx X. Rather 20.000 $20,000
------ -------
Totals: 120,000 $120,000,000
SCHEDULE 2.02(a)
AUTHORIZATION AGREEMENTS
None
SCHEDULE 2.04(a)
ALLIANCE DATA SYSTEMS CORPORATION REVISED 7/12/99 STOCK LEDGER
SHAREHOLDER ISSUE DATE # of SHARES TOTAL SHARES % of FULLY DILUTED % OF OWNERSHIP
COMMON SHARES ISSUED SHARES
Limited Commerce 8/29/98 110,000,000
Corp 8/30/98 21,788,572
8/31/98 181,818
131,970,390 29.3437842 30.57518214
WCAS VII L.P. 8/29/98 110,115,170
8/30/98 (48,828,370 - 21,788,572)=
29,297,022
7/24/96 21,889,833 161,302,025 35.88571056 37.73747582
WCAS VIII L.P. 7/24/96 84,454,546 84,454,546 14.33155036 15.07948751
WCAS Information 8/29/96 & 8/30/96 622,110
Partners LP 7/24/96 364,007 986,117 0.21926437 0.230707373
Xxxxxxx X. Xxxxx 11/15/90 1,000,010
8/30/96 -100,000
8/30/96 -100,000
8/30/96 -100,000
8/30/96 183,240
7/24/95 862,667 1,745,917 0.388295867 0.405466667
Xxxxx Xxx Xxxxx FBO
Xxxx Xxxxx U/A dtd
11/26/84 8/30/96 100,000
100,000 0.022235127 0.023395538
Xxxxx Xxx Xxxxx FBO
Xxxxxxx Xxxxx U/A dtd
11/26/84 8/30/96 100,000
100,000 0.022235127 0.023395538
Xxxxx Xxx Xxxxx FBO
Xxxxxxxx Xxxxx U/A dtd
11/26/84 8/30/96 100,000
100,000 0.022235127 0.023395538
Xxxxxxx X. Xxxxxx 8/29/96 849,970
8/30/96 140,484
7/24/96 830,717 1,821,171 0.40483969 0.426072745
Xxxxx X. Xxxxxxxx 8/29/96 1,000,010
8/30/96 305,400
8/29/97 -45,000
7/24/96 953,948 2,214,358 0.49236532 0.518080957
Xxxxxxx X. Xxxxx 8/29/96 399,960
8/30/96 91,620
7/24/96 68,450 560,030 0.124523363 0.131022028
Xxxxxx X. Xxxx 8/29/96 199,950
8/30/96 81,080
7/24/96 277,458 538,518 0.119740163 0.125859181
Xxxxxx X. XxXxxxxxx 8/29/96 399,960
8/30/96 91,620
7/24/96 432,096 823,678 0.205360534 0.2160XXXXX85
Xxxxx Xxx Xxxxx 8/29/96 20,020
8/30/96 6,108
7/24/96 9,108 35,234 0.007834325 0.006243164
Xxxxx X. Xxxxxx 8/29/96 40,040
8/30/96 12,216
7/24/96 9,130 61,386 0.013649256 0.014361585
Xxxxxx X. Miniccuci 8/29/96 350,020
8/30/96 51,080
7/24/98 318,367 729,467 0.162197916 0.170662726
Xxxxxxx X. xx Xxxxxx 8/29/98 124,960
8/30/98 24,432
7/24/98 63,705 213,097 0.047362388 0.049655189
Welsh Xxxxxx Xxxxxxxx &
Xxxxx VI L.P. 8/29/96 49,999,950
49,999,950 11.11755253 11.69775707
WCAS Capital Partners
II LP 8/29/96 2,142,857
272,727 2,415,584 0.537108177 0.58568882
WCAS Capital Partners
II LP 9/15/96 5,900,000
5,900,000 1.31187251 1.360338715
Xxxx X. Xxxxxx 8/30/96 21,378
7/24/96 106,879 128,257 0.028518107 0.030006415
Page 1
STOCK XXXXXX
XXX FBO Xxxxx X.
Xxxxxxx OLISC as
Custodian XXX
Rollover Account 8/30/96 122,160 122,160 0.027162432 0.028579969
Xxxxx X. Xxxxxxx 7/24/96 45,456 45,456 0.010106677 0.010834482
Xxxxxxx X. Xxxxxxxx 8/29/97 15,000
15,000 0.003335269 0.003509331
Xxxxxx X. Xxxxxxxx 8/29/97 15,000
15,000 0.003335269 0.003509331
Xxxx X. Xxxxxxxx 8/29/97 15,000
15,000 0.003335269 0.003509331
Xxxxxxxx Xxxxxx 7/24/96 90,908 90,908 0.020213732 0.021266649
Xxxxxxxxx Xxxxxx 7/24/96 16,162 18,182 0.004042701 0.004253777
Xxxxxxx Xxxxxx 7/24/96 90,909 90,909 0.020213732 0.021268649
D. Xxxxx Xxxxxxx 7/24/96 22,727 22,727 0.008063377 0.005317104
M. Xxxxx Xxxxx 6/25/97 45,000 45,000 0.010005807 0.010527992
Xxxxxx X. Teburn 8/11/97 16,875 16,875 0.003752176 0.003947997
Xxxxx X. Xxxxxx 12/6/97 33,750 33,750 0.007504355 0.007895984
Xxxxx X. Xxxxxxx 4/8/95 450,000 450,000 0.100058073 0.105279919
Xxx X. Xxxxxx 7/29/96 1,250 1,250 0.000277838 0.000292444
Xxxxxxxx X. Xxxxxx 9/20/96 45,000 45,000 0.010005807 0.010527992
The Laurel Canyon
Trust, Xxxxx X.
Xxxxx, Trustee 9/25/96 56,250 56,250 0.012507259 0.01315000
Xxx Xxxxxx 4/1/99 2,500 2,500 0.000555878 0.01315999
Xxxxxxx X. Xxxxxxxx 4/12/99 43,750 43,750 0.009727968 0.010235548
Xxxxxxx X. XxXxxxxxx 5/17/99 2,500 2,500 0.000555878 0.010235546
Treasury Shares 0 0 0
TOTAL ISSUED AND
OUTSTANDING SHARES 427,431,940 100%
TOTAL UNISSUED
SHARES 22,588,080
TOTAL AUTHORIZED
SHARES 450,000,000 450,000,000
STOCK WARRANTS AND
EMPLOYEE STOCK
OPTION PLAN:
JCP Telecom Systems,
Inc. Stock Warrants 1,503,759
1,503,759 0.334362728
ADSC Employee Stock Exercised & issued
Option Plan - shares (-45,000 -
6,270,000 + 10,875 - 33,750 -
6,730,000 + 450,000 - 1,250 -
6,500,000 = 45,000 - 58,250 -
21,500,000 as of 2,500 - 43,750 - 20,803,125 4.825801325
12/1/98 2,500)
TOTALLY FULLY
DILUTED SHARES 449,738,824 100%
REMAINING UNISSUED
UNALLOCATED
AUTHORIZED SHARES 261,176
TOTAL AUTHORIZED
SHARES 450,000,000 450,000,000
450,000,000
Page 2
SCHEDULE 204(b)
All subsidiaries are 100% owned by Alliance Data Systems Corporation. All
shares of the U.S. subsidiaries and 65% of the shares of non U.S. subsidiaries
have been pledged as collateral pursuant to the credit agreement with X. X.
Xxxxxx dated July 24, 1998.
TOTAL ISSUED AND
TOTAL AUTHORIZED OUTSTANDING SHARES ALL SHARES
SUBSIDIARY CAPITAL STOCK PAR VALUE OF CAPITAL STOCK OWNED BY
---------- ---------------- --------- ------------------ ----------
ADS Alliance Data Systems, Inc. 1,000 $ 1.00 10 shares ADSC
World Financial Network National Bank 1,000,000 $100.00 175,000 shares ADSC
Harmonic Systems Incorporated 1,000 $ .01 100 shares ADSC
Harmonic Technology Licensing, Inc. 50,000 $ .01 1,000 shares Harmonics
Systems
Incorporated
Loyalty Management Group, Inc. unlimited No par 1,000 shares ADSC
LMG Travel Services Ltd. unlimited No par 1 share Loyalty
Management
Group, Inc.
Alliance Data Systems
(New Zealand) Limited 402,325 $ 1.00 402,325 ordinary shares ADSC
4,827,900 $ 1.00 4,827,900 preference shares ADSC
ADS Reinsurance Ltd. 120,000 $ 1.00 120,000 shares ADSC
SCHEDULE 2.04(c)
21,500,000 shares have been allocated to the Alliance Data Systems Employee
Stock Option Plan
696,875 shares have been issued pursuant to the Alliance Data Systems
Employee Stock Option Plan
Options are issued and outstanding to acquire 20,386,375 shares under the
Alliance Data Systems Employee Stock Option Plan
Right To Participate In Co Sale Agreement between Welsh Xxxxxx Xxxxxxxx &
Xxxxx VII, L.P., WCAS Capital Partners II, L.P., and JCP Telecom Systems, Inc.
dated January 24, 1996
Stock Purchase Warrant to Purchase Common Stock of World Financial Network
Holding Corporation issued to JCP Telecom Systems, Inc. dated August 30, 1996
(1,503,759 shares reserved for issuance)
Stockholders Agreement dated as of January 31, 1996 among World Financial
Network Holding Corporation, Limited Commerce Corp., Welsh, Carson, Xxxxxxxx &
Xxxxx VII, L.P. and the several investors named in Annex I hereto
Amended and Restated Stockholders Agreement dated as of August 30, 1996 among
World Financial Network Holding Corporation, Limited Commerce Corp., Welsh,
Carson, Xxxxxxxx & Xxxxx VII, L.P. and the several other WCAS Investors named in
Annex I hereto, as amended in the Amendment to Amended and Restated Stockholders
Agreement dated July 24, 1998 and the Amendment to Amended and Restated
Stockholders Agreement dated as of August 31, 1998
SCHEDULE 2.05(b)
MATERIAL OBLIGATIONS OR LIABILITIES
None
EXHIBIT B
FORM OF STOCKHOLDERS AGREEMENT AMENDMENT
See Tab 3
