ALLIANCE DATA SYSTEMS CORPORATION
LOYALTY MANAGEMENT GROUP CANADA INC.
THIRD AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
This Third Amendment to Amended and Restated Credit Agreement
(herein, the "AMENDMENT") is entered into as of January 10, 2001, between
Alliance Data Systems Corporation, a Delaware corporation (the "US BORROWER"),
Loyalty Management Group Canada Inc., an Ontario corporation (the "CANADIAN
BORROWER"; the US Borrower and the Canadian Borrower being referred to herein
individually as "BORROWER" and collectively as the "BORROWERS"), the Banks
party to the Credit Agreement (as such term is defined below) and Xxxxxx Trust
and Savings Bank, as a Bank and in its capacity as the Administrative Agent,
Pledgee and Collateral Agent under the Credit Agreement (the "ADMINISTRATIVE
AGENT").
PRELIMINARY STATEMENTS
A. The Borrowers, the Administrative Agent and the Banks are
currently party to a certain Amended and Restated Credit Agreement, dated as
of July 24, 1998 and amended and restated as of October 22, 1998 (as amended,
restated, modified and supplemented from time to time, the "CREDIT
AGREEMENT"). All capitalized terms used herein without definition shall have
the same meanings herein as such terms have in the Credit Agreement.
B. The Borrowers have requested that the Administrative Agent
and the Banks amend certain covenants and make certain other amendments to the
Credit Agreement, and the Administrative Agent and the Banks party hereto are
willing to do so under the terms and conditions set forth in this Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. AMENDMENTS.
Upon the satisfaction of the conditions precedent set forth in
Section 2 hereof, the Credit Agreement shall be and hereby is amended as
follows:
1.1. The definitions of "Consolidated EBITDA" and "Eligible IPO"
appearing in Section 1.1 of the Credit Agreement shall be amended and restated
in their entirety to read as follows:
"Consolidated EBITDA" of any Person means, for any period,
Consolidated EBIT for such Person for such period, adjusted
by (i) adding thereto the amount of all depreciation and
amortization expenses that were deducted in determining
Consolidated EBIT,
(ii) adding thereto the change from the prior period in the
Deferred Revenue Account and (iii) subtracting therefrom the
change from the prior period in the Restricted Cash Account.
"Eligible IPO" means any public or private offering of
certain capital stock of the US Borrower to be consummated
by no later than June 30, 2001 and to result in gross cash
proceeds raised by the US Borrower of not less than
$150,000,000.
1.2. Section 1.1 of the Credit Agreement shall be amended by
adding the following new definitions thereto:
"Deferred Revenue Account" means the account on the
consolidating balance sheet of the Borrower associated
solely with the change in revenue recognition by the
Canadian Borrower as required by the Securities and Exchange
Commission of the United States of America.
"Restricted Cash Account" means the account on the
consolidating balance sheet of the Borrower related solely
to redemption settlement assets of the Canadian Borrower's
"Air Miles Program".
1.3. The first sentence of Section 2.11(B)(c) of the Credit
Agreement shall be amended by deleting the reference to "and (2) all proceeds
of the Eligible IPO shall be applied (i) first to the aggregate outstanding
principal amount of the Subordinated Note and the WCAS Subordinated Note until
such Notes are paid in full and (ii) thereafter to repay the aggregate
outstanding principal amount of the US Term Loans until such Loans are repaid
in full" appearing immediately before the period at the end thereof and
inserting "and (2) all proceeds of the Eligible IPO shall be applied to repay
the aggregate outstanding principal amount of the US Term Loans until such
Loans are repaid in full" in lieu thereof.
1.4. The second sentence of Section 2.11(B)(c) of the Credit
Agreement shall be amended by deleting the reference to "such excess"
appearing therein and inserting "the excess referred to in the preceding
subsection (c)(1) of this Section 2.1(B)" in lieu thereof.
1.5. Section 6.13 of the Credit Agreement shall each be amended
and restated in their entirety to read as follows:
"Section 6.13. ADJUSTED CONSOLIDATED NET WORTH. Prior to the
Increase Date, the US Borrower will not permit its
Adjusted Consolidated Net Worth at any time to be less
than the sum of (i) $250,000,000, plus (ii) an amount
equal to 50% of the amount by which the US Borrower's
quarterly Consolidated Net Income (determined at the end
of each fiscal quarter, commencing with the fiscal quarter
ending on or about September 30, 1998) exceeds zero, plus
(iii) 100% of any proceeds from equity issuances of
2
capital stock of the US Borrower (other than in connection
with exercises of stock options of the officers, directors
and employees of the US Borrower in the ordinary course of
business). On and after the Increase Date, the US Borrower
will not permit its Adjusted Consolidated Net Worth to be
less than the sum of (i) $550,000,000, plus (ii) an amount
equal to 50% of the amount by which the US Borrower's
quarterly Consolidated Net Income (determined at the end
of each fiscal quarter, commencing with the second fiscal
quarter ending after the Increase Date) exceeds zero, plus
(iii) 100% of any proceeds from equity issuances of
capital stock of the US Borrower (other than (A) the
Eligible IPO and (B) in connection with exercises of stock
options of the officers, directors and employees of the US
Borrower in the ordinary course of business). As used in
this Section 6.13, the term "INCREASE DATE" shall mean the
earlier of (x) June 30, 2001 and (y) the date of the
Eligible IPO."
SECTION 2. CONDITIONS PRECEDENT.
The effectiveness of this Amendment shall be subject to the
satisfaction of the following conditions precedent:
(a) The Borrowers, the Guarantors, the Administrative Agent
and the Required Banks shall have executed and delivered this
Amendment.
(b) The US Borrower shall have paid, in accordance with the
terms of a Fee Letter by the US Borrower to the Banks dated as of
January 10, 2001, to the Administrative Agent (for the account of each
Bank which joins in this Amendment by the time and date contemplated in
such Fee Letter) an amendment fee in an amount equal to 0.15% of the
sum of such Bank's outstanding Term Loans plus such Bank's Revolving
Loan Commitment.
(c) All legal matters incident to the execution and
delivery of this Amendment and the instruments and documents
contemplated hereby shall be satisfactory to the Banks and their
counsel.
(d) The Administrative Agent shall have received copies
executed or certified (as may be appropriate) of all legal documents or
proceedings taken in connection with the execution and delivery of the
Credit Documents and this Amendment and the other instruments and
documents contemplated thereby.
SECTION 3. REPRESENTATIONS.
In order to induce the Banks to execute and deliver this Amendment,
each Borrower hereby represents to each Bank that as of the date hereof, after
giving effect to this Amendment,
3
the representations and warranties set forth in Section 4 of the Credit
Agreement are and shall be and remain true and correct (except that the
representations contained in Section 4.4 shall be deemed to refer to the most
recent financial statements of each Borrower delivered to the Administrative
Agent) and, after giving effect to this Amendment, (i) each Borrower is in
full compliance with all of the terms and conditions of the Credit Agreement
and (ii) no Default or Event of Default has occurred and is continuing under
the Credit Agreement.
SECTION 4. MISCELLANEOUS.
(a) Each Borrower and Guarantor has heretofore executed and
delivered to the Administrative Agent and the Banks certain Security Documents
and the other Credit Documents and each Borrower and Guarantor hereby
acknowledges and agrees that, notwithstanding the execution and delivery of
this Amendment, the Security Documents and the other Credit Documents remain
in full force and effect and the rights and remedies of the Administrative
Agent, the Pledgee and the Collateral Agent and the Banks thereunder, the
obligations of each Borrower and Guarantor thereunder and the liens and
security interests created and provided for thereunder remain in full force
and effect and shall not be affected, impaired or discharged hereby. Nothing
herein contained shall in any manner affect or impair the priority of the
liens and security interests created and provided for by the Security
Documents and the other Credit Documents as to the indebtedness which would be
secured thereby prior to giving effect to this Amendment.
(b) Except as specifically amended herein or waived hereby, the
Credit Agreement shall continue in full force and effect in accordance with
its original terms. Reference to this specific Amendment need not be made in
the Credit Agreement, the Notes, or any other instrument or document executed
in connection therewith, or in any certificate, letter or communication issued
or made pursuant to or with respect to the Credit Agreement, any reference in
any of such items to the Credit Agreement being sufficient to refer to the
Credit Agreement as amended hereby.
(c) The Borrowers agree to pay on demand all reasonable costs
and expenses of or incurred by the Administrative Agent in connection with the
negotiation, preparation, execution and delivery of this Amendment.
(d) This Amendment may be executed in any number of
counterparts, and by the different parties on different counterpart signature
pages, all of which taken together shall constitute one and the same
agreement. Any of the parties hereto may execute this Amendment by signing any
such counterpart and each of such counterparts shall for all purposes be
deemed to be an original. This Amendment shall be governed by the laws of the
State of New York.
[SIGNATURE PAGES TO FOLLOW]
4
Dated as of January __, 2001.
ALLIANCE DATA SYSTEMS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx, CCM
--------------------------------------
Title: Vice President, Treasurer
-------------------------------------
LOYALTY MANAGEMENT GROUP
CANADA INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx, CCM
--------------------------------------
Title: Vice President, Treasurer
-------------------------------------
Accepted and agreed to as of the date and year last above written.
XXXXXX TRUST AND SAVINGS BANK, in its
individual capacity as a Bank and as the
Administrative Agent
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Name: Xxxx X. Xxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
5
XXXXXX GUARANTY TRUST COMPANY OF
NEW YORK
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------------
Title: Vice President
-------------------------------------
FIRST UNION NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxx
--------------------------------------
Title: Sr. Vice President
-------------------------------------
BANK ONE, NA
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------------
Title: Vice President
-------------------------------------
THE HUNTINGTON NATIONAL BANK
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
KZH ING-2 LLC
By: /s/ Xxxxxxxx Xxxx
----------------------------------------
Name: Xxxxxxxx Xxxx
--------------------------------------
Title: Authorized Agent
-------------------------------------
KZH ING-3 LLC
By: /s/ Xxxxxxxx Xxxx
----------------------------------------
Name: Xxxxxxxx Xxxx
--------------------------------------
Title: Authorized Agent
-------------------------------------
6
PILGRIM AMERICA HIGH INCOME
INVESTMENTS, LTD.
By: Pilgrim Investments, Inc.,
as its Investment Manager
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx, CFA
--------------------------------------
Title: Vice President
-------------------------------------
PILGRIM PRIME RATE TRUST
By: Pilgrim Investments, Inc.,
as its Investment Manager
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx, CFA
--------------------------------------
Title: Vice President
-------------------------------------
PILGRIM CLO 1999-1 LTD.
By: Pilgrim Investments, Inc.,
as its Investment Manager
By: /s/ Xxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxx, CFA
--------------------------------------
Title: Vice President
-------------------------------------
CHASE MANHATTAN BANK
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxx, Vice President
--------------------------------------
Title: The Chase Manhattan Bank
-------------------------------------
BARCLAYS BANK PLC
By: /s/ Xxxxxx XxXxxxxx
----------------------------------------
Name: Xxxxxx XxXxxxxx
--------------------------------------
Title: Associate Director
-------------------------------------
SUNTRUST BANK
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------------
Title: Managing Director
-------------------------------------
7
ARCHIMEDES FUNDING II, LTD.
By: ING Capital Advisors LLC,
as Collateral Manager
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
ARCHIMEDES FUNDING III, LTD.
By: ING Capital Advisors LLC,
as Collateral Manager
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
SEQUILS-ING I (HBDGM), LTD.
By: ING Capital Advisors LLC,
as Collateral Manager
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxx
--------------------------------------
Title: Vice President
-------------------------------------
XXX XXXXXX PRIME RATE INCOME TRUST
By: Xxx Xxxxxx Investment Advisory Corp.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
--------------------------------------
Title: Principal
-------------------------------------
8
GUARANTORS' CONSENT
By their execution of the Credit Agreement, the undersigned have
heretofore guaranteed certain Guaranteed Obligations under Article 10 of the
Credit Agreement. Each of the undersigned hereby consents to the Amendment to
the Credit Agreement as set forth above and confirms that all of each of the
undersigned's obligations as a Guarantor remain in full force and effect. The
undersigned further agree that the consent of the undersigned to any further
amendments to the Credit Agreement shall not be required as a result of this
consent having been obtained.
ADS ALLIANCE DATA SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx, CCM
--------------------------------------
Title: Vice President, Treasurer
-------------------------------------
ADS COMMERCIAL SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx, CCM
--------------------------------------
Title: Vice President, Treasurer
-------------------------------------
HARMONIC TECHNOLOGY LICENSING, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx, CCM
--------------------------------------
Title: Vice President, Treasurer
-------------------------------------
9
