EXHIBIT A
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
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions...................................................2
ARTICLE II
RIGHTS AND OBLIGATIONS WITH
RESPECT TO TRANSFER
SECTION 2.1 General Restrictions..........................................7
SECTION 2.2 Restrictive Legend............................................8
SECTION 2.3 Rights of First Refusal.......................................9
SECTION 2.4 Tag-along Rights.............................................10
SECTION 2.5 Improper Transfer............................................13
SECTION 2.6 Preemptive Rights............................................13
SECTION 2.7 Termination..................................................13
ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1 Demand Registration..........................................14
SECTION 3.2 Piggy-Back Registration......................................15
SECTION 3.3 Reduction of Offering........................................15
SECTION 3.4 Registration Procedures......................................16
SECTION 3.5 Registration Expenses........................................19
SECTION 3.6 Indemnification by the Issuer................................19
SECTION 3.7 Indemnification by Selling Holders...........................20
SECTION 3.8 Conduct of Indemnification Proceedings ......................21
SECTION 3.9 Contribution.................................................22
SECTION 3.10 Participation in Underwritten Registrations..................23
SECTION 3.11 Current and Periodic Reports.................................24
SECTION 3.12 Holdback Agreements..........................................24
ARTICLE IV
CORPORATE GOVERNANCE; COVENANTS
SECTION 4.1 Composition of the Board.....................................24
SECTION 4.2 Action by the Board..........................................25
SECTION 4.3 Consent of the Board of Directors............................26
SECTION 4.4 Charter and Bylaws...........................................28
SECTION 4.5 Information..................................................28
SECTION 4.6 Non-Solicitation.............................................29
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SECTION 4.7 Protection of the Business; Investment Opportunities.........29
SECTION 4.8 Capital Commitments..........................................30
SECTION 4.9 Termination..................................................31
ARTICLE V
MISCELLANEOUS
SECTION 5.1 Headings.....................................................31
SECTION 5.2 No Inconsistent Agreements...................................31
SECTION 5.3 Entire Agreement; Amendments; No Waivers.....................31
SECTION 5.4 Notices......................................................32
SECTION 5.5 Applicable Law...............................................32
SECTION 5.6 Severability.................................................32
SECTION 5.7 Successors, Assigns, Transferees.............................32
SECTION 5.8 Counterparts; Effectiveness..................................33
SECTION 5.9 Fees and Expenses............................................33
SECTION 5.10 Recapitalization, etc........................................33
SECTION 5.11 Remedies.....................................................33
SECTION 5.12 Jurisdiction.................................................33
Annex I -- WCAS Investors
Exhibit A - Form of Agreement to be Bound
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AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated as of August __,
1996 among World Financial Network Holding Corporation (the "Issuer"),
Limited Commerce Corp. ("Limited Commerce"), Welsh, Carson, Xxxxxxxx & Xxxxx
VII, L.P. ("WCAS VII") and the several investors named in Annex I hereto
(collectively with WCAS VII, the "WCAS Investors").
WHEREAS, the Issuer, Limited Commerce and WCAS VII are parties to
the WFN Stock Purchase Agreement (as defined below) pursuant to which certain
WCAS Investors are the holders of an aggregate of 60% of the outstanding
Common Stock, par value $.01 per share, of the Issuer, after giving effect to
such sale from the Issuer and Limited Commerce;
WHEREAS, the Issuer, Limited Commerce and certain of the WCAS
Investors are parties to a Stockholders Agreement, dated as of January 31,
1996 (the "Original Agreement");
WHEREAS, the Issuer and Business Services Holdings, Inc., a Delaware
corporation ("BSH"), have entered into an Agreement and Plan of Merger dated as
of August __, 1996 pursuant to which BSH has been merged (the "Merger") with and
into the Issuer, and shares of BSH Common Stock and BSH Preferred Stock (as
defined in said Agreement and Plan of Merger) have been converted into the right
to receive WFN Common Stock;
WHEREAS, the Issuer, Limited Commerce and the WCAS Investors have
entered into a Securities Purchase Agreement dated as of August __, 1996 (as the
same may be amended or modified from time to time, the "1996 Securities Purchase
Agreement") whereby (i) the WCAS Investors have agreed to sell, and Limited
Commerce has agreed to purchase, shares of Common Stock and Notes (as each such
term is defined therein) and (ii) Limited Commerce has agreed to assume certain
obligations of certain WCAS Investors under Section 1.04 of the BSH Securities
Purchase Agreement (as defined below);
WHEREAS, the parties to the Original Agreement desire to amend and
restate the Original Agreement in order to reflect the rights and obligations of
the Issuer, Limited Commerce and the WCAS Investors after giving effect to the
transactions contemplated by the Merger Agreement and the 1996 Securities
Purchase Agreement and to confirm the restrictions contained in the Original
Agreement on the sale, assignment, transfer, encumbrance or other disposition of
the Common Stock and the provision of certain rights and obligations relating to
the Common Stock, all as more particularly set forth herein;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 DEFINITIONS. (a) The following terms, as used herein, have
the following meanings:
"Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, such
Person. For purposes of this definition, "control" (including, with correlative
meaning, the terms "controlling", "controlled by" and "under common control
with"), as applied to any Person means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.
"BSH Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of January 24, 1996 among BSH and the several Purchasers
named in Schedule I and Schedule II thereto, as the same may be amended or
modified from time to time.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.
"Commission" means the Securities and Exchange Commission and any
successor having similar powers.
"Common Stock" means the shares of common stock, par value $.01 per
share, of the Issuer.
"Competitor" means any Person which competes, directly or
indirectly, with any operations of Parent or any of its Subsidiaries, as such
operations exist as of the date hereof.
"Convertible Securities" means securities convertible into or
exercisable for Issuer equity securities.
"Credit Card Processing Agreement" means each Credit Card Processing
Agreement in effect from time to time between the Issuer and Limited Commerce or
one of its Affiliates which is a party thereto, as the same may be modified or
amended from time to time.
"Debt" means, with respect to any Person, at any date, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes
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or other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee under leases which are capitalized in accordance with generally
accepted accounting principles, (v) all Debt of others secured by a Lien on any
asset of such Person, whether or not such Debt is assumed by such Person, and
(vi) all Debt of others guaranteed by such Person.
"Duly Endorsed" means duly endorsed in blank by the Person or Persons
in whose name a stock certificate is registered or accompanied by a duly
executed stock assignment separate from the certificate with the signature(s)
thereon guaranteed by a commercial bank or trust company or a member of a
national securities exchange or of the National Association of Securities
Dealers, Inc.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means generally accepted accounting principles.
"Holder" means each Person (other than the Issuer) who shall be a party
to this Agreement, whether in connection with the transactions contemplated by
WFN Stock Purchase Agreement, the Merger Agreement, the 1996 Securities Purchase
Agreement or otherwise, so long as such Person shall "beneficially own" (as such
term is defined in Rule 13d-3 under the Exchange Act) any shares of Common
Stock.
"Incurrence" means the incurrence, creation, assumption or in any other
manner becoming liable with respect to, or responsible for the payment of, any
Debt.
"Issuer Board" means the Board of Directors of the Issuer.
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
August , 1996 between the Issuer and BSH, as the same may be amended or modified
from time to time.
"Parent" means The Limited, Inc., a Delaware corporation.
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"Permitted Transferee" means (i) in the case of Limited Commerce,
Parent or any Subsidiary of Parent and (ii) in the case of a WCAS Investor
listed on Annex I hereto, if such WCAS Investor is an individual, such
individual's spouse or lineal descendants, or a trust for the benefit of same.
"Person" means an individual, partnership, corporation, trust, joint
stock company, association, joint venture, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Processing Business" means the business of processing private label or
bank credit card transactions initiated by consumers primarily for the retail
industry (it being understood that a Person shall be deemed to be engaged in the
private label or bank credit card processing business if such Person performs
any one or more of the following functions: (i) transaction authorization, (ii)
data capture, (iii) statement preparation, (iv) credit extension and (v) related
customer and merchant services); PROVIDED that a Person outside North America
shall not be deemed to be engaged in the Processing Business unless at least 50%
of such Person's operations are of the type described in this paragraph.
"Public Offering" means any primary or secondary public offering of
equity securities of the Issuer pursuant to an effective registration statement
under the Securities Act other than pursuant to a registration statement on Form
S-4 or Form S-8 or any successor or similar form.
"Qualified Public Offering" shall mean an underwritten Public Offering
of Common Stock of the Issuer in which the aggregate price paid by the public
shall be at least $30 million.
"Registrable Securities" means the Common Stock held by Limited
Commerce, the WCAS Investors and the respective Transferees of Limited Commerce
or any WCAS Investor and any capital stock for which Common Stock is exchanged
or into which it is converted; PROVIDED that such securities shall cease to be
Registrable Securities when (x) a registration statement relating to such
securities shall have been declared effective by the Commission, and such
securities shall have been disposed of pursuant to such effective registration
statement, or (y) such securities are sold under circumstances in which all of
the applicable conditions of Rule 144 (or any similar provisions then in effect)
under the Securities Act are met or such shares may be sold pursuant to Rule
144 (k).
"Registration Expenses" means all (i) registration and filing fees,
(ii) fees and expenses of compliance with securities
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or blue sky laws (including reasonable fees and disbursements of a qualified
independent underwriter, if any, counsel in connection therewith and the
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses of the Issuer (including, without limitation, all salaries and
expenses of officers and employees performing legal or accounting duties), (v)
fees and disbursements of counsel for the Issuer, (vi) customary fees and
expenses for independent certified public accountants retained by the Issuer
(including the expenses of any comfort letters), (vii) fees and expenses of any
special experts retained by the Issuer in connection with such registration,
(viii) reasonable fees and expenses of (A) one counsel for Limited Commerce and
its Permitted Transferees and (B) one counsel for the WCAS Investors and their
Permitted Transferees, (ix) fees and expenses of listing the Registrable
Securities on a securities exchange or on the NASDAQ National Market System, (x)
rating agency fees, (xi) reasonable fees and expenses of counsel for the
Underwriter, (xii) reasonable fees and expenses of the Underwriter (excluding
discounts or commissions relating to the distribution of the Registrable
Securities) and (xiii) out-of-pocket expenses of the Issuer.
"Related Business" means (i) the business of providing one or more
processing functions (as set forth in the definition of "Processing Business")
for private label or bank credit card transactions initiated by consumers in
particular consumer markets other than retail and (ii) the business of providing
data base management services primarily for retailers.
"Securities Act" means the Securities Act of 1933, as amended.
"Selling Holder" means Limited Commerce or any Transferees of Limited
Commerce or any WCAS Investor or any Transferees of any WCAS Investor who
propose to Transfer Registrable Securities pursuant to Article III.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.
"Third Party" means a prospective purchaser of Common Stock from a
Holder in an arm's-length transaction where such Purchaser is not the Issuer or
an Affiliate of the Issuer.
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"Underwriter" means a securities dealer who purchases any Registrable
Securities as a principal in connection with a distribution of such Registrable
Securities and not as part of such dealer's market-making activities.
"Voting Securities" means any class or series of capital stock and any
bond, debenture or other obligation of the Issuer or WFN having the right to
vote generally on matters voted on by the stockholders of the Issuer or WFN, as
the case may be.
"WFN" means World Financial Network National Bank, a national banking
association and a wholly owned subsidiary of the Issuer.
"WFN Board" means the Board of Directors of WFN.
"WFN Stock Purchase Agreement" means the Stock Purchase Agreement dated
as of October 24, 1995 among the Issuer, Limited Commerce and WCAS VII, as the
same may be amended or modified from time to time.
(b) Each of the following terms is defined in the Section opposite such
term:
Term Section
---- -------
Additional Shares 5.1
BSH Preamble
Charter Documents 4.4
Demand Registrant 3.1
Demand Registration 3.1
Effective Date 5.9
Existing Portfolio Company 4.7
Indemnified Party 3.8
Indemnifying Party 3.8
Issuer Preamble
Limited Commerce Preamble
Merger Preamble
Nominee 4.1
Offer 2.3
Offer Notice 2.3
Offer Price 2.3
Offered Stock 2.3
Offeree Holder 2.3
Offering Holder 2.3
Original Agreement Preamble
Piggy-Back Registration 3.2
Preemptive Rights Notice 2.6
Registration Request 3.1
Sale Date 2.4
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1996 Securities Purchase Preamble
Agreement
Tag-along Notice 2.4
Tag-along Notice Date 2.4
Tag-along Notice Period 2.4
Tag-along Offer 2.4
Tag-along Offer Notice 2.4
Tag-along Offeree 2.4
Tag-along Purchaser 2.4
Tag-along Ratio 2.4
Transfer 2.1
Transferee 2.1
Transferring Party 2.4
WCAS VII Preamble
WCAS Investors Preamble
ARTICLE II
RIGHTS AND OBLIGATIONS WITH
RESPECT TO TRANSFER
SECTION 2.1 GENERAL RESTRICTIONS. (a) No Holder shall, directly or
indirectly, transfer, sell, assign, pledge, hypothecate, encumber or otherwise
dispose of any Common Stock to any Person (any such act being referred to as a
"Transfer", with the term "Transferee" to mean any transferee in a Transfer)),
except (i) in compliance with all applicable federal and state securities laws
and (ii) as expressly permitted by this Agreement.
(b) The WCAS Investors shall be permitted to Transfer any or all of
their Common Stock after January 31, 1998 (i) in a Public Offering upon exercise
of the Registration Rights provided for in Article III, subject to Section 3.2,
or (ii) subject to Sections 2.3 and 2.4 and with the consent of Limited
Commerce, to a Third Party; provided that any Transferee pursuant to clause (ii)
shall have agreed in writing to be bound (through execution of an agreement
substantially in the form of Exhibit A hereto) by the terms of this Agreement
applicable to Holders.
(c) The WCAS Investors shall be permitted to Transfer any or all of
their Common Stock after January 31, 2000, subject to Sections 2.3 and 2.4, to
any Person other than a Competitor; provided that any Transferee pursuant to
this paragraph shall have agreed in writing to be bound (through execution of an
agreement substantially in the form of Exhibit A hereto) by the terms of this
Agreement applicable to Holders.
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(d) Limited Commerce shall be permitted to Transfer any or all of its
Common Stock after January 31, 1998 (i) in a Public Offering upon exercise of
the registration rights provided for in Article III, subject to Section 3.2, or
(ii) subject to Sections 2.3 and 2.4, and with the consent of WCAS VII, to a
Third Party; provided that any Transferee pursuant to clause (ii) shall have
agreed in writing to be bound (through execution of an agreement substantially
in the form of Exhibit A hereto) by the terms of this Agreement applicable to
Holders.
(e) Limited Commerce shall be permitted to Transfer any or all of its
Common Stock after January 31, 2000, subject to Sections 2.3 and 2.4, to any
Person; provided that any Transferee pursuant to this paragraph shall have
agreed in writing to be bound (through execution of an agreement substantially
in the form of Exhibit A hereto) by the terms of this Agreement applicable to
Holders.
(f) Notwithstanding any other provision of this Agreement to the
contrary, any Holder may at any time Transfer any or all shares of Common Stock
to one or more of its Permitted Transferees so long as (i) such Permitted
Transferee shall have agreed in writing to be bound (through execution of an
agreement substantially in the form of Exhibit A hereto) by the terms of this
Agreement applicable to Holders and (ii) the Transfer to such Permitted
Transferee is not in violation of any applicable federal or state securities
laws.
SECTION 2.2 RESTRICTIVE LEGEND. (a) For so long as this Agreement
remains in effect, each certificate representing Common Stock owned by any
Holder shall include a legend in substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER AS SET FORTH IN THE AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT, DATED AS OF AUGUST , 1996, A COPY OF WHICH
MAY BE OBTAINED FROM WORLD FINANCIAL NETWORK HOLDING CORPORATION.
(b) If any shares of Common Stock shall cease to be Registrable
Securities, the Issuer shall, upon the written request of the holder thereof,
issue to such holder a new certificate evidencing such shares without the first
sentence of the legend required by Section 2.2(a) endorsed thereon. If any
shares of Common Stock cease to be subject to any restrictions on Transfer set
forth in this Agreement, the Issuer shall, upon the written request of the
Holder thereof, issue to such Holder a new
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certificate evidencing such shares without the second sentence of the legend
required by Section 2.2(a) endorsed thereon.
SECTION 2.3 RIGHTS OF FIRST REFUSAL. (a) No Holder (each an "Offering
Holder") will Transfer any Common Stock pursuant to Section 2.1(b) (ii), 2.1(c),
2.1(d) (ii) or 2.1(e) without first giving Limited Commerce (in the case of
transfers by any WCAS Investor or any of its Permitted Transferees) or WCAS VII
(in the case of any transfer by Limited Commerce or any of its Permitted
Transferees) (each an "Offeree Holder") prior notice thereof (an "Offer Notice")
and the opportunity (as hereinafter provided) to purchase all but not less than
all such Common Stock (the "Offered Stock") at a cash price (the "Offer Price")
equal to the sum of the amount of any cash plus the fair market value of any
other consideration offered by the prospective purchaser or other transferee
pursuant to a bona fide offer to purchase. The Offer Notice shall constitute an
offer (the "Offer") by an Offering Holder to sell the Offered Stock to the
Offeree Holder at the Offer Price and shall state the identity of the purchaser
or the Transferee and the terms of the proposed Transfer.
(b) The Offer may be accepted within 45 days of receipt by the Offeree
Holder of the Offer Notice and, if accepted, such acceptance shall constitute
the Offeree Holder's binding agreement to purchase the Offered Stock by the
later of (i) the date 30 days after such acceptance or (ii) the date by which
the prospective purchaser or Transferee would have been obligated to purchase
the Offered Stock. If the Offer is not accepted or the Offered Stock is not
purchased as contemplated above, the Offering Holder may Transfer the Offered
Stock to such prospective purchaser or Transferee at a price not less than the
Offer Price and on substantially the same terms as described in the Offer
Notice. If the Transfer to such prospective purchaser or Transferee is not
consummated as contemplated above within 30 days after the expiration of the
45-day offer period or earlier irrevocable rejection of the Offer or failure to
purchase the Offered Stock after acceptance of the Offer, no Transfer may be
made by the Offering Holder without again complying with this Section 2.3.
Notwithstanding the foregoing, if the purchase and sale of the Offered Stock is
subject to any prior regulatory approval, the time periods specified above
within which such purchase and sale must be consummated shall be extended until
the expiration of five Business Days after all such approvals shall have been
received.
(c) If the consideration offered by the prospective purchaser or
Transferee includes non-cash consideration, the Offeree Holder and Offering
Holder shall negotiate in good faith with a view to agreeing upon the fair
market value of such non-
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cash consideration. If, despite such good faith negotiations, the Offering
Holder and Offeree Holder are unable to agree on such fair market value within
15 days following receipt by the Offeree Holder of the Offer Notice, each of the
Offering Holder and the Offeree Holder shall, at its own expense, retain an
investment banking firm of national reputation to determine such fair market
value. If such two investment banking firms do not make substantially similar
determinations and neither determination is acceptable to both the Offering
Holder and the Offeree Holder, then such investment banking firms shall, at the
equally shared expense of the Offering Holder and the Offeree Holder, retain a
third investment banking firm of national reputation to select between the two
determinations, which selection shall be binding upon each party. If a
determination under this subsection (c) is required, the deadline for acceptance
provided for in this Section 2.3 shall be postponed until the fifth Business Day
after the date of such determination.
(d) The rights of Limited Commerce and the WCAS Investors under this
Section 2.3 are transferable to any Permitted Transferee of Limited Commerce or
any WCAS Investor, as the case may be, that executes an agreement substantially
in the form of Exhibit A hereto.
SECTION 2.4 TAG-ALONG RIGHTS. (a) Except as provided in Section
2.4(e), if any Holder ("Transferring Party") proposes to sell or otherwise
dispose of any of its Common Stock pursuant to Section 2.1(b) (ii), 2.1(c),
2.1(d) (ii) or 2.1(e) to any Third Party (a "Tag-along Purchaser") pursuant
to a bona fide offer to purchase (a "Tag-along Offer"), the Transferring
Party shall provide written notice (the "Tag-along Offer Notice") of such
Tag-along Offer to the Issuer and the Issuer shall promptly provide written
notice (the effective date of such notice being the "Tag-along Notice Date")
of such Tag-along Offer to such other Holder and its Permitted Transferees
(the "Tag-along Offeree"), the Tag-along Ratio (as defined below), the
consideration per share of Common Stock and other material terms and
conditions of the Tag-along Ratio (as defined below), the consideration per
share of Common Stock and other material terms and conditions of the
Tag-along Offer and, in the case of a Tag-along Offer in which the
consideration payable for Common Stock consists in part or in whole of
consideration other than cash, such information relating to such
consideration as the Tag-along Offeree may reasonably request as being
necessary for such Tag-along Offeree to evaluate such non-cash consideration,
it being understood that such request shall not obligate the Transferring
Party to deliver any information to such Tag-along Offeree not provided to
the Transferring Party by the Tag-along Purchaser.
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Each Tag-along Offeree shall have the right, exercisable as set forth
below, to accept the Tag-along Offer for up to the number of shares of Common
Stock determined pursuant to Section 2.4(b). The consideration per share paid to
any Tag-along Offeree shall be not less than the highest price paid per share to
the Transferring Party in respect of its Common Stock. Each Tag-along Offeree
that desires to accept the Tag-along Offer shall provide the Transferring Party
with written revocable notice (a "Tag-along Notice") (specifying, subject to
Section 2.4(b), the number of Common Stock which such Tag-along Offeree desires
to sell) within 45 days after the Tag-along Notice Date, and shall
simultaneously provide a copy of such Tag-along Notice to the Issuer, and the
Issuer shall forward a copy of each such Tag-along Notice to the Transferring
Party and each other Tag-along Offeree. Such Tag-along Notice may be withdrawn
or modified at any time until the expiration of 45 days after the Tag-along
Notice Date (the "Tag-along Notice Period"). At the expiration of the Tag-along
Notice Period, the most recent Tag-along Notice shall become irrevocable and
binding, and shall constitute an irrevocable acceptance of the Tag-along Offer
by the Tag-along Offeree for the Common Stock specified therein.
As soon as practicable after the expiration of the Tag-along Notice
Period, the Transferring Party shall notify the Issuer and each accepting
Tag-along Offeree of the number of shares of Common Stock such Tag-along Offeree
is obligated to sell or otherwise dispose of pursuant to the Tag-along Offer,
such number to be calculated in accordance with Section 2.4(b). The Transferring
Party shall notify the Issuer and each accepting Tag-along Offeree of the
proposed date of any sale ("Sale Date") pursuant to this Section 2.4 no less
than five days prior to the Sale Date, and each accepting Tag-along Offeree
shall deliver to the Transferring Party the Duly Endorsed certificate or
certificates representing the Common Stock to be sold or otherwise disposed of
pursuant to such offer by such Tag-along Offeree, together with a limited
power-of-attorney authorizing the Transferring Party to sell or otherwise
dispose of such Common Stock pursuant to the terms of the Tag-along Offer and
all other documents required to be executed in connection with such Tag-along
Offer, no less than two days prior to the Sale Date.
(b) Each Tag-along Offeree shall have the right to sell, pursuant to
any Tag-along Offer, a number of shares of Common Stock less than or equal to
the product of the total number of Common Stock offered to be sold by the
Transferring Party or offered to be purchased by the Tag-along Purchaser as set
forth in such Tag-along Offer multiplied by a fraction (the "Tag-along Ratio"),
the numerator of which is the number of Common Stock then held by such Tag-along
Offeree and the denominator of which shall be an amount equal to the total
number of
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shares of Common Stock then held by all Tag-along Offerees exercising rights
under this Section 2.4 PLUS the total number of shares of Common Stock then
held by the Transferring Party. The number of shares of Common Stock sold by
each Tag-along Offeree in a Tag-along Offer shall be equal to the lesser of
the number of shares of Common Stock calculated pursuant to the formula set
forth in this Section 2.4(b) and the number of shares of Common Stock
specified in such Tag-along Offeree's Tag-along Notice in respect of such
Tag-along Offer. If at the termination of the Tag-along Notice Period any
Tag-along Offeree shall not have accepted the Tag-along Offer, such Tag-along
Offeree will be deemed to have waived any and all of its rights under this
Section 2.4 with respect to the sale of other disposition of any of its
Common Stock pursuant to such Tag-along Offer and no Common Stock held by any
such Tag-along Offeree will be included in such Tag-along Offer.
(c) The Transferring Party shall have 45 days from the termination of
the Tag-along Notice Period in which to consummate the sale contemplated by the
Tag-along Offer to the Tag-along Purchaser at the price and on the terms set
forth in the Tag-along Offer Notice; PROVIDED that if the purchase and sale of
such Common Stock is subject to any prior regulatory approval, the time period
during which such purchase and sale may be consummated shall be extended until
the expiration of five Business Days after all such approvals shall have been
received. If, at the end of the period set forth in this Section 2.4(c) the
Transferring Party has not completed the sale contemplated by the Tag-along
Offer Notice, all the restrictions on sale or other disposition contained in
this Agreement with respect to Common Stock owned by the Transferring Party
shall again be in effect.
(d) Within one Business Day after the consummation of the sale or other
disposition of the Common Stock pursuant to the Tag-along Offer, the
Transferring Party shall notify the Tag-along Offeree thereof, shall remit to
each of the Tag-along Offerees the total sales price specified in the Tag-along
Offer Notice of the Common Stock of such Tag-along Offeree sold or otherwise
disposed of pursuant thereto, and shall furnish such other evidence of such sale
(including the time of completion) and the terms thereof as may be reasonably
requested by the Tag-along Offeree.
(e) Notwithstanding anything contained in this Section 2.4, there shall
be no liability on the part of a Transferring Party to any Tag-along Offeree if
the same of Common Stock pursuant to Section 2.4(c) is not consummated for
whatever reason. Whether to effect a sale of Common Stock pursuant to this
Section 2.4 by a Transferring Party is in the sole and absolute discretion of
the Transferring Party.
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(f) Each Tag-along Offeree shall be required to bear its proportionate
share of any escrows, holdbacks or adjustments in purchase price under the terms
of the purchase agreement relating to such Tag-along Offer; PROVIDED that the
amount borne by any Tag-along Offeree shall not exceed the net proceeds received
by such Tag-along Offeree for the Common Stock sold by it pursuant to such
Tag-along Offer.
SECTION 2.5 IMPROPER TRANSFER. (a) Any attempt to Transfer any Common
Stock not in compliance with this Agreement shall be null and void and neither
the Issuer nor any transfer agent of the Issuer shall register, or otherwise
recognize in the Issuer's stock records, any such improper Transfer.
SECTION 2.6 PREEMPTIVE RIGHTS. If the Issuer shall, other than (i)
pursuant to any employee incentive arrangement, (ii) upon conversion of
Convertible Securities of the Issuer outstanding on January 31, 1996, (iii) in a
Public Offering, (iv) as a dividend on or other distribution in respect of all
outstanding shares of Common Stock, (v) pursuant to Sections 1.03 and 1.04 of
the BSH Securities Purchase Agreement or (vi) in connection with any merger,
acquisition or other business combination, issue any of its equity securities or
Convertible Securities, each Holder shall have the right to purchase for cash
the number or amount of such equity securities or Convertible Securities on the
same terms and at the same price as the issue price of such equity security or
Convertible Security so that, after the issuance of all such equity securities
or Convertible Securities, such Holder would, in the aggregate, hold the same
proportional interest of such equity securities (or, in the case of Convertible
Securities, to be outstanding upon conversion or exercise of all such
Convertible Securities) as is held by it prior to the issuance of any such
additional equity securities or Convertible Securities. Upon consummation of any
issuance by the Issuer subject to the provisions of this Section 2.6, the Issuer
shall promptly deliver written notice (a "Preemptive Rights Notice") of such
issuance to the other Holders. Each Holder's right to purchase securities under
this Section 2.6 with respect to any issuance of securities shall terminate 15
days after the delivery of the Preemptive Rights Notice.
SECTION 2.7 TERMINATION. The provisions of Article II shall terminate
and be of no further force and effect from and after the date of the
consummation of a Qualified Public Offering.
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ARTICLE III
REGISTRATION RIGHTS
SECTION 3.1 DEMAND REGISTRATION. (a) REQUEST FOR REGISTRATION. At any
time after the consummation of a Public Offering, Limited Commerce, any WCAS
Investor or any other Holder to which rights under this Section 3.1 have been
transferred or assigned (a "Demand Registrant") may make a written request (the
"Registration Request") for registration (a "Demand Registration") under the
Securities Act of Registrable Securities having a value (determined in the good
faith judgment of Limited Commerce (in the case of a Registration Request by
Limited Commerce or any Transferee of Limited Commerce) or WCAS VII (in the case
of a Registration Request by any WCAS Investor or any Transferee of any WCAS
Investor)) of not less than $10 million (or, if less, all of the Registrable
Securities then owned by such Demand Registrant). The Registration Request will
specify the number of shares of Registrable Securities proposed to be sold and
will also specify the intended method of disposition thereof; PROVIDED that the
Issuer shall not be obligated to effect (i) more than two Demand Registrations
for the WCAS Investors and their Transferees in the aggregate, (ii) more than
two Demand Registrations for Limited Commerce and its Transferees in the
aggregate or (iii) a Demand Registration if counsel to the Issuer delivers to
the Demand Registrant a written opinion in form and substance satisfactory to
the Demand Registrant to the effect that registration under the Securities Act
is not necessary in order for the Demand Registrant to sell the Registrable
Securities in the manner contemplated by the Demand Registrant and, following
such sale, the Transferee (assuming such Transferee is not the Issuer or an
affiliate of the Issuer within the meaning of the Securities Act) will be free
to resell such Registrable Securities without restriction and without
registration under the Securities Act.
(b) EFFECTIVE REGISTRATION. For purposes of Section 3.1(a), a
registration of Registrable Securities will not count as a Demand Registration
until it has become effective under the Securities Act.
(c) UNDERWRITING. If the Demand Registrant so elects, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form of
an underwritten offering. The Board of Directors shall select the book-running
managing Underwriter in connection with such offering, and Limited Commerce and
the WCAS Investors (taken as a group) may each select one additional investment
banking firm to serve as co-managing underwriter in connection with the
offering.
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(d) BEST EFFORTS OF THE ISSUER. The Issuer will use its best efforts to
effect the registration and the sale of Registrable Securities in accordance
with the intended method of disposition thereof as quickly as practicable in
connection with any Registration Request.
SECTION 3.2 PIGGY-BACK REGISTRATION. If the Issuer proposes to file a
registration statement under the Securities Act with respect to an offering of
its Registrable Securities (i) for its own account (other than a registration
statement on Form S-4 or S-8 (or any substitute form that may be adopted by the
Commission)), or (ii) for the account of any holders of its capital stock, then
the Issuer shall give written notice of such proposed filing to Limited
Commerce, the WCAS Investors and all Transferees of Limited Commerce or any WCAS
Investor to which Limited Commerce or such WCAS Investor shall have transferred
any of its rights under this Section 3.2 (a "Piggyback Holder") as soon as
practicable (but in any event not less than 20 days before the anticipated
filing date), and such notice shall offer such Piggyback Holders the opportunity
to register any and all shares of Registrable Securities owned by such Piggyback
Holders. If such Holders wish to register securities of the same class or series
as the Issuer or such holders, such registration shall be on the same terms and
conditions as the registration of the Issuer's or such holders' securities (a
"Piggy-Back Registration"). No registration effected under this Section 3.2
shall relieve the Issuer of its obligations to effect Demand Registrations to
the extent required by Section 3.1 hereof.
SECTION 3.3 REDUCTION OF OFFERING.
(a) If a Demand Registration involves an underwritten Public Offering
and the managing Underwriter shall advise the Issuer and the Selling Holders
that, in its view, (i) the number of shares of Common Stock requested to be
included in such registration (including Common Stock which the Issuer proposes
to be included) or (ii) the inclusion of some or all of the shares of Common
Stock owned by the Holders, in either case, exceeds the greatest number of
shares of Common Stock which can be sold without having an adverse effect on
such offering, including the price at which such shares of Common Stock can be
sold (the "Maximum Offering Size"), the Issuer will include in such
registration, in the priority listed below, up to the Maximum Offering Size:
(i) first, all shares of Common Stock requested to be registered by
the Selling Holders (allocated, if necessary for the offering not to exceed
the Maximum Offering Size, pro rata among such entities on the basis of the
relative
15
number of shares of Registrable Stock requested to be registered);
(ii) second, all Registrable Stock requested to be included in such
registration by any other Holder (allocated, if necessary for the offering
not to exceed the Maximum Offering Size, pro rata among such other Holders
on the basis of the relative number of shares of Registrable Stock
requested to be included in such registration); and
(iii) third, any Common Stock proposed to be registered by the Issuer.
(b) If a registration pursuant to Section 3.2 involves an
underwritten Public Offering (other than in the case of an underwritten
Public Offering requested by any Demand Registrant in a Demand Registration,
in which case the provisions with respect to priority of inclusion in such
offering set forth in Section 3.3(a) shall apply) and the managing
Underwriter advises the Issuer that, in its view, the number of shares of
Common Stock which the Issuer and the selling Holders intend to include in
such registration exceeds the Maximum Offering Size, the Issuer will include
in such registration, in the following priority, up to the Maximum Offering
Size:
(i) first, so much of the Common Stock proposed to be registered by
the Issuer as would not cause the offering to exceed the Maximum Offering
Size; and
(ii) second, all Registrable Stock requested to be included in such
registration statement by any Holder pursuant to Section 3.2 or otherwise
(allocated, if necessary for the offering not to exceed the Maximum
Offering Size, pro rata among such entities on the basis of the relative
number of shares of Registrable Stock requested to be so included).
SECTION 3.4 REGISTRATION PROCEDURES. Whenever the Issuer is required to
effect the registration of Registrable Securities pursuant to Section 3.1 or 3.2
hereof, the Issuer will use its best efforts to effect the registration and the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any such
Registration Request:
(a) The Issuer will as expeditiously as possible prepare and file with
the Commission a registration statement on any form for which the Issuer
then qualifies or which counsel for the Issuer shall deem appropriate and
which form shall be available for the sale of the Registrable Securities to
be registered thereunder in accordance
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with the intended method of distribution thereof, and use its best efforts
to cause such filed registration statement to become and remain effective
for a period of not less than 120 days; PROVIDED that in the case of a
Demand Registration, if the Issuer shall furnish to any Selling Holder a
certificate signed by either its Chairman, Chief Executive Officer or
President stating that in his good faith judgment it would materially
adversely affect the Issuer or its shareholders for such a registration
statement to be filed as expeditiously as possible, the Issuer shall have a
period of not more than 120 days within which to file such registration
statement measured from the date of receipt of the Registration Request in
accordance with Section 3.1.
(b) The Issuer will, if requested, prior to filing a registration
statement or prospectus or any amendment or supplement thereto, furnish to
any Selling Holder and each Underwriter, if any, drafts of such documents
proposed to be filed, and thereafter furnish to the Selling Holders and
such Underwriter, if any, such number of copies of such registration
statement, each amendment and supplement thereto (in each case including
all exhibits thereto and documents incorporated by reference therein), the
prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as any Selling Holders or
such Underwriter may reasonably request in order to facilitate the sale of
the Registrable Securities.
(c) After the filing of the registration statement, the Issuer will
promptly notify any Selling Holders of any stop order issued or threatened
by the Commission and take all reasonable actions required to prevent the
entry of such stop order or to remove it if entered.
(d) The Issuer will use its best efforts to (i) register or qualify
the Registrable Securities under such other securities or blue sky laws of
such jurisdictions in the United States as any Selling Holders reasonably
(in light of their intended plan of distribution) request and (ii) cause
such Registrable Securities to be registered with or approved by such other
governmental agencies or authorities as may be necessary by virtue of the
business and operations of the Issuer and do any and all other acts and
things that may be reasonably necessary or advisable to enable the Selling
Holders to consummate the disposition of their Registrable Securities;
PROVIDED, that the Issuer will not be required to (i) qualify generally to
do business in any jurisdiction where it would not otherwise be required to
qualify but for this paragraph (d), (ii) subject itself to taxation in any
17
such jurisdiction other than taxation arising with respect to the
registration of securities or (iii) consent to general service of process
in any such jurisdiction.
(e) At any time when a prospectus relating to the sale of Registrable
Securities is required to be delivered under the Securities Act, the Issuer
will immediately notify the Selling Holders of the occurrence of any event
requiring the preparation of a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and
promptly make available to the Selling Holders and the Underwriters any
such supplement or amendment. The Selling Holders agree that, upon receipt
of any notice from the Issuer of the happening of any event of the kind
described in the preceding sentence, the Selling Holders will forthwith
discontinue the offer and sale of Registrable Securities pursuant to the
registration statement covering such Registrable Securities until receipt
of the copies of such supplemented or amended prospectus and, if so
directed by the Issuer, the Selling Holders will deliver to the Issuer all
copies, other than permanent file copies then in the possession of the
Selling Holders, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the issuer
shall give such notice, the Issuer shall extend the period during which
such registration statement shall be maintained effective as provided in
Section 3.4(a) hereof by the number of days during the period from and
including the date of the giving of such notice to the date when the Issuer
shall make available to the Selling Holders such supplemented or amended
prospectus.
(f) The Issuer will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions as
are reasonably required in order to expedite or facilitate the disposition
of such Registrable Securities.
(g) The Issuer will make available for inspection by any Selling
Holder and any Underwriter participating in any disposition pursuant to a
registration statement being filed by the Issuer pursuant to this Article
III any attorney, accountant or other professional retained by any such
Shareholder or Underwriter (collectively, the "Inspectors"), all financial
and other records, pertinent corporate documents and properties of the
Issuer's (collectively, the "Records") as shall be reasonably requested by
any such Person, and
18
cause the Issuer's officers, directors and employees to supply all
information reasonably requested by any Inspectors in connection with such
registration statement.
(h) The Issuer will furnish to the Selling Holders and to each
Underwriter, if any, a signed counterpart, addressed to the Selling Holders
or such Underwriter, of (i) an opinion or opinions of counsel to the Issuer
and (ii) a comfort letter or comfort letters from the Issuer's independent
public accountants, each in customary form and covering such matters as are
customarily covered by opinions and comfort letters, as the Selling Holders
or the managing Underwriter therefor reasonably request.
(i) The Issuer will otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to
its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, beginning within three months
after the effective date of the registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Securities
Act.
(j) The Issuer will use its best efforts to cause all such Registrable
Securities to be listed on each securities exchange on which similar
securities issued by the Issuer are then listed.
The Issuer may require any Selling Holder, and each Selling Holder
agrees, to furnish promptly in writing to the Issuer such information regarding
such Selling Holder, the plan of distribution of the Registrable Securities and
other information as the Issuer may from time to time reasonably request or as
may be legally required in connection with such registration.
SECTION 3.5 REGISTRATION EXPENSES. Registration Expenses incurred in
connection with any registration made or requested to be made pursuant to this
Article III will be borne by the Issuer, whether or not any such registration
statement becomes effective.
SECTION 3.6 INDEMNIFICATION BY THE ISSUER. The Issuer agrees to
indemnify and hold harmless each Selling Holder, its officers, directors and
agents, and each Person, if any, who controls each such Selling Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages, liabilities and
expenses caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Securities (as amended
19
or supplemented if the Issuer shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Issuer by or on behalf of any such
Selling Holder expressly for use therein; PROVIDED that with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, or in any prospectus, as the case may be, the indemnity
agreement contained in this paragraph shall not apply to the extent that any
such loss, claim, damage, liability or expense results from the fact that a
current copy of the prospectus (or, in the case of a prospectus, the prospectus
as amended or supplemented) was not sent or given to the Person asserting any
such loss, claim, damage, liability or expense at or prior to the written
confirmation of the sale of the Registrable Stock concerned to such Person if it
is determined that the Issuer has provided such prospectus and it was the
responsibility of such Selling Holder to provide such Person with a current copy
of the prospectus (or such amended or supplemented prospectus, as the case may
be) and such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. The Issuer also agrees to indemnify
any Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 3.6.
SECTION 3.7 INDEMNIFICATION BY SELLING HOLDERS. Each Selling Holder
agrees, severally but not jointly, to indemnify and hold harmless the Issuer,
its officers, directors and agents and each Person, if any, who controls the
Issuer within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Issuer to such Selling Holder, but only with reference to information related to
such Selling Holder furnished in writing by or on behalf of such Selling Holder
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. Each Selling Holder also agrees to indemnify and hold
harmless Underwriters of the Registrable Securities, their officers and
directors and each Person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Issuer provided in this Section
3.7.
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SECTION 3.8 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 3.6 or 3.7, such Person (the "Indemnified Party") shall promptly notify
the Person against whom such indemnity may be sought (the "Indemnifying Party")
in writing and the Indemnifying Party upon request of the Indemnified Party
shall retain counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to the proceeding; PROVIDED that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent that the Indemnifying
Party is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Party shall have requested an Indemnifying Party to reimburse the Indemnified
Party for fees and expenses of counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 business days after receipt by such
Indemnifying Party of the aforesaid request and (ii) such Indemnifying Party
shall not have reimbursed the Indemnified Party in accordance with such request
prior to the date of such settlement, unless the Indemnifying Party has
21
contested such reimbursement obligation and provides reasonable assurances that
such payment can be made upon resolution of such dispute. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement (x) includes
an unconditional release of such Indemnified Party from all liability arising
out of such proceeding and (y) provides that such Indemnified Party does not
admit any fault or guilt with respect to the subject matter of such proceeding.
SECTION 3.9 CONTRIBUTION. (a) If the indemnification provided for
herein is for any reason unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) as between the Issuer and the
Selling Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Issuer and such Selling Holders on the one hand and the Underwriters on the
other from the offering of the securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits but also the relative fault of the Issuer and the
Selling Holders on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Issuer on the one hand and any Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Issuer and of such Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Issuer and the Selling Holders on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Issuer
and such Selling Holders bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the prospectus. The relative fault of the Issuer and the
Selling Holders on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuer and any Selling
Holder or by the Underwriters. The
22
relative fault of the Issuer on the one hand and any Selling Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(b) The Issuer and each Selling Holder agree that it would not be just
and equitable if contribution pursuant to this Section 3.9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public (less underwriters' discounts and commissions) exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
SECTION 3.10 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights.
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SECTION 3.11 CURRENT AND PERIODIC REPORTS. The Issuer covenants that it
will file any reports required to be filed by it under the Securities Act and
the Exchange Act. Upon the request of Limited Commerce or the WCAS Investors,
the Issuer will deliver to Limited Commerce or the WCAS Investors, a written
statement as to whether it has complied with such requirements.
SECTION 3.12 HOLDBACK AGREEMENTS. If and to the extent requested by the
Issuer, in the case of a non-underwritten public offering, and if and to the
extent requested by the managing Underwriter or Underwriters, in the case of an
underwritten public offering, the Holders agree not to effect, except as part of
such registration, any public sale or distribution of the issue being registered
or a similar security of the Issuer, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144, during the 14 days prior to, and during the 120-day period beginning
on, the effective date of such registration statement.
ARTICLE IV
CORPORATE GOVERNANCE; COVENANTS
SECTION 4.1 COMPOSITION OF THE BOARD. (a) The Issuer Board shall
consist of five members. WCAS VII shall be entitled, but not required, to
designate three members of the Issuer Board, and Limited Commerce shall be
entitled, but not required, to designate two members of the Issuer Board. Each
Holder entitled to vote for the election of directors to the Board agrees that
it will vote all of its Voting Securities or execute consents, as the case may
be, and take all other necessary action (including causing the Issuer to call a
special meeting of stockholders) in order to ensure that the composition of the
Board is as set forth in this Section 4.1(a). Notwithstanding the foregoing, if,
pursuant to the terms of the Issuer's 6 1/4% Redeemable Exchangeable Preferred
Stock (the "Preferred Stock"), the holders thereof are entitled to elect one
member of the Issuer Board, WCAS VII shall be entitled, but not required, to
expand the size of the Issuer Board to seven members (including the member
elected by the holders of the Preferred Stock) and designate one additional
member of the Issuer Board. The term of the additional member of the Issuer
Board designated by WCAS VII pursuant to the immediately preceding sentence
shall expire simultaneously with the expiration of the term of the member of the
Issuer Board designated by the holders of the Preferred Stock, and the Issuer
Board shall thereupon consist of five members as contemplated by the first two
sentences of this Section 4.1(a); PROVIDED that the right of WCAS VII to enlarge
the Issuer Board and to designate one additional member shall be reinstated in
accordance with, and
24
subject to the provisions of this Section 4.1(a), at any subsequent time at
which the holders of the Preferred Stock are entitled to elect one member of the
Issuer Board.
(b) Each Holder and the Issuer agrees that if, at any time, it is
entitled to vote for the removal of directors of the Issuer, it will not vote
any of its Voting Securities in favor of the removal of any director who shall
have been designated or nominated pursuant to Section 4.1(a) unless such removal
shall be for Cause or the Person entitled to designate or nominate such director
shall have consented to such removal in writing. Removal for "Cause" shall mean
removal of a director because of such director's (a) willful and continued
failure to substantially perform his duties with the Issuer in his established
position, (b) willful conduct which is significantly injurious to the Issuer,
monetarily or otherwise, or (c) conviction for, or a guilty plea to, a felony.
(c) If, as a result of death, disability, retirement, resignation,
removal (with or without Cause) or otherwise, there shall exist or occur any
vacancy on the Issuer Board:
(i) the Person entitled under Section 4.1(a) to designate or nominate
such director whose death, disability, retirement, resignation or removal
resulted in such vacancy may designate another individual (the "Nominee")
to fill such capacity and serve as a director of the Issuer; and
(ii) each Holder then entitled to vote for the election of the Nominee
as a director of the Issuer agrees that it will vote all of its Voting
Securities, or execute a written consent, as the case may be, in order to
ensure that the Nominee be elected to the Issuer Board.
SECTION 4.2 ACTION BY THE BOARD. A quorum of the Issuer Board shall
consist of four directors (or, at any time at which the holders of the Preferred
Stock are entitled to elect a member of the Issuer Board, five directors). All
actions of the Issuer Board shall require the affirmative vote of at least a
majority of the directors at a duly convened meeting of the Issuer Board at
which a quorum is present or the unanimous written consent of the Issuer Board;
PROVIDED that, in the event there is a vacancy on either such Board of Directors
and an individual has been nominated to fill such vacancy, the first order of
business shall be to fill such vacancy.
25
SECTION 4.3 CONSENT OF THE BOARD OF DIRECTORS.
(a) From and after January 31, 1996 through January 31, 1998, the
Issuer shall not, and shall not permit any of its Subsidiaries to, take any
action regarding any of the following matters without the affirmative vote of at
least one member of the Issuer Board designated by Limited Commerce:
(i) appointment or removal of the Chief Executive Officer (or
Person with comparable duties) of the Issuer;
(ii) the Incurrence by the Issuer or any Subsidiary of the Issuer
of Debt where, after giving effect to such Incurrence, the
Issuer would have a consolidated ratio of Debt to equity in
excess of 1.5 to 1.0 excluding securitized Debt and Debt
issued upon the exchange of Preferred Stock;
(iii) any transaction with any Affiliate of the Issuer or any
Subsidiary of the Issuer other than (A) transactions that are
at least as favorable to the Issuer or any Subsidiary of the
Issuer, as the case may be, as could have been obtained on an
arm's-length basis with a Person who is not an Affiliate of
the Issuer or any Subsidiary of the Issuer, as the case may be
(as determined in the good faith judgment of the Issuer Board)
or (B) the transactions contemplated by the Credit Card
Processing Agreement;
(iv) entry into any line of business other than the Processing
Business or a Related Business;
(v) issuance or sale of any capital stock of the Issuer or any
Subsidiary of the Issuer, whether publicly or privately, other
than, in the case of Issuer, (A) to or for the benefit of
employees of Issuer any Subsidiary of the Issuer pursuant to
stock option plans or other employee compensation or benefit
arrangements, (B) upon conversion of Convertible Securities of
the Issuer outstanding on January 31, 1996, (C) as a dividend
on or other distribution in respect of all outstanding shares
of Common Stock or (D) except as provided in clause (viii)
below, in connection with any merger, acquisition or other
business combination;
(vi) the declaration or payment, whether directly or indirectly, of
any dividend or any distribution on
26
its capital stock or to the holders of its capital stock that
would impair the capital of the Issuer or any Subsidiary of
the Issuer; or
(vii) the purchase or other acquisition (by merger, business
combination or otherwise) of assets with a fair market value
in excess of $10,000,000, except for any such purchase or
acquisition the consideration for which is being funded out of
the Remaining Capital Commitments (as defined in Section 4.8)
of the WCAS Investors and Limited Commerce.
(b) From and after the date hereof, the Issuer will not, and will not
permit any of its Subsidiaries to, take any action regarding any of the
following matters without the affirmative vote of at least one member of the
Issuer Board designated by Limited Commerce:
(i) any consolidation, combination or merger of the Issuer with or
into any other Person, other than any such consolidation,
combination or merger if, after the consummation thereof, the
WCAS Investors (taken as a group) constitute the largest
stockholder of the surviving entity and designees of the WCAS
Investors constitute a majority of the Board of Directors (or
similar governing body of such surviving entity);
(ii) the sale, assignment, transfer or lease of all or
substantially all of the assets of the Issuer;
(iii) the dissolution of the Issuer; or
(iv) the voluntary bankruptcy of the Issuer or any Subsidiary of
the Issuer.
(c) Unless earlier terminated in accordance with the terms of this
Agreement, the rights granted to Limited Commerce pursuant to Sections 4.1, 4.2
and 4.3 shall terminate at such time as Limited Commerce (i) shall have sold to
Persons other than Permitted Transferees at least 50% of the shares of Common
Stock owned by it as of the date hereof or (ii) Limited Commerce and its
Permitted Transferees (taken as a group) shall own less than 5% of the Common
Stock outstanding; provided that the requirement that at least one member of the
Issuer Board designated by Limited Commerce vote in favor of any matter referred
to in Section 4.3(b)(i) before the Issuer or any of its Subsidiaries may take
any action with respect to such matter shall terminate on January 31, 2000.
27
SECTION 4.4 CHARTER AND BYLAWS. (a) The Issuer's Certificate of
Incorporation and Bylaws, each in the form in which it is in effect on the date
hereof (the "Charter Documents"), are attached as Exhibits A and B hereto.
(b) The Issuer agrees not to amend, or permit the amendment of, the
Charter Documents or the Certificate of Incorporation or Bylaws of any
Subsidiary of the Issuer in a way that would be material and adverse to the
rights of the Holders hereunder without the written consent of the Holders
holding at least 66 2/3% of the Common Stock then outstanding.
SECTION 4.5 INFORMATION. (a) For so long as Limited Commerce and its
Permitted Transferees (taken as a group), or the WCAS Investors and their
Permitted Transferees (taken as a group) own at least 5% of the Common Stock
then outstanding, the Issuer shall deliver to Limited Commerce and/or the WCAS
Investors, as the case may be, the following information:
(i) as promptly as practicable but not later than 90 days after the
end of the Issuer's fiscal year, audited financial statements for such
fiscal year;
(ii) as promptly a practicable but not later than 30 days after the
end of each quarter, the Issuer's unaudited financial statements for such
month; and
(iii) from time to time such additional information regarding the
financial position or business of the Issuer and its Subsidiaries as
Limited Commerce or the WCAS Investors may reasonably request.
(b) The Issuer agrees to provide all members of the Issuer Board with
unaudited financial statements for each fiscal month of the Issuer within 30
days after the end of such month.
(c) Limited Commerce and the WCAS Investors agree that they will keep
all confidential information received by them in strictest confidence and will
limit the dissemination of such information to those persons who reasonable
require access to such information; PROVIDED that Limited Commerce and the WCAS
Investors may disseminate such information without restriction to the extent
required to satisfy the safe harbor provided by Rule 144(c) (2) in conjunction
with Rule 15c2-11(a) (5) (i)-(xiv) and (xvi) under the Exchange Act. The term
"confidential information" does not include (i) any information that is or
becomes publicly available through no fault of Limited Commerce and the WCAS
Investors, (ii) information that is in or comes into the possession of Limited
Commerce and the WCAS Investors on a nonconfidential basis from a person other
than the Issuer or any
28
of its Affiliates and (iii) any information that is required to be disclosed by
Limited Commerce and the WCAS Investors under compulsion of law.
SECTION 4.6 NON-SOLICITATION. For so long as Limited Commerce and its
Permitted Transferees (taken as a group) own at least 5% of the outstanding
Common Stock, none of the WCAS Investor or any Affiliate of any WCAS Investor
shall, without the prior written approval of Limited Commerce, directly or
indirectly solicit any Person who is an employee of the Issuer or any Affiliate
of the Issuer at any time on or after the date of this Agreement to terminate
his or her relationship with the Issuer or any Affiliate of the Issuer; PROVIDED
that the foregoing shall not apply to persons hired as a result of the use of an
independent employment agency (so long as the agency was not directed to solicit
such person) or as a result of the use of a general solicitation (such as an
advertisement) not specifically directed to employees of the Issuer or any
Affiliate of the Issuer; PROVIDED, FURTHER, that the provisions of this Section
4.6 (i) shall not apply to the activities of officers or employees of companies
in which any WCAS Investor has invested in the ordinary course of business and
(ii) shall not prohibit any WCAS Investor from assisting any such officer or
employee in evaluating the qualifications of any employee contacted without the
intervention of such WCAS Investor.
SECTION 4.7 PROTECTION OF THE BUSINESS; INVESTMENT OPPORTUNITIES. (a)
WCAS VII hereby covenants and agrees that neither WCAS VII nor any Affiliate of
WCAS VII shall, directly or indirectly, invest in any Processing Business other
than the Issuer; PROVIDED that this Section 4.7(a) shall not (i) apply to
investments by WCAS VII or any of its Affiliates in securities of another entity
which constitute, in the aggregate, less than 5% of the outstanding shares of
such entity entitled to vote generally in the election of directors or similar
persons, (ii) apply to any Transferee of WCAS VII where the relevant Transfer is
effected in accordance with the terms of this Agreement, (iii) prohibit WCAS VII
or any Affiliate of WCAS VII from investing in any Person engaged in the
Processing Business where such Processing Business is ancillary to another
existing business of such WCAS Investor or any such Affiliate, as the case
maybe, and constitutes less than 10% of the total gross revenues of such
business and (iv) prohibit WCAS VII or any Affiliates of WCAS VII from investing
in any Person engaged in the Processing Business where Limited Commerce has
blocked the acquisition of such Processing Business by the Issuer or any
Subsidiary of the Issuer in accordance with the exercise of Limited Commerce's
rights under Section 4.3(a).
29
(b) WCAS VII agrees to present to the Issuer Board investment
opportunities in the Processing Business or any Related Business that come to
the attention of WCAS VII or any Affiliate of WCAS VII for the purpose of
allowing the Issuer Board to consider pursuing those opportunities it considers
appropriate.
(c) Notwithstanding any provisions of this Section 4.7 to the contrary,
the provisions of this Section 4.7(i) shall not restrict the investment
activities of any Existing Portfolio Company and (ii) shall not apply to
investment opportunities in the healthcare industry. For purposes of the
foregoing, an "Existing Portfolio Company" shall mean any Person in which WCAS
VII or any other investment fund managed by Welsh, Carson, Xxxxxxxx & Xxxxx or
any of its Affiliates shall have made an investment on or prior to the date
hereof in the ordinary course of such fund's business.
(d) Unless earlier terminated in accordance with the terms hereof, the
provisions of this Section 4.7 shall terminate on the earliest to occur of (i)
the date on which Limited Commerce and its Permitted Transferees shall own less
than 5% of the Common Stock outstanding, (ii) the date on which Limited Commerce
shall have sold to Persons other than Permitted Transferees at least 50% of the
shares of Common Stock owned by it as of the date hereof and (iii) the fourth
anniversary of the Closing Date.
SECTION 4.8 CAPITAL COMMITMENTS. The WCAS Investors and their
Permitted Transferees (as a group) and Limited Commerce and its Permitted
Transferees (as a group) shall be obligated, upon not less than 15 days'
written notice from the Issuer, to contribute an amount in cash equal to its
or their Remaining Capital Commitment to fund any acquisition approved by the
Issuer Board. For purposes of this Section 4.8, the term "Remaining Capital
Commitment" shall mean (i) in the case of the WCAS Investors and their
Permitted Transferees (as a group), an amount equal to $75 million MINUS all
amounts theretofore contributed to the Issuer pursuant to this Section 4.8 and
(ii) in the case of Limited Commerce and its Permitted Transferees, $50
million MINUS all amounts theretofore contributed to the Issuer pursuant to
this Section 4.8. It is hereby acknowledged and agreed that, as of the date
of this Agreement, the WCAS Investors have heretofore contributed an
aggregate $________________ to the Issuer pursuant to this Section 4.8, and
Limited Commerce has heretofore contributed an aggregate $_______________ to
the Issuer pursuant to this Section 4.8. It is further acknowledged and
agreed that, for purposes of calculating the Remaining Capital Commitment of
any person or entity under this Section 4.8, (i) any amounts actually
contributed pursuant to Section 1.04 of the 1996 Securities Purchase
Agreement shall be deemed to constitute contribu-
30
tions pursuant to this Section 4.8 and (ii) until such time as the final amount
of any contribution pursuant to such Section 1.04 of the 1996 Securities
Purchase Agreement is determined, the maximum amounts that may be required to be
contributed by such person or entity pursuant to said Section 1.04 shall be
deemed to have heretofore been contributed to the Issuer pursuant to this
Section 4.8. Unless earlier terminated in accordance with the terms hereof, the
provisions of this Section 4.8 shall terminate on January 31, 1998.
SECTION 4.9 TERMINATION. Unless earlier terminated in accordance with
the terms hereof, the provisions of Article IV shall terminate and be of no
further force or effect upon the consummation of a Qualified Public Offering.
ARTICLE V
MISCELLANEOUS
SECTION 5.1 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.
SECTION 5.2 NO INCONSISTENT AGREEMENTS. The Issuer is not a party to
and will not hereafter enter into any agreement with respect to its securities
which is inconsistent with, or otherwise grant rights superior to, the rights
granted to Limited Commerce under this Agreement. Each of the Issuer, Limited
Commerce and the WCAS Investors represents that it is not and agrees that it
will not become a party to any other agreement relating to the voting of Voting
Securities.
SECTION 5.3 ENTIRE AGREEMENT; AMENDMENTS; NO WAIVERS. (a) This Amended
and Restated Stockholders Agreement contains the entire agreement among the
parties hereto with respect to the subject matter hereof and supersedes (i) the
Original Agreement, (ii) the Registration Rights Agreement dated as of January
24, 1996 among BSH, the WCAS Investors party thereto and JCP Telecom Systems,
Inc. and (iii) all other prior written agreements and negotiations and oral
understandings, if any, with respect to such subject matter. This Agreement may
be amended but only in a writing signed by the Issuer, the WCAS Investors and
Limited Commerce. Any provision hereof may be waived but only in a writing
signed by the party against which such waiver is sought to be enforced.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude
31
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.
SECTION 5.4 NOTICES. Any notice, request, instruction or other document
to be given hereunder by any party hereto to another party hereto shall be in
writing (including telecopier or similar writing) and shall be given to such
party at its address, or telecopier number set forth on its signature page or,
in the case of a Transfer, to the address, or telecopier number of the party
executing the written agreement pursuant to Sections 2.1 hereof, or to such
other address as the party to whom notice is to be given may provide in a
written notice to the party giving such notice, a copy of which written notice
shall be on file with the Secretary of the Issuer. Each such notice, request or
other communication shall be effective (i) if given by telecopy, which such
telecopy is transmitted to the telex or telecopy number specified in its
signature page and the appropriate answerback or confirmation, as the case may
be, is received, (ii) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid addressed as aforesaid
or (iii) if given by any other means, when delivered at the address specified in
this Section 5.4.
SECTION 5.5 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles.
SECTION 5.6 SEVERABILITY. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 5.7 SUCCESSORS, ASSIGNS, TRANSFEREES. (a) The provisions of
this Agreement shall be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns. Neither
this Agreement nor any provision hereof shall be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and permitted assigns.
(b) This Agreement shall not be assignable or otherwise transferable by
any party hereto, except that any Person acquiring shares of Common Stock who is
required by the terms of this Agreement to become a party hereto shall execute
and deliver
32
to the Issuer an agreement to be bound (substantially in the form of Exhibit A)
by this Agreement and shall thenceforth be a "Holder", and any Holder who ceases
to beneficially own any Shares shall cease to be bound by the terms hereof
(other than Sections 3.6, 3.7, 3.8 and 3.9 and the confidentiality obligations
set forth in Section 4.4.
SECTION 5.8 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in any number of counterparts, each of which shall be an original
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party hereto
shall have received a counterpart hereof signed by the other parties hereto
and the closings under both the 1996 Securities Purchase Agreement and the
Merger Agreement shall have occurred (the "Effective Date").
SECTION 5.9 FEES AND EXPENSES. Except as otherwise set forth in the WFN
Stock Purchase Agreement, the 1996 Securities Purchase Agreement and the Merger
Agreement, all fees and expenses incurred by any party hereto in connection with
the preparation of this Agreement and the transactions contemplated hereby and
all matters related thereto shall be borne by the party incurring such fees or
expenses.
SECTION 5.10 RECAPITALIZATION, ETC. If any capital stock or other
securities are issued in respect of, or in exchange or substitution for, any
Common Stock by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Common Stock or any other change in capital
structure of the Issuer, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.
SECTION 5.11 REMEDIES. The parties hereby acknowledge that money
damages would not be adequate compensation for the damages that a party would
suffer by reason of a failure of any other party to perform any of the
obligations under this Agreement. Therefore, each party hereto agrees that
specific performance is the only appropriate remedy under this Agreement and
hereby waives the claim or defense that any other party has an adequate remedy
at law.
SECTION 5.12. JURISDICTION. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, any of the Transaction Documents may be brought against any of the parties
in the
00
Xxxxxx Xxxxxx Xxxxxxxx Xxxxx for the Southern District of New York or any
state court sitting in The City of New York, Borough of Manhattan, and each of
the parties hereby consents to the exclusive jurisdiction of such court (and of
the appropriate appellate courts) in any such suit, action or proceeding and
waives any obligation to venue laid therein. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the State of New York. Without limiting the foregoing, the parties agree
that service of process upon such party at the address referred to in Section
5.4, together with written notice of such service of such party, shall be deemed
effective service of process upon such party.
34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
WORLD FINANCIAL NETWORK HOLDING
CORPORATION
By /s/ Xxxxx X. Xxxxxxx
--------------------------------
Title:
LIMITED COMMERCE CORP.
By
------------------------------
Title:
WELSH, CARSON, XXXXXXXX & XXXXX
VII, L.P.
By: WCAS VII Partners, L.P.,
General Partner
By
------------------------------
Title: General Partner
WELSH, CARSON, XXXXXXXX & XXXXX
VI, L.P.
By: WCAS VI Partners, L.P.,
General Partner
By
------------------------------
Title: General Partner
35
WCAS INFORMATION PARTNERS, L.P.
By: WCAS INFO Partners,
General Partner
By
------------------------------
Title: General Partner
WCAS CAPITAL PARTNERS II, L.P.
By: WCAS XX XX Partners,
General Partner
By
------------------------------
Title: General Partner
WCA MANAGEMENT CORPORATION
By
------------------------------
Title:
--------------------------------
Xxxxxxx X. Xxxxx
--------------------------------
Xxxxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxx
36
--------------------------------
Xxxxxx X. Xxxx
--------------------------------
Xxxxxx X. XxXxxxxxx
--------------------------------
Xxxxx XxxXxxxx
--------------------------------
Xxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxxx X. xxXxxxxx
--------------------------------
Xxxxx Xxxxxx
37
ANNEX I
WELSH, CARSON, XXXXXXXX & XXXXX VI, L.P.
WCAS CAPITAL PARTNERS II, L.P.
WCAS INFORMATION PARTNERS, L.P.
WCA MANAGEMENT CORPORATION
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxx
Xxxxxx X. XxXxxxxxx
Xxxxx X. XxxXxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxx
Xxxxxxx X. xxXxxxxx
Xxxxx Xxxxxx
38
EXHIBIT A
FORM OF AGREEMENT TO BE BOUND
[DATE]
To the Parties to the
Stockholders Agreement
dated as of _________ __, 1996
Dear Sirs:
Reference is made to the Amended and Restated Stockholders Agreement
dated as of _________ __, 1996 (the "Stockholders Agreement"), by and among WFN
Holdings, Inc. (the "Issuer"), Limited Commerce, Inc. ("Limited Commerce"),
Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P. ("WCAS VII") and the several investors
named in Annex I of the Stockholders Agreement (collectively with WCAS VII, the
"WCAS Investors"). Capitalized terms not defined herein have the meanings
assigned to them in the Stockholders Agreement.
In consideration of the covenants and agreements contained in the
Stockholders Agreement and the transfer of the common stock, par value $.01 per
share, of the Issuer (the "Common Stock") to the undersigned by [Transferor],
the undersigned hereby confirms and agrees to be bound by all of the
provisions thereof.
[The undersigned acknowledges that it is a condition to an effective
pledge of the Common Stock under the Stockholders Agreement that the pledgee
agree, and the undersigned hereby confirms and agrees, that upon foreclosure of
such pledge, the undersigned will take the Common Stock subject to all of the
restrictions applicable to the transferor under the Stockholders Agreement.] *
----------------------
* Include in the case of a pledge.
AMENDMENT TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
AMENDMENT, dated July 24, 1998, to AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT, dated as of August 30, 1996 (the "Original Agreement"), among
Alliance Data Systems Corporation (known in the Original Agreement as World
Financial Network Holding Corporation) (the "Issuer"), Limited Commerce Corp.
("Limited Commerce"), Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P. ("WCAS VII"),
Welsh, Carson, Xxxxxxxx & Xxxxx VIII, L.P. ("WCAS VIII") and the several
investors named on Annex I hereto (collectively with WCAS VII and WCAS VIII, the
"WCAS Investors"), certain of whom were also parties to the Original Agreement
(sometimes referred to herein collectively with WCAS VII as the "Original WCAS
Investors")
WHEREAS, the Original Agreement was entered into by the Issuer, Limited
Commerce and the Original WCAS Investors except for WCAS VIII (the "Original
Investors");
WHEREAS, the Issuer, WCAS VII, WCAS VIII and the remaining WCAS
Investors have entered into a Common Stock Purchase Agreement dated as of the
date hereof (the "Purchase Agreement"), whereby the WCAS Investors have agreed
to purchase an aggregate 90,909,091 shares of Common Stock (the "Shares"), par
value $.01 per share, of the Issuer;
WHEREAS, the Issuer and the Original Investors desire to amend the
Original Agreement to include the Shares in such agreement;
WHEREAS, each of WCAS VII and WCAS VIII, pursuant to their respective
partnership agreements, has agreed to use its reasonable best efforts to conduct
its affairs and activities in such a manner so that it will qualify as a
"venture capital operating company" within the meaning of the United States
Department of Labor's "plan asset" regulations (29 C.F.R Section 2510.3-101)
and the rules and regulations of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and in connection with said qualification,
each of WCAS VII and WCAS VIII desires to obtain directly such management
rights (which may be exercised by WCAS VII or WCAS VIII, as the case may be,
solely for its own benefit and own account) as are sufficient to permit each
of WCAS VII and WCAS VIII to qualify as a "venture capital operating company"
with respect to its investment in the Issuer; and
WHEREAS, the parties hereto desire to provide such management rights to
WCAS VII and WCAS VIII;
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein
without definition shall have the meanings ascribed to them in
the Original Agreement.
SECTION 2. THE SHARES. The Shares to be purchased by WCAS VII and WCAS
VIII pursuant to the Stock Purchase Agreement shall for all purposes be deemed
"Common Stock" and "Registrable Securities" under the Original Agreement.
SECTION 3. AMENDMENT OF SECTION 4.1 OF THE ORIGINAL AGREEMENT. Section
4.1 of the Original Agreement is hereby amended in its entirety to read as
follows:
"SECTION 4.1 COMPOSITION OF THE BOARD. (a) The Issuer Board shall
consist of five members. WCAS VII shall be entitled, but not required,
to designate two members of the Issuer Board, WCAS VIII shall be
entitled, but not required, to designate one member of the Issuer
Board, and Limited Commerce shall be entitled, but not required, to
designate two members of the Issuer Board. The right to designate a
member or members of the Issuer Board shall belong solely to, and shall
be exercised exclusively by, the respective Holder to whom such right
has been granted herein for its own benefit and account. Each Holder
entitled to vote for the election of directors to the Board agrees that
it will vote all of its Voting Securities or execute consents, as the
case may be, and take all other necessary action (including causing the
Issuer to call a special meeting of stockholders) in order to ensure
that the composition of the Board is as set forth in this Section
4.1(a). Notwithstanding the foregoing, if, pursuant to the terms of the
Issuer's 6 1/4% Redeemable Exchangeable Preferred Stock (the "Preferred
Stock"), the holders thereof are entitled to elect one member of the
Issuer Board, WCAS VII shall be entitled, but not required, to expand
the size of the Issuer Board to seven members (including the member
elected by the holders of the Preferred Stock) and designate one
additional member of the Issuer Board. The term of the additional
member of the Issuer Board designated by WCAS VII pursuant to the
immediately preceding sentence shall expire simultaneously with the
expiration of the
term of the member of the Issuer Board designated by the holders of the
Preferred Stock, and the Issuer Board shall thereupon consist of five
members as contemplated by the first two sentences of this Section
4.1(a); PROVIDED that the right of WCAS VII to enlarge the Issuer Board
and to designate one additional member shall be reinstated in
accordance with, and subject to the provisions of this Section 4.1(a),
at any subsequent time at which the holders of the Preferred Stock are
entitled to elect one member of the Issuer Board.
"(b) Each director designated pursuant to Section 4.1(a) shall have the
right to serve as a member of any and all committees of the Issuer
Board. The appointment and removal of a designated director shall be by
written notice from the designating stockholder to the Issuer, and
shall take effect upon the delivery of written notice thereof at the
Issuer's principal office or at any meeting of the Issuer Board.
"(c) Each of WCAS VII and WCAS VIII shall have the right to appoint a
representative to attend as an observer (i) each and every meeting of
the Issuer Board and each subsidiary thereof and (ii) each and every
meeting of any committee of any such board. The appointment and removal
of such representatives shall be by written notice from WCAS VII or
WCAS VIII, as the case may be, to the Issuer and shall take effect upon
the delivery of written notice thereof to the Issuer at its principal
office or at any meeting of the Issuer Board.
"(d) In addition to the rights et forth in Section 4.5 hereto, each of
WCAS VII and WCAS VIII shall have the right to receive, within a
reasonable time after its written request therefor, any information
relating to the Issuer or any subsidiary thereof as WCAS VII or WCAS
VIII in its respective sole discretion reasonably deems appropriate,
including without limitation: (i) financial information and statements,
including balance sheets and profit and loss and cash flow statements
of the Issuer and its subsidiaries; (ii) on an annual basis or, if so
requested, more frequently, budgets and cash flow forecasts and
projections of the Issuer and its subsidiaries; and (iii) such
additional financial or other information as WCAS VII or WCAS VIII may
reasonably request. Each of WCAS VII and WCAS VIII shall be entitled,
at all reasonable times, to have
access to the premises, books and records of the Issuer and its
subsidiaries.
"(e) Each of WCAS VII and WCAS VIII shall have the right to meet on a
regular basis with the management personnel of the Issuer and its
subsidiaries from time to time and upon reasonable notice for the
purpose of consulting with, rendering advice, recommendations and
assistance to, and influencing, the management of such companies or
obtaining information regarding them or their operations, activities
and prospects, and expressing its views thereon.
"(f) If United States ERISA counsel for either WCAS VII or WCAS VIII
reasonably concludes that the rights granted to WCAS VII or WCAS VIII,
as the case may be, in this agreement should be altered in order to
preserve the qualification of WCAS VII or WCAS VIII as a "venture
capital operating company," or otherwise to ensure that the assets of
WCAS VII or WCAS VIII are not considered "plan assets" for purposes of
ERISA, the Issuer agrees (and each other party hereto likewise agrees)
to amend this agreement to effect any such alteration, PROVIDED that no
such alteration would have a material adverse effect on the business
operations or prospects of the Issuer and its subsidiaries taken as a
whole.
"(g) The Issuer shall use all reasonable efforts to take such further
action as may be necessary or advisable in order to give full effect to
the rights being granted hereunder to WCAS VII and WCAS VIII.
"(h) Each Holder and the Issuer agrees that if, at any time, it is
entitled to vote for the removal of directors of the Issuer, it will
not vote any of its Voting Securities in favor of the removal of any
director who shall have been designated or nominated pursuant to
Section 4.1(a) unless such removal shall be for Cause or the Person
entitled to designate or nominate such director shall have consented to
such removal in writing. Removal for "Cause" shall mean removal of a
director because of such director's (a) willful and continued failure
to substantially perform his or her duties with the Issuer in his or
her established position, (b) willful conduct which is significantly
injurious to the Issuer, monetarily or
otherwise, or (c) conviction for, or a guilty plea to, a felony.
"(i) If, as a result of death, disability, retirement, resignation,
removal (with or without Cause) or otherwise, there shall exist or
occur any vacancy on the Issuer Board:
(i) the Person entitled under Section 4.1(a) to designate or
nominate such director whose death, disability, retirement,
resignation or removal resulted in such vacancy may designate another
individual (the "Nominee") to fill such capacity and serve as a
director of the Issuer; and
(ii) each Holder then entitled to vote for the election of the
Nominee as a director of the Issuer agrees that it will vote all of
its Voting Securities, or execute a written consent, as the case may
be, in order to ensure that the Nominee be elected to the Issuer
Board."
SECTION 4. APPLICABLE LAW. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to conflicts of law principles.
SECTION 5. ORIGINAL AGREEMENT. Except as amended or modified
pursuant to this Amendment, the terms of the Original Agreement shall remain in
full force and effect.
SECTION 6. SEVERABILITY. The invalidity or unenforceability of
any provisions of this Amendment in any jurisdiction shall not affect the
validity, legality or enforceability of the remainder of this Amendment in such
jurisdiction or the validity, legality or enforceability of this Amendment,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 7. COUNTERPARTS; EFFECTIVENESS. This Amendment may be
executed in any number of counterparts, each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first above written.
ALLIANCE DATA SYSTEMS CORPORATION
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Title:
WELSH, CARSON, XXXXXXXX & XXXXX
VIII, L.P.
By: WCAS VIII Partners, L.P.,
General Partner
By /s/ Xxxxxxx X. xxXxxxxx
------------------------------
Title: General Partner
WELSH, CARSON, XXXXXXXX & XXXXX
VII, L.P.
By: WCAS VII Partners, L.P.,
General Partner
By /s/ Xxxxxxx X. xxXxxxxx
------------------------------
Title: General Partner
WELSH, CARSON, XXXXXXXX & XXXXX
VI, L.P.
By: WCAS VI Partners, L.P.,
General Partner
By /s/ Xxxxxxx X. xxXxxxxx
-------------------------------
Title: General Partner
WCAS INFORMATION PARTNERS, L.P.
By: WCAS INFO Partners,
General Partner
By /s/ [Illegible]
-------------------------------
Title: General Partner
WCAS CAPITAL PARTNERS II, L.P.
By: WCAS XX XX Partners,
General Partner
BY /s/ Xxxxxxx X. xxXxxxxx
-------------------------------
Title: General Partner
/s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxx X. Xxxxx
---------------------------------
Xxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxx
---------------------------------
Xxxxxx X. Xxxx
/s/ Xxxxxx X. XxXxxxxxx
---------------------------------
Xxxxxx X. XxXxxxxxx
/s/ Xxxxx XxxXxxxx
---------------------------------
Xxxxx XxxXxxxx
/s/ Xxxxx X. Xxxxxx
---------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxxxx X. xxXxxxxx
---------------------------------
Xxxxxxx X. xxXxxxxx
/s/ Xxxxx Xxxxxx
---------------------------------
Xxxxx Xxxxxx
/s/ Xxxx X. Xxxxxxx
---------------------------------
Xxxx X. Xxxxxxx
LIMITED COMMERCE CORP.
By
------------------------------
Title:
/s/ Xxxxxxxx Xxxxxx
----------------------------------
Xxxxxxxx Xxxxxx
/s/ Xxxxxxxxx Xxxxxx
----------------------------------
Xxxxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
/s/ D. Xxxxx Xxxxxxx
----------------------------------
D. Xxxxx Xxxxxxx
WAIVER AND CONSENT
The undersigned, parties to that certain Amended and Restated
Stockholders Agreement, dated as of August 30, 1996 (the "Agreement"), among
Alliance Data Systems Corporation, then known as World Financial Network Holding
Corporation (the "Company"), Limited Commerce Corp. ("Limited"), Welsh, Carson,
Xxxxxxxx & Xxxxx VII, L.P. ("WCAS VII") and the Several Other WCAS Investors
Named in Annex I Thereto, do hereby waive certain rights granted to them in
Section 2.6 of the Agreement as such rights relate to the transactions
contemplated by that certain Securities Purchase Agreement for the purchase of
(i) an aggregate of 5,900,000 shares of the Company's Common Stock and (ii) the
Company's 10% Subordinated Note in the principal amount of $52,000,000 by WCAS
Capital Partners III, L.P.
Dated: September , 1998
LIMITED COMMERCE CORP.
By: /s/ [ILLEGIBLE]
------------------------
Title:
AMENDMENT TO AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT
AMENDMENT TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated as of
August 31, 1998 (the "Amendment"), amending the Amended and Restated
Stockholders Agreement dated as of August 30, 1996, as amended (as so
amended, the "Original Agreement"), among Alliance Data Systems Corporation
(known in the Original Agreement as World Financial Network Holding
Corporation) (the "Issuer"), Limited Commerce Corp. ("Limited Commerce"),
WCAS Capital Partners II, L.P. ("WCAS XX XX"), Welsh, Carson, Xxxxxxxx &
Xxxxx VII, L.P. ("WCAS VII"), and the several other investors named as
parties thereto (collectively with Limited Commerce, WCAS XX XX and WCAS VII,
the "Investors"), certain of whom were also parties to the Original Agreement.
WHEREAS, the Issuer, Limited Commerce, WCAS XX XX and WCAS VII have
entered into an Amendment to Securities Purchase Agreement dated as of the
date hereof (the "Amendment to Securities Agreement") pursuant to which,
among other things, the Issuer has agreed to issue and deliver to WCAS XX XX
and Limited Commerce an aggregate 454,545 shares of Common Stock (the "Common
Shares"), par value $.01 per share, of the Issuer in consideration of the
agreement by WCAS XX XX and Limited Commerce to change the maturity of the
10% Subordinated Notes due January 24, 2002 of the Company held by WCAS XX XX
and Limited Commerce Corp. from January 24, 2002 to October 25, 2005; and
WHEREAS, the Issuer and the Investors desire to amend the Original
Agreement to include the Common Shares in such agreement;
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. AMENDMENT TO ORIGINAL AGREEMENT. The Common Shares to be
acquired by WCAS XX XX and Limited Commerce pursuant to the Amendment to
Securities Agreement shall for all purposes be deemed "Common Stock" and
"Registrable Securities" under the Original Agreement.
SECTION 2. CONSENT. Each of the Investors hereby consents to the
issuance of the Common Shares to WCAS XX XX and Limited Commerce and hereby
waives any preemptive right or other right it may have to purchase,
participate in or otherwise acquire any such shares of Common Stock.
SECTION 3. APPLICABLE LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles.
SECTION 4. ORIGINAL AGREEMENT. Except as amended or modified
pursuant to this Amendment, the terms of the Original Agreement shall remain in
full force and effect.
SECTION 5. SEVERABILITY. The invalidity or unenforceability of any
provisions of this Amendment in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Amendment in such
jurisdiction or the validity, legality or enforceability of this Amendment,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 6. COUNTERPARTS: EFFECTIVENESS. This Amendment may
be executed in any number of counterparts, each of which shall be
an original with the same effect as if the signatures thereto and
hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
ALLIANCE DATA SYSTEMS CORPORATION
By /s/ [ILLEGIBLE]
--------------------------------
LIMITED COMMERCE CORP.
By /s/ [ILLEGIBLE]
--------------------------------
WELSH, CARSON, XXXXXXXX & XXXXX
VIII, L.P.
By WCAS VIII Associates LLC,
General Partner
By /s/ Xxxxx XxxXxxxx
--------------------------------
General Partner
WELSH, CARSON, XXXXXXXX & XXXXX
VII, L.P.
By WCAS VII Partners, L.P.,
General Partner
By /s/ Xxxxx XxxXxxxx
--------------------------------
General Partner
WELSH, CARSON, XXXXXXXX & XXXXX VI,
L.P.
By WCAS VI Partners, L.P.,
General Partner
By /s/ Xxxxx XxxXxxxx
--------------------------------
General Partner
3
WCAS CAPITAL PARTNERS II, L.P.
By WCAS XX XX Partners, General
Partner
By /s/ Xxxxx XxxXxxxx
--------------------------------
General Partner
WCAS INFORMATION PARTNERS, L.P.
By: WCAS INFO Partners, General
Partner
By /s/ Xxxxx XxxXxxxx
--------------------------------
General Partner
Attorney-in-Fact
XXXXXXX X. XXXXX
XXXXXXX X. XXXXXX
XXXXX X. XXXXXXXX
XXXXXXX X. XXXXX
XXXXXX X. XXXX
XXXXXX X. XXXXXXXXX
XXXXX X. XXXXXX
By /s/ Xxxxx XxxXxxxx
--------------------------------
Xxxxx XxxXxxxx, Attorney-in-Fact
/s/ Xxxxx XxxXxxxx
--------------------------------
Xxxxx XxxXxxxx
/s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Xxxxxx X. Xxxxxxxxx
4
/s/ Xxxxxxx X. xxXxxxxx
----------------------------------
Xxxxxxx X. xxXxxxxx
/s/ Xxxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx
/s/ Xxxx X. Xxxxxxx
----------------------------------
Xxxx X. Xxxxxxx
/s/ Xxxxxxxx Xxxxxx
----------------------------------
Xxxxxxxx Xxxxxx
/s/ Xxxxxxxxx Xxxxxx
----------------------------------
Xxxxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
----------------------------------
Xxxxxxx Xxxxxx
/s/ D. Xxxxx Xxxxxxx
----------------------------------
D. Xxxxx Xxxxxxx
5
AMENDMENT TO AMENDED AND
RESTATED STOCKHOLDERS AGREEMENT
AMENDMENT TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated as of
JULY 12, 1999 (this "Amendment"), amending the 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 "Original Agreement"),
among Alliance Data Systems Corporation (known in the Original Agreement as
World Financial Network Holding Corporation), a Delaware corporation (the
"Issuer"), 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 VIII"), WCAS Information Partners, L.P., a
Delaware limited partnership ("WCAS IP"), and the several other investors party
thereto (collectively, the "Investors").
WHEREAS, the Issuer, WCAS VIII, WCAS IP and the other purchasers named
on Schedule I thereto (together with WCAS VIII and WCAS IP, the "Purchasers")
have entered into a Preferred Stock Purchase Agreement, dated as of July 12,
1999, pursuant to which, among other things, the Issuer has agreed to issue and
deliver to the Purchasers an aggregate 120,000 shares of its Series A Cumulative
Convertible Preferred Stock, par value $.01 per share (the "Preferred Shares"),
which are initially convertible into shares of Common Stock, par value $.01 per
share, of the Issuer ("Common Stock); and
WHEREAS, the Issuer and the Investors desire to amend the Original
Agreement to set forth certain restrictions upon the transfer of the Preferred
Shares, include the shares of Common Stock from time to time 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.
NOW THEREFORE, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO ORIGINAL AGREEMENT. (a) All shares of Common
Stock from time to time issued upon conversion of the Preferred Shares shall for
all purposes be deemed "Common Stock" and "Registrable Securities" under the
Original Agreement.
(b) The definition of Permitted Transferee contained in the Original
Agreement is hereby amended to include on Annex I thereof each of the Purchasers
(to the extent not already
included on said Annex).
SECTION 2. CONSENTS. Each of the Investors hereby consents to (i) the
issuance of the Preferred Shares (and the shares of Common Stock issuable upon
conversion thereof) and hereby waives any preemptive right or other right it may
have to purchase, participate in or otherwise acquire any such shares and (ii)
the amendment and restatement of the Certificate of Incorporation of the Issuer
in the form attached hereto as Annex A.
SECTION 3. RESTRICTIONS ON TRANSFER. (a) Each Purchaser signatory
hereto agrees to be bound, with respect to the transfer of his, her or its
Preferred Shares, by the transfer restrictions set forth in Sections 2.1(a),
2.1(b)(ii), 2.1(c)(ii), 2.1(f), 2.3, 2.5 and 2.7 of the Original Agreement (in
each case substituting the words "Series A Cumulative Convertible Preferred
Stock of the Issuer" for references to "Common Stock" appearing in said
sections).
(b) For so long as the Preferred Shares continue to be subject to the
transfer restrictions set forth in (a) above, each certificate evidencing
Preferred Shares shall include a legend substantially in the following form:
"THE SHARES REPRESENTED BY THIS SECURITY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
EXCEPT IN COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS
SECURITY ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS
SET FORTH IN THE AMENDMENT, DATED AS OF JULY 12, 1999, TO THE
AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF AUGUST
30, 1996, A COPY OF WHICH MAY BE OBTAINED FROM ALLIANCE DATA
SYSTEMS CORPORATION."
SECTION 4. APPLICABLE LAW. This Amendment shall be governed
by and construed in accordance with the laws of the State of New
York, without regard to conflicts of law principles.
SECTION 5. ORIGINAL AGREEMENT. Except as amended or modified
pursuant to this Amendment, the terms of the Original Agreement
shall remain in full force and effect.
SECTION 6. SEVERABILITY. The invalidity or unenforceability of any
provisions of this Amendment in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Amendment in such
jurisdiction or the validity, legality or enforceability of this Amendment,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.
SECTION 7. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any number of counterparts, each of which shall be an original with the same
effect as if the
signatures thereto and hereto were upon the same instrument.
[signature pages follow]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.
ALLIANCE DATA SYSTEMS CORPORATION
By [Illegible]
------------------------------
LIMITED COMMERCE CORP.
By [Illegible]
------------------------------
WELSH, CARSON, XXXXXXXX & XXXXX
VIII, L.P.
By WCAS VIII Associates LLC,
General Partner
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
Managing Member
WELSH, CARSON, XXXXXXXX & XXXXX
VII, L.P.
By WCAS VII Partners, L.P., General
Partner
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
General Partner
WELSH, CARSON, XXXXXXXX & XXXXX VI,
L.P.
By WCAS VI Partners, L.P., General
Partner
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
General Partner
WCAS CAPITAL PARTNERS III, L.P.
By WCAS CP III Associates, L.L.C.,
General Partner
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
General Partner
WCAS CAPITAL PARTNERS III, L.P.
By WCAS XX XX Associates, L.L.C.,
General Partner
By /s/ Xxxxxx X. Xxxxxxxxx
------------------------------
General Partner
WCAS INFORMATION PARTNERS, L.P.
By: WCAS INFO Partners,
General Partner
By /s/ Xxxxxx X. XxXxxxxxx
------------------------------
General Partner
