20,000,000 SHARES OF COMMON STOCK
ALLIANCE DATA SYSTEMS CORPORATION
UNDERWRITING AGREEMENT
June __, 2000
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
as Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Alliance Data Systems Corporation, a corporation organized
and existing under the laws of the State of Delaware (the "COMPANY"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the several underwriters named in Schedule I hereto (the "UNDERWRITERS") an
aggregate of 20,000,000 shares (the "FIRM SHARES") of its common stock, par
value $0.01 per share (the "COMMON STOCK") and, for the sole purpose of
covering over-allotments in connection with the sale of the Firm Shares, at
the option of the Underwriters, up to an additional 3,000,000 shares (the
"ADDITIONAL SHARES") of Common Stock. The Firm Shares and any Additional
Shares purchased by the Underwriters are referred to herein as the "SHARES".
The Shares are more fully described in the Registration Statement referred to
below.
The Company and the Underwriters agree that up to 1,000,000
shares of the Securities to be purchased by the Underwriters (the "RESERVED
SHARES") shall be reserved for sale by ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇")
to certain eligible employees and persons having business relationships with
the Company, as part of the distribution of the Shares by the Underwriters,
subject to the terms of this Agreement, the applicable rules, regulations and
interpretations of the National Association of Securities Dealers, Inc. (the
"NASD") and all other applicable laws, rules and regulations. To the extent
that such Reserved Shares are not orally confirmed for purchase by such
eligible employees and persons having business relationships
with the Company by the end of the first business day after the date of this
Agreement, such Reserved Shares may be offered to the public as part of the
public offering contemplated hereby.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to, and agrees with, each of the Underwriters
that:
(a) The Company has filed with the Securities and
Exchange Commission (the "COMMISSION") a registration statement, and may have
filed an amendment or amendments thereto, on Form S-1 (No. 333-94623), for the
registration of the Shares under the Securities Act of 1933, as amended (the
"ACT"). Such registration statement, including the prospectus, financial
statements and schedules, exhibits and all other documents filed as a part
thereof, as amended at the time of effectiveness of the registration
statement, including any information deemed to be a part thereof as of the
time of effectiveness pursuant to paragraph (b) of Rule 430A or Rule 434 of
the Rules and Regulations of the Commission under the Act (the "REGULATIONS"),
and any additional registration statement increasing the size of the offering
filed pursuant to Rule 462(b) of the Regulations with respect to the Shares
("462(b) REGISTRATION STATEMENT"), is herein called the "REGISTRATION
STATEMENT," and the prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Regulations or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b) or Rule
434 filing is required, is herein called the "PROSPECTUS." The term
"PRELIMINARY PROSPECTUS" as used herein means a preliminary prospectus as
described in Rule 430 of the Regulations.
(b) At the time of the effectiveness of the Registration
Statement or any 462(b) Registration Statement or the effectiveness of any
post-effective amendment to the Registration Statement, when the Prospectus is
first filed with the Commission pursuant to Rule 424(b) or Rule 434 of the
Regulations, when any supplement to or amendment of the Prospectus is filed
with the Commission and at the Closing Date and the Additional Closing Date,
if any (as hereinafter respectively defined), the Registration Statement, any
462(b) Registration Statement and the Prospectus and any amendments thereof
and supplements thereto complied or will comply in all material respects with
the applicable provisions of the Act and the Regulations and do not or will
not contain an untrue statement of a material fact and do not or will not omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein (i) in the case of the Registration Statement,
not misleading and (ii) in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading, and the Prospectus,
any preliminary prospectus and any supplement thereto or prospectus wrapper
prepared in connection therewith, at their respective times of issuance and at
the Closing Date, complied and will comply in all material respects with any
applicable laws or regulations of foreign jurisdictions in which the
Prospectus and such preliminary prospectus, as amended or supplemented, if
applicable, are distributed in connection with the offer and sale of Reserved
Shares. When any related preliminary prospectus was first filed with the
Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
of the Regulations) and when any amendment thereof or supplement thereto was
first filed with the Commission, such preliminary prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Act and the Regulations and did not
contain an untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein in light of the circumstances under which they were made
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not misleading. No representation and warranty is made in this subsection (b),
however, with respect to any information contained in or omitted from the
Registration Statement or the Prospectus or any related preliminary prospectus
or any amendment thereof or supplement thereto in reliance upon and in
conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through you as herein stated expressly for use in
connection with the preparation thereof. If Rule 434 is used, the Company will
comply with the requirements of Rule 434.
(c) Deloitte & Touche LLP, who have certified the
financial statements and supporting schedules included in the Registration
Statement, are independent public accountants as required by the Act and the
Regulations.
(d) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, except as disclosed or
specifically contemplated therein, there has been no material adverse change
or any development involving a prospective material adverse change in the
business, properties, operations, condition (financial or other) or results of
operations of the Company and its subsidiaries taken as a whole, whether or
not arising from transactions in the ordinary course of business (a "MATERIAL
ADVERSE EFFECT"), and since the date of the latest balance sheet presented in
the Registration Statement and the Prospectus, neither the Company nor any of
its subsidiaries has incurred or undertaken any liabilities or obligations,
direct or contingent, which are material to the Company and its subsidiaries
taken as a whole, except for liabilities or obligations which are reflected in
the Registration Statement and the Prospectus.
(e) This Agreement and the transactions contemplated
herein have been duly and validly authorized by the Company and this Agreement
has been duly and validly executed and delivered by the Company and
constitutes the valid and binding agreement of the Company, enforceable
against it in accordance with its terms, subject to any bankruptcy or other
law affecting the enforcement of creditors rights generally and any general
principles of equity.
(f) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby do not
and will not (i) conflict with or result in a breach of any of the terms and
provisions of, or constitute a default (or an event which with notice or lapse
of time, or both, would constitute a default) under, or result in the creation
or imposition of any lien, charge or encumbrance upon any property or assets
of the Company or any of its subsidiaries pursuant to, any indenture,
mortgage, deed of trust, agreement, instrument, franchise, license or permit
to which the Company or any of its subsidiaries is a party or by which any of
such corporations or their respective properties or assets may be bound and
which is material to the business of the Company or its subsidiaries or (ii)
violate or conflict with any provision of the certificate of incorporation,
bylaws or other organizational documents of the Company or any of its
subsidiaries or any judgment, decree, order, statute, rule or regulation of
any court or any public, governmental or regulatory agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
respective properties, assets or businesses. No consent, approval,
authorization, order, registration, filing, qualification, license or permit
of or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties, assets or businesses is required for the
execution, delivery and performance of this Agreement or the consummation
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of the transactions contemplated hereby, including the issuance, sale and
delivery of the Shares to be issued, sold and delivered by the Company
hereunder, except (A) the registration under the Act of the Shares, (B) such
consents, approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters, (C) such as have been obtained under the laws and
regulations of jurisdictions outside the United States in which the Reserved
Shares are offered and (D) those which have been duly obtained at or prior to
the Closing Date.
(g) None of the Company or its subsidiaries is in
violation or default of any provision of its certificate of incorporation or
bylaws, or other organizational documents, and is not in breach of or default
with respect to any provision of any agreement, judgment, decree, order,
mortgage, deed of trust, lease, franchise, license, indenture, permit or other
instrument to which it is a party or by which it or any of its properties are
bound except as would not reasonably be expected to result in a Material
Adverse Effect; and there does not exist any state of facts which constitutes
an event of default on the part of the Company or its subsidiaries nor, to the
Company's knowledge, any other party as defined in such documents or which,
with notice or lapse of time or both, would constitute such an event of
default except as would not reasonably be expected to result in a Material
Adverse Effect.
(h) All of the outstanding shares of Common Stock are
duly and validly authorized and issued, fully paid and nonassessable, were
issued in compliance with federal and state securities laws and the Delaware
General Corporation Law and were not issued and are not now in violation of or
subject to any preemptive rights. The Shares, when issued, delivered and sold
in accordance with this Agreement, will be duly and validly issued and
outstanding, fully paid and nonassessable, and will not have been issued in
violation of or be subject to any preemptive rights. The Company had, as of
December 31, 1999, an authorized and outstanding capitalization as set forth
in the Registration Statement and the Prospectus. The Common Stock, the Firm
Shares and the Additional Shares conform to the descriptions thereof contained
in the Registration Statement and the Prospectus. Except as disclosed in or
specifically contemplated by the Prospectus, the Company has no outstanding
options to purchase, or any preemptive rights or other rights to subscribe for
or to purchase, any securities or obligations convertible into, or any
contracts or commitments to issue or sell, shares of its capital stock or any
such options, rights, convertible securities or obligations. The description
of the Company's stock option and other stock plans or arrangements, and the
options or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents in all material respects the
information required to be shown with respect to such plans, arrangements,
options and rights.
(i) Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in good standing under
the laws of its jurisdiction of incorporation. Each of the Company and its
subsidiaries is duly qualified and in good standing as a foreign corporation
in each jurisdiction in which the character or location of its properties
(owned, leased or licensed) or the nature or conduct of its business makes
such qualification necessary, except for those failures to be so qualified or
in good standing which will not in the aggregate have a Material Adverse
Effect. Each of the Company and its subsidiaries has all requisite power and
authority, and all necessary consents, approvals, authorizations, orders,
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registrations, qualifications, licenses and permits of and from all public,
regulatory or governmental agencies and bodies, to own, lease and operate its
properties and conduct its business as now being conducted and as described in
the Registration Statement and the Prospectus, and no such consent, approval,
authorization, order, registration, qualification, license or permit contains
a materially burdensome restriction not disclosed as required by the Act or
the Regulations in the Registration Statement and the Prospectus; and, to the
knowledge of the Company, the Company has not received any notice of a
proceeding instituted in any jurisdiction revoking, limiting or curtailing, or
seeking to revoke, limit or curtail, such power and authority or qualification
which, either singly or in the aggregate, could have a Material Adverse
Effect. Other than its ownership of all of the outstanding capital stock or
other equity interests of each of the entities set forth on Schedule II
hereto, the Company does not own or control, either directly or indirectly,
any corporation, partnership, limited liability company, association or other
entity.
(j) Except as described in the Prospectus, there is no
litigation or governmental proceeding to which the Company or any of its
subsidiaries is a party or to which any property of the Company or any of its
subsidiaries is subject or which is pending or, to the knowledge of the
Company, threatened against the Company or any of its subsidiaries which might
result in a Material Adverse Effect or which is required to be disclosed in
the Registration Statement and the Prospectus. There are no statutes or
regulations that are required to be described in the Registration Statement or
Prospectus that are not described as required by the Act or the Regulations.
There are no contracts or other documents required to be described in the
Registration Statement or to be filed as exhibits to the Registration
Statement which have not been described or filed as required by the Act or the
Regulations. The contracts so described in the Prospectus are in full force
and effect on the date hereof.
(k) The Company has not taken and will not take, directly
or indirectly, any action designed to cause or result in, or which constitutes
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares.
(l) The consolidated financial statements, including the
notes thereto, and supporting schedules included in the Registration Statement
and the Prospectus present fairly the consolidated financial position of the
Company and its subsidiaries as of the dates indicated and the results of
their operations for the periods specified; except as otherwise stated in the
Registration Statement, said financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved except as may be expressly
stated in the related notes thereto; and the supporting schedules included in
the Registration Statement, if any, present fairly the information required to
be stated therein. Pro forma financial information included in the Prospectus
under the captions "Summary Unaudited Calendar Year and Pro Forma Consolidated
Financial and Operating Information" and "Unaudited Pro Forma Consolidated
Financial Information" has been prepared in accordance with the applicable
requirements of Rules 11-01 and 11-02 of Regulation S-X under the Act, and the
necessary pro forma adjustments have been properly applied to the historical
amounts in the compilation of such information, and, in the opinion of the
Company, the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the
transactions and circumstances referred to
5
therein. Except as included in the Registration Statement, no other financial
statements or schedules are required by Form S-1 to be included in the
Registration Statement.
(m) Except as described in the Prospectus, no holder of
securities of the Company has any rights to the registration of securities of
the Company because of the filing of the Registration Statement or otherwise
in connection with the sale of the Shares contemplated hereby. All holders of
any such rights to the registration of securities of the Company have duly and
validly waived all such rights in writing prior to the date hereof.
(n) None of the Company or any of its subsidiaries is,
and upon consummation of the transactions contemplated hereby none of such
entities will be, subject to registration as an "investment company" under the
Investment Company Act of 1940, as amended.
(o) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (iii) access
to assets is permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(p) Each of the Company and its subsidiaries has good and
marketable title to all the properties and assets reflected as owned by them
in the financial statements hereinabove described (or elsewhere in the
Prospectus), subject to no lien, mortgage, pledge, charge or encumbrance of
any kind except (i) those, if any, reflected in such financial statements (or
elsewhere in the Prospectus) or (ii) those which would not have a Material
Adverse Effect. Each of the Company and its subsidiaries holds its leased
properties under valid and binding leases, with such exceptions as would not
have a Material Adverse Effect. Except as disclosed in the Prospectus, the
Company and its subsidiaries own or lease all such properties as are necessary
to their operations as now conducted or as proposed to be conducted.
(q) Since the respective dates as of which information is
given in the Registration Statement and Prospectus, except as disclosed or
specifically contemplated therein, (i) neither the Company nor any of its
subsidiaries has entered into any material agreement or other transaction
which is not in the ordinary course of business; (ii) the Company has not
purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital stock;
(iii) neither the Company nor any of its subsidiaries has sustained any
material loss or interference with its business or properties from fire,
flood, windstorm, accident or other calamity, whether or not covered by
insurance; (iv) neither the Company nor any of its subsidiaries is in default
in the payment of principal or interest on any outstanding debt obligations;
and (v) there has not been any change in the capital stock (other than upon
the sale of the Common Stock hereunder, upon the conversion of Series A
preferred stock and upon the exercise of options or warrants described in the
Registration Statement) or indebtedness material to the Company.
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(r) Except as disclosed in the Prospectus, the Company
has acquired or can acquire on commercially reasonable terms sufficient
trademarks, trade names, patent rights, copyrights, know-how (including trade
secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), licenses, approvals and governmental
authorizations related to its business as now conducted and as proposed to be
conducted; and the Company has no knowledge of any infringement by it of
trademark, trade name rights, patent rights, copyrights, licenses, trade
secret or other similar rights of others and, to the Company's knowledge,
there is no claim being made against the Company regarding trademark, trade
name, patent, copyright, license, trade secret or other infringement which
would reasonably be expected to have a Material Adverse Effect, nor is the
Company aware of any reasonable grounds for the same.
(s) Each of the Company and its subsidiaries has filed
all federal, state and local income tax returns or extensions therefor which
have been required to be filed and has paid or accrued all taxes required to
be paid and any other assessment, fine or penalty levied against it, to the
extent that any of the foregoing is due and payable, except, in all cases, for
any such tax, assessment, fine or penalty that is being contested in good
faith. The Company has no knowledge of any tax deficiency which has been or
might be asserted or threatened against the Company which would reasonably be
expected to result in a Material Adverse Effect.
(t) The Company has not distributed and will not
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares and the Reserved Shares other than the
Prospectus, the Registration Statement and correspondence in connection with
the Reserved Share program, in substantially the form as filed supplementally
by the Company with the SEC, and the other materials permitted by the Act.
(u) The Company and its subsidiaries maintain insurance
of the types and in the amounts generally deemed reasonable and customary for
their respective businesses and all other risks customarily insured against,
all of which insurance is in full force and effect. None of the Company nor
any of its subsidiaries has been refused any insurance coverage sought or
applied for; and the Company has no reason to believe that it and its
subsidiaries will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue their respective businesses.
(v) Neither the Company, any of its subsidiaries nor, to
the Company's knowledge, any of its employees or agents has at any time during
the last five years (i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution in violation of
law or (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States of
any jurisdiction thereof.
(w) No labor disturbance by the employees of the Company
or any of its subsidiaries exists or, to the knowledge of the Company, is
threatened; and the Company is not aware of any existing or threatened labor
disturbance by the employees of any of its principal suppliers, vendors or
original equipment manufacturers that would reasonably be expected to result
in a Material Adverse Effect. No collective bargaining agreement exists with
any of the
7
Company's or its subsidiaries' employees and, to the Company's knowledge, no
such agreement is imminent.
(x) The Common Stock has been approved for listing on the
New York Stock Exchange, subject to official notice of issuance.
(y) Except as set forth in the Registration Statement and
Prospectus, (i) the Company and its subsidiaries are in compliance with all
rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment
("ENVIRONMENTAL LAWS") which are applicable to their respective business, (ii)
neither the Company nor any of its subsidiaries has received notice from any
governmental authority or third party of an asserted claim under Environmental
Laws which, under Regulation S-K, is required to be disclosed in the
Registration Statement and the Prospectus, (iii) the Company and its
subsidiaries will not be required to make future material capital expenditures
to comply with Environmental Laws, (iv) no property which is owned, leased or
occupied by the Company or one of its subsidiaries has been designated as a
Superfund site pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. Section 9601,
ET SEQ.) ("CERCLA"), or otherwise designated as a contaminated site under
applicable state or local law, (v) neither the Company nor any of its
subsidiaries has disposed of any "hazardous substances" as defined by CERCLA
on any property which is or was owned, leased or occupied by the Company or
one of its subsidiaries; (vi) neither the Company nor any of its subsidiaries
has disposed or arranged for disposal of any "hazardous substances" as defined
by CERCLA on any third party property, except as would not, either singly or
in the aggregate, have a Material Adverse Effect; and (vii) neither the
Company nor any of its subsidiaries has agreed to assume, undertake or provide
indemnification for any liability of any other person under any Environmental
Law, including any obligation for cleanup or remedial action.
(z) There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
executive officers or directors of the Company or any of the members of the
families of any of them of the sort required to be disclosed in the
Registration Statement and Prospectus, except as disclosed therein. No
relationship, direct or indirect, exists between or among the Company or any
of its subsidiaries on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or its subsidiaries, on
the other hand, which is required to be described in the Prospectus which is
not so described.
(aa) The Company has not offered, or caused the
Underwriters to offer, Shares to any person pursuant to the Directed Share
Program with the specific intent to unlawfully influence (i) a customer or
supplier of the Company or its subsidiaries to alter the customer's or
supplier's level or type of business with the Company or its subsidiaries, or
(ii) a trade journalist or publication to write or publish favorable
information about the Company or its business.
(bb) Each of the Company and its subsidiaries is in
compliance in all material respects with all presently applicable provisions
of the Employee Retirement Income Security Act of 1974, as amended, including
the regulations and published interpretations thereunder ("ERISA"); no
"reportable event" (as defined in ERISA) has occurred with respect to
8
any "pension plan" (as defined in ERISA) for which the Company or any of its
subsidiaries would have any liability.
(cc) The information technology of the Company and its
subsidiaries is Year 2000 Compliant. "YEAR 2000 COMPLIANT" means, with respect
to the information technology (as defined below) of the Company and its
subsidiaries, the information technology is designed to be used prior to,
during and after the calendar year 2000, and the information technology used
during each such time period has and will continue to accurately receive,
provide and process date/time data (including, but not limited to,
calculating, comparing and sequencing) from, into and between the twentieth
and twenty-first centuries, including the years 1999 and 2000, and leap year
calculations and will not malfunction, cease to function or provide invalid or
incorrect results as a result of date/time data, to the extent that other
information technology, used in combination with the information technology
being acquired, properly exchanges date/time data with it. For purposes of
this agreement, "information technology" refers to all computer software,
computer firmware, computer hardware (whether general or specific purpose),
and other similar or related items of automated, computerized, and/or software
system(s) that are used or relied on by the Company and its subsidiaries in
the conduct of their respective businesses.
(dd) The deposit accounts and investment certificates of
World Financial Network National Bank, a wholly owned subsidiary of the
Company (the "BANK"), are duly and adequately insured by the Federal Deposit
Insurance Corporation (the "FDIC") to the full extent of FDIC insurance
limits. No charge, investigation or proceeding for the termination or
revocation of the Bank's charter, good standing or FDIC insurance is pending
or, to the best knowledge of the Company, threatened.
(ee) Neither the Company nor the Bank is subject to any
order of the Federal Reserve Board (the "FEDERAL RESERVE"), the FDIC, the
Office of the Comptroller or the Currency (the "OCC") or any state or foreign
banking departments with jurisdiction over the Bank or its operations, nor is
the Company or the Bank subject to any agreement or consent related to
compliance with banking laws and regulations with, or board resolution adopted
at the instigation of, any such regulatory authorities. The Bank has conducted
and is conducting its business so as to comply in all material respects with
all applicable federal, foreign and state laws, rules, regulations, decisions,
directives and orders of the Federal Reserve, the FDIC, the OCC and any state
or foreign banking departments with jurisdiction over the Bank or its
operations. No material charge, investigation or proceeding with respect to,
or relating to, the Bank is pending or, to the best knowledge of the Company,
threatened, by or before any regulatory, administrative or governmental
agency, body or authority.
(ff) The Bank is in compliance with all applicable
capital requirements. The Bank is "well capitalized" as defined in FDIC
regulations, with capital ratios as set forth in the Registration Statement
and the Prospectus.
(gg) Neither the Company nor any of its subsidiaries is a
"bank holding company" within the meaning of the Bank Holding Company Act of
1956, as amended.
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(hh) The credit card accounts (the "ACCOUNTS") originated
by the Bank, whether securitized by the Bank or retained as seller's interest
for the Bank's own account, have been created, maintained by the Bank and
serviced in material compliance with all applicable federal and state laws and
regulations and the standard policies and procedures of the Bank relating to
the administration of the Accounts including, but not limited to, the
solicitation, credit approval, processing, servicing, collection and other
administration and management of the Accounts, as such policies and procedures
may have been modified from time to time.
(ii) The interest rates, fees and charges in connection
with the Accounts comply in all material respects with all applicable federal
and state laws and regulations and with each agreement between the Bank and a
cardholder containing the terms and conditions of the Account.
(jj) All applications for Accounts have been conducted
and evaluated and applicants notified in a manner which is in compliance, in
all material respects, with all provisions of the Equal Credit Opportunity Act
and its implementing regulations, as amended. All disclosures made in
connection with the Accounts are and have been in compliance, in all material
respects, with the provisions of the Consumer Credit Protection Act and its
implementing regulations, as amended.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
Underwriters and the Underwriters, severally and not jointly, agree to
purchase from the Company, at a purchase price per share of $_______, the
number of Firm Shares set forth opposite the respective names of the
Underwriters in Schedule I hereto plus any additional number of Shares which
such Underwriter may become obligated to purchase pursuant to the provisions
of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Shares shall be made at the office of ▇▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or at such
other place as shall be agreed upon by Bear, ▇▇▇▇▇▇▇ & Co. Inc. ("BEAR
▇▇▇▇▇▇▇") and the Company, at 10:00 A.M. on the third or fourth business day
(as permitted under Rule 15c6-1 under the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT")) (unless postponed in accordance with the
provisions of Section 9 hereof) following the date of the effectiveness of the
Registration Statement (or, if the Company has elected to rely upon Rule 430A
of the Regulations, the third or fourth business day (as permitted under Rule
15c6-1 under the Exchange Act) after the determination of the initial public
offering price of the Shares), or such other time not later than ten business
days after such date as shall be agreed upon by Bear ▇▇▇▇▇▇▇ and the Company
(such time and date of payment and delivery being herein called the "CLOSING
DATE"). Payment shall be made to the Company by wire transfer in same day
funds, against delivery to you for the respective accounts of the Underwriters
of certificates for the Shares to be purchased by them. Certificates for the
Firm Shares shall be registered in such name or names and in such authorized
denominations as you may request in writing at least two full business days
prior to the Closing Date. The Company will permit you to examine and package
such certificates for delivery at least one full business
10
day prior to the Closing Date. If you so elect, delivery of the Firm Shares
may be made by credit through full fast transfer to the accounts at The
Depository Trust Company designated by you.
(c) In addition, the Company hereby grants to the
Underwriters the option to purchase up to 3,000,000 Additional Shares at the
same purchase price per share to be paid by the Underwriters to the Company
for the Firm Shares as set forth in this Section 2, for the sole purpose of
covering over-allotments in the sale of Firm Shares by the Underwriters. This
option may be exercised from time to time and at any time, in whole or in
part, on or before the 30th day following the date of the Prospectus, by
written notice by Bear ▇▇▇▇▇▇▇ to the Company. Such notice shall set forth the
aggregate number of Additional Shares as to which the option is being
exercised and the date and time, as reasonably determined by Bear ▇▇▇▇▇▇▇,
when the Additional Shares are to be delivered (such date and time being
herein sometimes referred to as the "ADDITIONAL CLOSING DATE"); PROVIDED,
HOWEVER, that, unless otherwise agreed to by Bear ▇▇▇▇▇▇▇ and the Company, the
Additional Closing Date shall not be earlier than the Closing Date or earlier
than the second full business day after the date on which the option shall
have been exercised nor later than the eighth full business day after the date
on which the option shall have been exercised (unless such time and date are
postponed in accordance with the provisions of Section 9 hereof). Certificates
for the Additional Shares shall be registered in such name or names and in
such authorized denominations as you may request in writing at least two full
business days prior to the Additional Closing Date. The Company will permit
you to examine and package such certificates for delivery at least one full
business day prior to the Additional Closing Date. If you so elect, delivery
of any Additional Shares may be made by credit through full fast transfer to
the accounts at The Depository Trust Company designated by you.
The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same ratio to the aggregate
number of Additional Shares being purchased as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto (or such
number increased as set forth in Section 9 hereof) bears to 20,000,000,
subject, however, to such adjustments to eliminate any fractional shares as
Bear ▇▇▇▇▇▇▇ in its sole discretion shall make.
Payment for the Additional Shares shall be made by wire
transfer in same day funds at the offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, or such other location as may be
mutually acceptable, upon delivery of the certificates for the Additional
Shares to you for the respective accounts of the Underwriters.
3. OFFERING. Upon the Company's authorization of the release
of the Firm Shares, the Underwriters propose to offer the Shares for sale to
the public upon the terms set forth in the Prospectus.
4. COVENANTS OF THE COMPANY. The Company covenants and
agrees with the Underwriters that:
(a) If the Registration Statement has not yet been
declared effective the Company will use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as possible, and if Rule 430A is used or the filing of the Prospectus
is otherwise required under Rule 424(b) or Rule 434, the Company will file the
11
Prospectus (properly completed if Rule 430A has been used) pursuant to Rule
424(b) or Rule 434 within the prescribed time period and will provide evidence
satisfactory to you of such timely filing. If the Company elects to rely on
Rule 434, the Company will prepare and file a term sheet that complies with
the requirements of Rule 434.
The Company will notify you immediately
(and, if requested by you, will confirm such notice in writing) (i) when the
Registration Statement and any amendments thereto become effective, (ii) of
any request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional information,
(iii) of the mailing or the delivery to the Commission for filing of any
amendment of or supplement to the Registration Statement or the Prospectus,
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of the initiation, or the threatening, of any proceedings therefor,
(v) of the receipt of any comments from the Commission and (vi) of the receipt
by the Company of any notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for that purpose. If the Commission shall
propose or enter a stop order at any time, the Company will make every
reasonable effort to prevent the issuance of any such stop order and, if
issued, to obtain the lifting of such order as soon as possible. The Company
will not file any amendment to the Registration Statement or any amendment of
or supplement to the Prospectus (including the prospectus required to be filed
pursuant to Rule 424(b) or Rule 434 of the Regulations) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement before or after the effective date of the Registration Statement to
which you shall reasonably object in writing after being timely furnished in
advance a copy thereof.
(b) If at any time when a prospectus relating to the
Shares is required to be delivered under the Act any event shall have occurred
as a result of which the Prospectus as then amended or supplemented would, in
the judgment of the Underwriters or the Company, include 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, in the light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any time to amend or supplement the Prospectus or Registration
Statement to comply with the Act or the Regulations, the Company will notify
you promptly and prepare and file with the Commission an appropriate amendment
or supplement (in form and substance reasonably satisfactory to you) which
will correct such statement or omission and will use its best efforts to have
any amendment to the Registration Statement declared effective as soon as
possible.
(c) The Company will promptly deliver to you four signed
copies of the Registration Statement, including exhibits and all amendments
thereto, and the Company will promptly deliver to each of the Underwriters
such number of copies of any preliminary prospectus, the Prospectus, the
Registration Statement and all amendments of and supplements to such
documents, if any, as you may reasonably request.
(d) The Company will endeavor in good faith, in
cooperation with you, at or prior to the time of effectiveness of the
Registration Statement, to qualify the Shares for offering and sale under the
securities laws relating to the offering or sale of the Shares of such
jurisdictions (foreign and domestic) as you may designate and to maintain such
12
qualification in effect for so long as required for the distribution thereof;
except that in no event shall the Company be obligated in connection therewith
to qualify as a foreign corporation or to execute a general consent to service
of process.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Act) to its security holders and to you as
soon as practicable, but not later than 45 days after the end of its fiscal
quarter in which the first anniversary date of the effective date of the
Registration Statement occurs, an earnings statement (in form complying with
the provisions of Rule 158 of the Regulations) covering a period of at least
12 consecutive months beginning after the effective date of the Registration
Statement.
(f) During the period of 180 days from the date of the
Prospectus, the Company will not, without the prior written consent of Bear
▇▇▇▇▇▇▇, issue, sell, offer or agree to sell, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, any Common Stock (or any
securities convertible into, exercisable for or exchangeable for Common
Stock), and the Company will obtain the written undertaking, the form of which
shall be subject to the approval of Bear ▇▇▇▇▇▇▇, of each of its executive
officers and directors and such of its stockholders and other officers as have
been heretofore designated by you and listed on Schedule III attached hereto
not to engage in any similar transactions on their own behalf. The foregoing
sentence shall not apply to (i) the Shares to be sold hereunder, (ii) the
issuance by the Company of shares of Common Stock upon the exercise of options
or warrants or the conversion of a security outstanding on the date hereof
which is described in the Prospectus or (iii) the grant of options or share
purchase rights by the Company pursuant to the option plans described in the
Registration Statement and Prospectus, provided, such options are not
exercisable for 180 days after the date of the Prospectus, or if such options
are exercisable within such period, such options are subject to lockup
provisions substantially the same as those set forth in this Section 4(f).
(g) During a period of three years from the effective
date of the Registration Statement, the Company will furnish or make available
to you copies of (i) all reports to its stockholders; and (ii) all reports,
financial statements and proxy or information statements filed by the Company
with the Commission or any national securities exchange.
(h) The Company will apply the proceeds from the sale of
the Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the
Shares to be listed on the New York Stock Exchange.
(j) The Company will comply with Rule 463 of the
Regulations.
(k) The Company hereby agrees that it will ensure that
the Reserved Shares will be restricted as required by the NASD or the NASD
rules from sale, transfer, assignment, pledge or hypothecation for a period of
three months following the date of this Agreement. ▇▇▇▇▇▇▇ ▇▇▇▇▇ will notify
the Company as to which persons will need to be so restricted. At the request
of the Underwriters, the Company will direct the transfer agent to place a
stop transfer restriction upon such securities for such period of time. Should
the Company
13
release, or seek to release, from such restrictions any of the Reserved
Shares, the Company agrees to reimburse the Underwriters for any reasonable
expenses (including, without limitation, legal expenses) they incur in
connection with such release.
(l) The Company shall cause to be prepared and delivered,
at its expense, within one business day from the effective date of this
Agreement, to the Underwriters an "electronic Prospectus" to be used by the
Underwriters in connection with the offering and sale of the Shares. As used
herein, the term "ELECTRONIC PROSPECTUS" means a form of Prospectus, and any
amendment or supplement thereto, that meets each of the following conditions:
(i) it shall be encoded in an electronic format, reasonably satisfactory to
Bear ▇▇▇▇▇▇▇, that may be transmitted electronically by Bear ▇▇▇▇▇▇▇ and the
other Underwriters to offerees and purchasers of the Shares for at least
during the period when the Prospectus is required to be delivered under the
Act or the Exchange Act (the "PROSPECTUS DELIVERY PERIOD"); (ii) it shall
disclose the same information as the paper Prospectus and Prospectus filed
pursuant to ▇▇▇▇▇, except to the extent that graphic and image material cannot
be disseminated electronically, in which case such graphic and image material
shall be replaced in the electronic Prospectus with a fair and accurate
narrative description or tabular representation of such material, as
appropriate; and (iii) it shall be in or convertible into a paper format or an
electronic format, reasonably satisfactory to Bear ▇▇▇▇▇▇▇, that will allow
investors to store and have continuously ready access to the Prospectus at any
future time, without charge to investors (other than any fee charged for
subscription to the system as a whole and for on-line time). Such electronic
Prospectus may consist of a Rule 434 preliminary prospectus, together with the
applicable term sheet, provided that it otherwise satisfies the format and
conditions described in the immediately preceding sentence. The Company hereby
confirms that it has included or will include in the Prospectus filed pursuant
to ▇▇▇▇▇ or otherwise with the Commission and in the Registration Statement at
the time it was declared effective an undertaking that, upon receipt of a
request by an investor or his or her representative within the Prospectus
Delivery Period, the Company shall transmit or cause to be transmitted
promptly, without charge, a paper copy of the Prospectus.
5. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is
terminated, the Company hereby agrees to pay all costs and expenses incident
to the performance of the obligations of the Company hereunder, including
those in connection with (i) preparing, printing, duplicating, filing and
distributing the Registration Statement, as originally filed and all
amendments thereof (including all exhibits thereto), any preliminary
prospectus, the Prospectus and any amendments or supplements thereto
(including, without limitation, fees and expenses of the Company's accountants
and counsel), the underwriting documents (including this Agreement, the
Agreement Among Underwriters and the Master Selling Agreement) and all other
documents related to the public offering of the Shares (including those
supplied to the Underwriters in quantities as hereinabove stated), (ii) the
issuance, transfer and delivery of the Shares to the Underwriters, including
any transfer or other taxes payable thereon, (iii) the qualification of the
Shares under state or foreign securities or Blue Sky laws, including the costs
of printing and mailing a preliminary and final "Blue Sky Survey" and the fees
of counsel for the Underwriters and such counsel's disbursements in relation
thereto, (iv) listing of the Shares on the New York Stock Exchange, (v) filing
fees of the Commission and the National Association of Securities Dealers,
Inc.; (vi) the cost of printing certificates representing the Shares; (vii)
the cost and charges of any transfer agent or registrar and (viii) all costs
and expenses of the Underwriters, including the fees
14
and disbursements of counsel for the Underwriters with respect to the Reserved
Share program, incurred by the Underwriters in connection with the Reserved
Share program, and stamp duties, similar taxes or duties or other taxes, if
any, incurred by the Underwriters in connection with the Reserved Share
program.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations
of the Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the Company herein contained, as of the date
hereof and as of the Closing Date (for purposes of this Section 6, "CLOSING
DATE" shall refer to the Closing Date for the Firm Shares and any Additional
Closing Date, if different, for the Additional Shares), to the absence from
any certificates, opinions, written statements or letters furnished to you or
to ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP ("UNDERWRITERS' COUNSEL") pursuant to this
Section 6 of any misstatement or omission, to the performance by the Company
of its obligations hereunder, and to the following additional conditions:
(a) The Registration Statement shall have become
effective not later than 5:30 P.M., New York City time, on the date of this
Agreement, or at such later time and date as shall have been consented to in
writing by you; if the Company shall have elected to rely upon Rule 430A or
Rule 434 of the Regulations, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 4(a) hereof; and, at
or prior to the Closing Date no stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment thereof shall have been
issued and no proceedings therefor shall have been initiated or threatened by
the Commission.
(b) At the Closing Date you shall have received the
opinion of Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., counsel for the Company,
dated the Closing Date addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) Each of the Company and its subsidiaries is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation. Each of the Company and its
subsidiaries is duly qualified and in good standing as a foreign
corporation in each jurisdiction listed on Schedule II attached
hereto. Each of the Company and its subsidiaries has all requisite
corporate power to own, lease and license its respective properties
and conduct its business as now being conducted and as described in
the Registration Statement and the Prospectus. All of the issued and
outstanding capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and nonassessable
and were not issued in violation of preemptive rights granted under
such Subsidiary's certificate of organization or under the corporate
laws of the jurisdiction of its incorporation and are owned directly
or indirectly by the Company, free and clear of any lien,
encumbrance, claim, security interest, restriction on transfer,
stockholders' agreement, voting trust or other defect of title
whatsoever. Except as disclosed in or specifically contemplated by
the Prospectus, to the knowledge of such counsel, the Company has no
outstanding options to purchase, or any preemptive rights or other
rights to subscribe for or to purchase, any securities or obligations
convertible
15
into, or any contracts or commitments to issue or sell, shares of its
capital stock or any such options, rights, convertible securities or
obligations.
(ii) The authorized capital stock of the Company
(including the Common Stock) as of December 31, 1999 conforms to the
description thereof set forth in the Registration Statement and the
Prospectus. All of the outstanding shares of Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable
and were not issued in violation of any preemptive rights created
under the Company's certificate of incorporation or under the
Delaware General Corporation Law. The Shares to be delivered on the
Closing Date have been duly authorized and, when issued and delivered
by the Company in accordance with this Agreement, will be duly and
validly issued, fully paid and nonassessable and will not have been
issued in violation of or subject to any preemptive rights created
under the Company's certificate of incorporation or under the
Delaware General Corporation Law. The Common Stock, the Firm Shares
and the Additional Shares conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(iii) The Shares are duly authorized for listing on the
New York Stock Exchange subject to official notice of issuance.
(iv) The execution and delivery of this Agreement by the
Company has been duly authorized by the Company, and this Agreement
has been duly and validly executed and delivered by the Company.
(v) To the knowledge of such counsel, there is no
litigation or governmental or other action, suit, proceeding or
investigation before any court or before or by any public, regulatory
or governmental agency or body pending or threatened against, or
involving the properties or business of, the Company or any of its
Subsidiaries, which is of a character required to be disclosed in the
Registration Statement and the Prospectus which has not been properly
disclosed therein.
(vi) The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated
hereby by the Company do not and will not (A) conflict with or result
in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, any
material agreement, instrument, franchise, license or permit known to
such counsel to which the Company or any of its subsidiaries is a
party or by which any of such corporations or their respective
properties or assets may be bound or (B) violate or conflict with any
provision of the certificate of incorporation or bylaws of the
Company or any of its Subsidiaries, or, to the best knowledge of such
counsel, any judgment, decree, order, statute, rule or regulation of
any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or
any of their respective properties or assets, except that such
counsel shall express no opinion in clause (A) above with respect to
breaches or violations of or
16
defaults under any covenant, restriction or provision with respect to
financial ratios, or tests, or any aspect of the financial condition
or results of operations of any party.
(vii) No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any
court or any public, governmental, or regulatory agency or body
having jurisdiction over the Company or any of its Subsidiaries or
any of their respective properties or assets is required for the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby, except for (1)
such as may be required under any foreign securities laws, including
such as have been obtained under the laws and regulations of
jurisdictions outside the United States in which the Reserved Shares
are offered, or state securities or Blue Sky laws in connection with
the purchase and distribution of the Shares by the Underwriters (as
to which such counsel need express no opinion) and (2) such as have
been made or obtained under the Act, (3) the clearance of the
offering by the NASD and (4) such consents, approvals, authorizations
and orders as have been duly obtained on or prior to the date hereof
and are in full force and effect.
(viii) The Registration Statement and the Prospectus and
any amendments thereof or supplements thereto (other than the
financial statements and schedules and other financial data included
or incorporated by reference therein, as to which no opinion need be
rendered) comply as to form in all material respects with the
requirements of the Act and the Regulations.
(ix) The Registration Statement is effective under the
Act, and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any
post-effective amendment thereof has been issued by the Commission
and no proceedings therefor have been initiated or threatened by the
Commission and all filings required by Rule 424(b) of the Regulations
have been made.
(x) Except as disclosed in the Registration Statement and
the Prospectus, the Company is not in violation or default of any
provision of its certificate of incorporation or bylaws, or other
organizational documents, and to the best of such counsel's
knowledge, is not in breach of or default with respect to any
provision of any agreement, judgment, decree, order, mortgage, deed
of trust, lease, franchise, license, indenture, permit or other
instrument to which it is a party or by which it or any of its
properties are bound except as would not have a Material Adverse
Effect; and to the best of such counsel's knowledge, there does not
exist any state of facts which constitutes an event of default on the
part of the Company as defined in such documents or which, with
notice or lapse of time or both, would constitute such an event of
default except as would not have a Material Adverse Effect.
(xi) To the knowledge of such counsel, there are no
contracts or other documents required to be described in the
Registration Statement or to be filed as exhibits to the Registration
Statement or by the Regulations which have not been accurately and
completely described or filed as required.
17
(xii) The statements (i) in the Prospectus under the
captions:
(a) Risk Factors--If our bank subsidiary fails to
meet credit card bank criteria, we may become subject to
regulation under the Bank Holding Company Act,
(b) Risk Factors--Delaware law and our charter
documents could prevent a takeover that might be beneficial
to you,
(c) Risk Factors--Legislation relating to consumer
privacy may affect our ability to collect data,
(d) Risk Factors--Current and proposed regulation
and legislation relating to our credit services could limit
our business, activities, product offerings and fees charged,
(e) Risk Factors--Laws and regulations pertaining to
the Internet may adversely affect our business,
(f) Description of our Business--Regulation,
(g) Description of our Business--Legal Proceedings,
(h) Management--Employment and Indemnification
Agreements,
(i) Management--Stock Option and Restricted Stock
Purchase Plan,
(j) Management--Alliance Data Systems 401(k) and
Retirement Savings Plan,
(k) Management--Supplemental Executive Retirement
Plan,
(l) Management--2000 Incentive Compensation Plan,
(m) Certain Transactions--Transactions with Welsh,
Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇,
(n) Certain Transactions--Transactions with The
Limited,
(o) Certain Transactions--Stockholders' Agreement
with ▇▇▇▇▇ ▇▇▇▇▇▇ and The Limited,
(p) Description of Capital Stock and
(q) Shares Eligible for Future Sale, and
(ii) in Item 14 and, to such counsel's knowledge, Item 15 of Part II
of the Registration Statement, insofar as such statements constitute
a summary of the legal matters, documents or proceedings referred to
therein, fairly present, in all material respects, the information
called for with respect to such legal matters, documents and
proceedings.
(xiii) The form of certificate used to evidence the Shares
is in due and proper form and complies in all material respects with
all applicable statutory requirements under the laws of the State
of Delaware.
18
(xiv) The Company has duly authorized and reserved a
number of shares of Common Stock for issuance upon the exercise of
options under the Company's Stock Option Plan which is not less than
the number of options issuable under such plan, as of the Closing
Date.
(xv) Other than as described in the Prospectus, no
stockholder of the Company or any other person has any preemptive
right of first refusal or other similar right to subscribe for or
purchase securities of the Company (i) arising by operation of the
certificate of incorporation or bylaws of the Company or the general
corporation law of the State of Delaware or (ii) arising from any
contract or agreement filed as an exhibit to the Registration
Statement (including without limitation any transaction document
entered into in connection with any of the Company's preferred stock
financings) or otherwise known to such counsel.
(xvi) In addition, such opinion shall also contain a
statement that such counsel has participated in conferences with
officers and representatives of the Company, representatives of the
independent public accountants for the Company and the Underwriters
at which the contents and the Prospectus and related matters were
discussed and, no facts have come to the attention of such counsel
which would lead such counsel to believe that either the Registration
Statement at the time it became effective (including the information
deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable),
or any amendment thereof made prior to the Closing Date as of the
date of such amendment, contained an untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Prospectus as of its date (or any amendment thereof or
supplement thereto made prior to the Closing Date as of the date of
such amendment or supplement) and as of the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits
to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such
counsel need express no belief or opinion with respect to the
financial statements and schedules and other financial data included
or incorporated by reference therein).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such
counsel deems proper and to the extent specified in such opinion, if at all,
upon an opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws; (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the
Company and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting
the corporate existence or good standing of the Company and its subsidiaries,
provided that copies of any such statements or certificates shall be delivered
to Underwriters' Counsel.
(c) All proceedings taken in connection with the sale of
the Firm Shares and the Additional Shares as herein contemplated shall be
satisfactory in form and
19
substance to you and to Underwriters' Counsel, and the Underwriters shall have
received from said Underwriters' Counsel a favorable opinion, dated as of the
Closing Date with respect to the issuance and sale of the Shares, the
Registration Statement and the Prospectus and such other related matters as
you may reasonably require, and the Company shall have furnished to
Underwriters' Counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(d) At the Closing Date you shall have received a
certificate of the Company executed on its behalf by its Chief Executive
Officer and Chief Financial Officer, dated the Closing Date to the effect that
(i) the condition set forth in subsection (a) of this Section 6 has been
satisfied, (ii) as of the date hereof and as of the Closing Date the
representations and warranties of the Company set forth in Section 1 hereof
are accurate, (iii) as of the Closing Date the obligations of the Company to
be performed hereunder on or prior thereto have been duly performed and (iv)
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, the Company and its subsidiaries
have not sustained any material loss or interference with their respective
businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or
any legal or governmental proceeding, and there has not been any material
adverse change, or any development involving a prospective material adverse
change, in the properties, operations, condition (financial or otherwise), or
results of operations of the Company as presently conducted or as proposed to
be conducted and its subsidiaries taken as a whole, except in each case as
described in or contemplated by the Prospectus.
(e) At the time this Agreement is executed and at the
Closing Date, you shall have received a letter, from Deloitte & Touche LLP,
independent public accountants for the Company, dated, respectively, as of the
date of this Agreement and as of the Closing Date, addressed to the
Underwriters and in form and substance reasonably satisfactory to you, to the
effect that: (i) they are independent certified public accountants with
respect to the Company within the meaning of the Act and the Regulations and
stating that the answer to Item 10 of the Registration Statement is correct
insofar as it relates to them; (ii) stating that, in their opinion, the
financial statements and schedules of the Company included in the Registration
Statement and the Prospectus and covered by their opinion therein comply as to
form in all material respects with the applicable accounting requirements of
the Act and the applicable published rules and regulations of the Commission
thereunder; (iii) on the basis of procedures consisting of a reading of the
latest available unaudited interim consolidated financial statements of the
Company, and its subsidiaries, a reading of the minutes of meetings and
consents of the stockholders and boards of directors of the Company and its
subsidiaries and the committees of such boards subsequent to December 31,
1999, inquiries of officers and other employees of the Company and its
subsidiaries who have responsibility for financial and accounting matters of
the Company and its subsidiaries with respect to transactions and events
subsequent to December 31, 1999 and other specified procedures and inquiries
to a date not more than five days prior to the date of such letter, nothing
has come to their attention that would cause them to believe that: (A) the
unaudited consolidated financial statements and schedules of the Company
presented in the Registration Statement and the Prospectus do not comply as to
form in all material respects with the applicable accounting requirements of
the Act and, if applicable, the Exchange Act and the applicable published
rules and regulations of the Commission thereunder or that such unaudited
consolidated financial statements are not fairly presented in conformity with
generally accepted
20
accounting principles applied on a basis substantially consistent with that of
the audited consolidated financial statements included in the Registration
Statement and the Prospectus; (B) with respect to the period subsequent to
December 31, 1999 there were, as of the date of the most recent available
monthly consolidated financial statements of the Company and its subsidiaries,
if any, and as of a specified date not more than five days prior to the date
of such letter, any changes in the capital stock or long-term indebtedness of
the Company or any decrease in the net current assets or stockholders' equity
of the Company, in each case as compared with the amounts shown in the most
recent balance sheet presented in the Registration Statement and the
Prospectus, except for changes or decreases which the Registration Statement
and the Prospectus disclose have occurred or may occur or which are set forth
in such letter or (C) that during the period from January 1, 2000 to the date
of the most recent available monthly consolidated financial statements of the
Company and its subsidiaries, if any, and to a specified date not more than
five days prior to the date of such letter, there was any decrease, as
compared with the corresponding period in the prior fiscal year, in total
revenues, or total or per share net income, except for decreases which the
Registration Statement and the Prospectus disclose have occurred or may occur
or which are set forth in such letter; and (iv) stating that they have
compared specific dollar amounts, numbers of shares, percentages of revenues
and earnings, and other financial information pertaining to the Company and
its subsidiaries set forth in the Registration Statement and the Prospectus,
which have been specified by you prior to the date of this Agreement, to the
extent that such amounts, numbers, percentages, and information may be derived
from the general accounting and financial records of the Company and its
subsidiaries or from schedules furnished by the Company, and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries, and other
appropriate procedures specified by you set forth in such letter, and found
them to be in agreement. In addition, such letter shall state that the pro
forma financial information and the historical recast financial information
included in the Registration Statement and the Prospectus comply as to form in
all material respects with the applicable accounting requirements of the Act,
including Rule 11-02 of Regulation S-X, and that the pro forma adjustments
have been properly applied to historical amounts in the compilation of such
pro forma financial information.
(f) Prior to the Closing Date the Company shall have
furnished to you such further information, certificates and documents as you
may reasonably request.
(g) You shall have received from each person who is a
director or officer of the Company, and each stockholder as has been
heretofore designated by you and listed on Schedule III hereto, an agreement,
in the form set forth on Schedule IV hereto, to the effect that such person
will not, directly or indirectly, without the prior written consent of Bear
▇▇▇▇▇▇▇, on behalf of the Underwriters, issue, sell, offer or agree to sell,
grant any option for the sale of, pledge, make any short sale or maintain any
short position, establish or maintain a "put equivalent position" (within the
meaning of Rule 16a-1(h) under the Exchange Act), enter into any swap,
derivative transaction or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock (whether any such transaction is to be settled by delivery of Common
Stock, other securities, cash or other consideration) or otherwise dispose of,
any Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock) or interest therein of the Company or of any of
its Subsidiaries, other than the transfer by the stockholder of any Common
Stock to any
21
member of the stockholder's immediate family, or to a revocable trust for the
benefit of the stockholder or any member of the stockholder's immediate
family, provided that any such member or transferee agrees to be bound by all
of the terms and conditions contained in such agreement, for a period of 180
days after the date of the Prospectus.
(h) At the Closing Date, the Shares shall have been
approved for listing on the New York Stock Exchange upon official notice of
issuance.
If any of the conditions specified in this Section 6 shall
not have been fulfilled when and as required by this Agreement, or if any of
the certificates, opinions, written statements or letters furnished to you or
to Underwriters' Counsel pursuant to this Section 6 shall not be in all
material respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
canceled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
canceled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to attorneys' fees and any
and all expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims,
damages or expenses (or actions in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement for the registration of the Shares, as
originally filed or any amendment thereof, or any related preliminary
prospectus or the Prospectus, or in any supplement thereto or amendment
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent, but only to the
extent, that any such loss, liability, claim, damage or expense arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of any
Underwriter through you expressly for use therein; and PROVIDED, FURTHER, that
this indemnity agreement with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any
such losses, liabilities, claims, damages or expenses purchased Shares, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented if the Company shall have furnished any such
amendments or supplements thereto) was not sent or given by or on behalf of
such Underwriter to such person, if such is required by law, at or prior to
the written confirmation of the sale of such Shares to such person and if the
Prospectus (as so amended or supplemented) would have corrected the defect
giving rise to such loss, liability, claim, damage
22
or expense or (ii)(A) the violation of any applicable laws or regulations of
foreign jurisdictions where Reserved Shares have been offered and (B) any
untrue statement or alleged untrue statement of a material fact included in
the supplement or prospectus wrapper material distributed in Canada or New
Zealand in connection with the reservation and sale of the Reserved Shares to
participants in the Reserved Share program, or the omission or alleged
omission therefrom of a material fact necessary to make the statements
therein, when considered in conjunction with the Prospectus or preliminary
prospectus, not misleading. This indemnity agreement will be in addition to
any liability which the Company may otherwise have including under this
Agreement.
(b) Each Underwriter severally, and not jointly, agrees
to indemnify and hold harmless the Company, each of the directors of the
Company, each of the officers of the Company who shall have signed the
Registration Statement, and each other person, if any, who controls the
Company or any of its subsidiaries within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, against any losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration of
the Shares, as originally filed or any amendment thereof, or any related
preliminary prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that any such loss, liability, claim, damage
or expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; PROVIDED,
HOWEVER, that in no case shall any Underwriter be liable or responsible for
any amount in excess of the underwriting discount applicable to the Shares
purchased by such Underwriter hereunder. This indemnity will be in addition to
any liability which any Underwriter may otherwise have including under this
Agreement. The Company acknowledges that the statements set forth in the last
two paragraphs of the cover page and under the captions "Underwriting--Public
Offering Price and Dealers Concession," "Underwriting--Discretionary
Accounts," "Underwriting--Prospectus in Electronic Format,"
"Underwriting--Stabilization and Other Transactions" and "Underwriting--NYSE
Undertaking" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriter expressly for use in the
registration statement relating to the Shares as originally filed or in any
amendment thereof, any related preliminary prospectus or the Prospectus or in
any amendment thereof or supplement thereto, as the case may be.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the
23
commencement thereof (but the failure so to notify an indemnifying party shall
not relieve it from any liability which it may have under this Section 7). In
case any such action is brought against any indemnified party, and it notifies
an indemnifying party of the commencement thereof, the indemnifying party will
be entitled to participate therein, and to the extent it may elect by written
notice delivered to the indemnified party promptly after receiving the
aforesaid notice from such indemnified party, to assume the defense thereof
with counsel reasonably satisfactory to such indemnified party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized
in writing by one of the indemnifying parties in connection with the defense
of such action, (ii) the indemnifying parties shall not have employed counsel
to have charge of the defense of such action within a reasonable time after
notice of commencement of the action, or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available
to it or them which are different from or additional to those available to one
or all of the indemnifying parties (in which case the indemnifying parties
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the indemnifying parties. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its written consent;
PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
(d) In connection with the offer and sale of the Reserved
Shares, the Company agrees, promptly upon a request in writing to indemnify
and hold harmless the Underwriters from and against any and all losses,
liabilities, claims, damages and expenses incurred by them as a result of the
failure of participants in the Reserved Share program to pay for and accept
delivery of Reserved Shares which, by the end of the first business day
following the date of this Agreement, were subject to a properly confirmed
agreement to purchase.
8. CONTRIBUTION. In order to provide for contribution in
circumstances in which the indemnification provided for in Section 7 hereof is
for any reason held to be unavailable from any indemnifying party or is
insufficient to hold harmless a party indemnified thereunder, the Company and
the Underwriters shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Company and its
subsidiaries any contribution received by the Company or its subsidiaries from
persons, other than the Underwriters, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, officers of the Company who
signed the Registration Statement and directors of the Company) as incurred to
which the Company and one or more of the Underwriters may be subject, in such
proportions as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriters, on the other hand, from the
offering of the Shares or, if such allocation is not permitted by applicable
law or indemnification is not available as a result of the indemnifying party
not having received notice as provided in Section 7 hereof, in such proportion
as is appropriate to reflect not only the relative benefits referred to above
but also the relative fault of the Company, on the one hand, and the
Underwriters, on the other hand,
24
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
the Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and (y) the underwriting
discounts and commissions received by the Underwriters, respectively, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company, on the one hand, and of the Underwriters, on
the other hand, 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 Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 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 above.
Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter be liable or responsible for any amount in excess
of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder, and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 8 and the
preceding sentence, no Underwriter shall be required to contribute any amount
in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) of this Section 8. Any party entitled to contribution will, promptly
after receipt of notice of commencement of any action, suit or proceeding
against such party in respect of which a claim for contribution may be made
against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 8 or
otherwise. No party shall be liable for contribution with respect to any
action or claim settled without its consent; PROVIDED, HOWEVER, that such
consent was not unreasonably withheld. The Underwriters' respective
obligations to contribute pursuant to this Section 8 are several in proportion
to the number of Firm Shares set forth opposite their respective names in
Schedule I hereto and not joint.
25
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in
its or their obligation to purchase Firm Shares or Additional Shares
hereunder, and if the Firm Shares or Additional Shares with respect to which
such default relates do not (after giving effect to arrangements, if any, made
by you pursuant to subsection (b) below) exceed in the aggregate 10% of the
number of Firm Shares or Additional Shares, to which the default relates shall
be purchased by the non-defaulting Underwriters in proportion to the
respective proportions which the numbers of Firm Shares set forth opposite
their respective names in Schedule I hereto bear to the aggregate number of
Firm Shares set forth opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than
10% of the Firm Shares or Additional Shares, as the case may be, you may in
your discretion arrange for yourself or for another party or parties
(including any non-defaulting Underwriter or Underwriters who so agree) to
purchase such Firm Shares or Additional Shares, as the case may be, to which
such default relates on the terms contained herein. In the event that within 5
calendar days after such a default you do not arrange for the purchase of the
Firm Shares or Additional Shares, as the case may be, to which such default
relates as provided in this Section 9, this Agreement or, in the case of a
default with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional Shares
shall thereupon terminate, without liability on the part of the Company with
respect thereto (except in each case as provided in Section 5, 7(a) and 8
hereof) or the Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if any, to
the other Underwriters and the Company for damages occasioned by its or their
default hereunder.
(c) In the event that the Firm Shares or Additional
Shares to which the default relates are to be purchased by the non-defaulting
Underwriters, or are to be purchased by another party or parties as aforesaid,
you or the Company shall have the right to postpone the Closing Date or
Additional Closing Date, as the case may be for a period, not exceeding five
business days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment or supplement to the Registration Statement or the Prospectus which,
in the opinion of Underwriters' Counsel, may thereby be made necessary or
advisable. The term "UNDERWRITER" as used in this Agreement shall include any
party substituted under this Section 9 with like effect as if it had
originally been a party to this Agreement with respect to such Firm Shares and
Additional Shares.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All
representations and warranties, covenants and agreements of the Underwriters
and the Company contained in this Agreement, including the agreements
contained in Section 5, the indemnity agreements contained in Section 7 and
the contribution agreements contained in Section 8, shall remain operative and
in full force and effect regardless of any investigation made by or on behalf
of any Underwriter or any controlling person thereof or by or on behalf of the
Company, any of its officers and directors (including any person who, with his
or her consent, is named in the Registration Statement as about to become, and
does become, a director of the Company) or any controlling person thereof, and
shall survive delivery of and payment for the Shares to and by the
26
Underwriters. The representations contained in Section 1 and the agreements
contained in Sections 5, 7, 8 and 11(d) hereof shall survive the termination
of this Agreement, including termination pursuant to Section 9 or 11 hereof.
11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective, upon the later
of when (i) you and the Company shall have received notification of the
effectiveness of the Registration Statement or (ii) the execution of this
Agreement. If either the initial public offering price or the purchase price
per Share has not been agreed upon prior to 5:00 P.M., New York City time, on
the fifth full business day after the Registration Statement shall have become
effective, this Agreement shall thereupon terminate without liability to the
Company or the Underwriters except as herein expressly provided. Until this
Agreement becomes effective as aforesaid, it may be terminated by the Company
by notifying you or by you notifying the Company. Notwithstanding the
foregoing, the provisions of this Section 11 and of Sections 1, 5, 7 and 8
hereof shall at all times be in full force and effect.
(b) You shall have the right to terminate this Agreement
at any time prior to the Closing Date or the obligations of the Underwriters
to purchase the Additional Shares at any time prior to the Additional Closing
Date, as the case may be, if (A) any domestic or international event or act or
occurrence has materially disrupted, or in your opinion will in the immediate
future materially disrupt, the market for the Company's securities or
securities in general; or (B) if trading on the New York or American Stock
Exchanges or the Nasdaq National Market System shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York or
American Stock Exchanges or the Nasdaq National Market System by such entities
or by order of the Commission or any other governmental authority having
jurisdiction; or (C) if a banking moratorium has been declared by a state or
federal authority or if any new restriction materially adversely affecting the
distribution of the Firm Shares or the Additional Shares, as the case may be,
shall have become effective; or (D) (i) if the United States becomes engaged
in hostilities or there is an escalation of hostilities involving the United
States or there is a declaration of a national emergency or war by the United
States or (ii) if there shall have been such change in political, financial or
economic conditions if the effect of any such event in (i) or (ii) as in your
judgment makes it impracticable or inadvisable to proceed with the offering,
sale and delivery of the Firm Shares or the Additional Shares, as the case may
be, on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any
of the provisions hereof (otherwise than pursuant to (i) notification by you
as provided in Section 11(a) hereof or (ii) Section 9(b) or 11(b) hereof), or
if the sale of the Shares provided for herein is not consummated because any
condition to the obligations of the Underwriters set forth herein is not
satisfied or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof,
the Company will, subject to demand by
27
you, reimburse the Underwriters for all out-of-pocket expenses (including the
fees and expenses of their counsel), incurred by the Underwriters in
connection herewith.
12. NOTICES. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and , if sent to
any Underwriter, shall be mailed, delivered, or telexed or faxed and confirmed
in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Syndicate Department, with a copy to ▇▇▇▇▇▇,
▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; if sent to the Company, shall be mailed, delivered, or
telexed or faxed and confirmed in writing to the Company, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to Akin,
Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, P.C., ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
13. PARTIES. This Agreement shall inure solely to the
benefit of, and shall be binding upon, the Underwriters and the Company and
the controlling persons, directors, officers, employees and agents referred to
in Sections 7 and 8, and their respective successors and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any
provision herein contained. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Shares from any of the
Underwriters.
14. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, but without
regard to principles of conflicts of law.
15. COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.
16. HEADINGS. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
28
If the foregoing correctly sets forth the understanding
between you and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
ALLIANCE DATA SYSTEMS CORPORATION
By:
------------------------------
Name:
Title:
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇
SECURITIES CORPORATION
By:
------------------------------
Name:
Title:
On behalf of themselves and the other
Underwriters named in Schedule I hereto.
29
SCHEDULE I
NUMBER OF FIRM
NAME OF UNDERWRITER SHARES TO BE PURCHASED
------------------- ----------------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇ Securities Corporation
Total 20,000,000
======================
SCHEDULE II
DIRECT AND INDIRECT SUBSIDIARIES
--------------------------------
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JURISDICTION OF JURISDICTIONS WHERE
SUBSIDIARY NAME OWNERSHIP INCORPORATION QUALIFIED TO DO BUSINESS
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ADS Alliance Data Systems, Inc. 100% Delaware Alabama, Arizona, Arkansas, California, Colorado,
Connecticut, District of Columbia, Florida, Georgia,
Illinois, Indiana, Iowa, Kansas, Kentucky,
Louisiana, Maryland, Massachusetts, Michigan,
Minnesota, Mississippi, Missouri, Nevada, New
Hampshire, New Jersey, New Mexico, New York, North
Carolina, North Dakota, Ohio, Oklahoma, Oregon,
Pennsylvania, South Carolina, South Dakota,
Tennessee, Texas, Utah, Vermont, Virginia,
Washington, West Virginia, Wisconsin, Wyoming
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Harmonic Technology Licensing, Inc. 100% Minnesota None
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World Financial Network National Bank 100% National Banking None
Association
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Alliance Data Systems (New Zealand) Limited 100% New Zealand None
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Financial Automation Limited 100% New Zealand None
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Financial Automation Marketing Limited 100% New Zealand None
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Loyalty Management Group Canada, Inc. 100% Ontario, Canada Toronto, Quebec, Alberta, British Columbia
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LMG Travel Services Ltd 100% Ontario, Canada None
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ADS Reinsurance Ltd. 100% Bermuda None
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ADS Commercial Services, Inc. 100% Delaware California, Illinois, Michigan, Nevada, North
Dakota, Tennessee, Vermont
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SCHEDULE III
PERSONS TO ENTER INTO LOCK-UP AGREEMENTS
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1% AND GREATER HOLDERS (AND RELATED ENTITIES)
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WCAS VII L.P.
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Limited Commerce Corp.
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WCAS VIII L.P.
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Welsh ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VI L.P.
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WCAS Capital Partners III L.P.
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WCAS Capital Partners II L.P.
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WCAS Information Partners L.P.
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OFFICERS
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J. ▇▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
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DIRECTORS
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
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[New Director]
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[New Director]
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[New Director]
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III-1
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OTHER INDIVIDUALS (RELATED TO WC)
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
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OTHER ADS OPTIONHOLDERS (> 10,000 VESTED OPTIONS)
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Pieto ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
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OTHER STOCKHOLDERS
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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III-2
SCHEDULE IV
FORM OF LOCK-UP AGREEMENT
_________ __, 2000
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇▇▇▇, LUFKIN & ▇▇▇▇▇▇▇▇
as Representatives of the
several Underwriters
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: ALLIANCE DATA SYSTEMS CORPORATION
Ladies and Gentlemen:
In consideration of the agreement of the several Underwriters (the
"UNDERWRITING AGREEMENT"), for which Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇
Securities Corporation intend to act as Representatives, to underwrite a
proposed public offering (the "OFFERING") of shares of common stock (the
"COMMON STOCK") of Alliance Data Systems Corporation, a corporation organized
under the laws of the State of Delaware (the "COMPANY"), as contemplated by a
registration statement filed with the Securities and Exchange Commission on
Form S-1, the undersigned hereby (i) agrees that the undersigned will not,
directly or indirectly, during a period of one hundred eighty (180) days from
the date of the final prospectus for the Offering (the "LOCK-UP PERIOD"),
without the prior written consent of Bear, ▇▇▇▇▇▇▇ & Co. Inc., issue, sell,
offer or agree to sell, grant any option for the sale of, pledge, make any
short sale or maintain any short position, establish or maintain a "put
equivalent position" (within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended), enter into any swap, derivative transaction
or other arrangement that transfers to another, in whole or in part, any of
the economic consequences of ownership of the Common Stock (whether any such
transaction is to be settled by delivery of Common Stock, other securities,
cash or other consideration) or otherwise dispose of, any Common Stock (or any
securities convertible into, exercisable for or exchangeable for Common Stock)
or interest therein of the Company or of any of its subsidiaries, other than
the transfer by the undersigned of any Common Stock to [any member of the
undersigned's immediate family or to a revocable trust for the benefit of the
undersigned or any member of the undersigned's immediate family, provided that
any such transferee agrees to be bound by such conditions] [any affiliate of
Limited Commerce Corp. that is wholly owned, directly or indirectly, by The
Limited, Inc.], and (ii) authorizes the Company during the Lock-Up Period to
cause the transfer agent to decline to transfer and/or to note stop transfer
restrictions on the transfer books and records of the Company with respect to
any shares of Common Stock and
IV-1
any securities convertible into or exercisable or exchangeable for Common
Stock for which the undersigned is the record holder and, in the case of any
such share or securities for which the undersigned is the beneficial but not
the record holder, agrees to cause the record holder to cause the transfer
agent to decline to transfer and/or to note stop transfer restrictions on such
books and records with respect to such shares or securities.
The undersigned further agrees, from the date hereof until the end of
the Lock-Up Period, that the undersigned will not exercise and will waive his,
her or its rights, if any, to require the Company to register its Common Stock
and to receive notice thereof.
The undersigned hereby represents and warrants that the undersigned
has full power and authority to enter into the agreements set forth herein,
and that, upon request, the undersigned will execute any additional documents
necessary in connection with enforcement hereof. It is further understood
that, if either the Underwriting Agreement is not executed or does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment
for and delivery of the Common Stock, the undersigned will be immediately
released without any further action on their or its part from their or its
obligations under this letter agreement. Any obligations of the undersigned
shall be binding upon the successors and assigns of the undersigned.
Very truly yours,
-----------------------------
Name:
IV-2