exv10w1



 








EXHIBIT 10.1




EXECUTION COPY




 

 








ALLIANCE DATA SYSTEMS CORPORATION




$500,000,000

Senior Notes




$250,000,000 6.00% Senior Notes, Series A, due May 16, 2009

$250,000,000 6.14% Senior Notes, Series B, due May 16, 2011



 




NOTE PURCHASE AGREEMENT



 




Dated as of May 1, 2006




 

 








SERIES A PPN: 018581 A* 9

SERIES B PPN: 018581 A@ 7





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	Section	 	 	 	 	 	Page	 
	1.	 	AUTHORIZATION OF NOTES.	 	 	1	 
	 
	 	1.1	 	Description of Notes to be Issued.	 	 	1	 
	 
	 	1.2	 	Subsidiary Guaranty.	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	2.	 	SALE AND PURCHASE OF NOTES.	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	3.	 	CLOSING.	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	4.	 	CONDITIONS TO CLOSING.	 	 	2	 
	 
	 	4.1	 	Representations and Warranties.	 	 	2	 
	 
	 	4.2	 	Performance; No Default.	 	 	3	 
	 
	 	4.3	 	Compliance Certificates.	 	 	3	 
	 
	 	4.4	 	Opinions of Counsel.	 	 	3	 
	 
	 	4.5	 	Purchase Permitted By Applicable Law, etc.	 	 	3	 
	 
	 	4.6	 	Sale of Other Notes.	 	 	4	 
	 
	 	4.7	 	Payment of Special Counsel Fees.	 	 	4	 
	 
	 	4.8	 	Private Placement Numbers.	 	 	4	 
	 
	 	4.9	 	Changes in Corporate Structure.	 	 	4	 
	 
	 	4.10	 	Funding Instructions.	 	 	4	 
	 
	 	4.11	 	Proceedings and Documents.	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	5.	 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.	 	 	4	 
	 
	 	5.1	 	Organization; Power and Authority.	 	 	5	 
	 
	 	5.2	 	Authorization, etc.	 	 	5	 
	 
	 	5.3	 	Disclosure.	 	 	5	 
	 
	 	5.4	 	Organization and Ownership of Shares of Subsidiaries; Affiliates.	 	 	6	 
	 
	 	5.5	 	Financial Statements; Material Liabilities.	 	 	7	 
	 
	 	5.6	 	Compliance with Laws, Other Instruments, etc.	 	 	7	 
	 
	 	5.7	 	Governmental Authorizations, etc.	 	 	7	 
	 
	 	5.8	 	Litigation; Observance of Statutes and Orders.	 	 	8	 
	 
	 	5.9	 	Taxes.	 	 	8	 
	 
	 	5.10	 	Title to Property; Leases.	 	 	9	 
	 
	 	5.11	 	Licenses, Permits, etc.	 	 	9	 
	 
	 	5.12	 	Compliance with ERISA.	 	 	9	 
	 
	 	5.13	 	Private Offering by the Company.	 	 	10	 
	 
	 	5.14	 	Use of Proceeds; Margin Regulations.	 	 	11	 
	 
	 	5.15	 	Existing Debt; Future Liens.	 	 	11	 
	 
	 	5.16	 	Foreign Assets Control Regulations, etc.	 	 	11	 
	 
	 	5.17	 	Status under Certain Statutes.	 	 	12	 
	 
	 	5.18	 	Environmental Matters.	 	 	12	 
	 
	 	5.19	 	Solvency.	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	6.	 	REPRESENTATIONS OF THE PURCHASERS.	 	 	13	 






i









 








	 	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Purchase for Investment.	 	 	13	 
	 
	 	6.2	 	Source of Funds.	 	 	13	 
	 
	 	 	 	 	 	 	 	 
	7.	 	INFORMATION AS TO COMPANY.	 	 	15	 
	 
	 	7.1	 	Financial and Business Information.	 	 	15	 
	 
	 	7.2	 	Officer’s Certificate.	 	 	17	 
	 
	 	7.3	 	Visitation.	 	 	18	 
	 
	 	 	 	 	 	 	 	 
	8.	 	PREPAYMENT OF THE NOTES.	 	 	18	 
	 
	 	8.1	 	No Scheduled Prepayments.	 	 	18	 
	 
	 	8.2	 	Optional Prepayments with Make-Whole Amount.	 	 	19	 
	 
	 	8.3	 	Mandatory Offer to Prepay Upon Change of Control.	 	 	19	 
	 
	 	8.4	 	Allocation of Partial Prepayments.	 	 	21	 
	 
	 	8.5	 	Maturity; Surrender, etc.	 	 	21	 
	 
	 	8.6	 	Purchase of Notes.	 	 	21	 
	 
	 	8.7	 	Make-Whole Amount.	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	9.	 	AFFIRMATIVE COVENANTS.	 	 	23	 
	 
	 	9.1	 	Compliance with Law.	 	 	23	 
	 
	 	9.2	 	Insurance.	 	 	23	 
	 
	 	9.3	 	Maintenance of Properties.	 	 	23	 
	 
	 	9.4	 	Payment of Taxes and Claims.	 	 	24	 
	 
	 	9.5	 	Corporate Existence, etc.	 	 	24	 
	 
	 	9.6	 	Books and Records.	 	 	24	 
	 
	 	9.7	 	Subsidiary Guaranty; Release.	 	 	24	 
	 
	 	9.8	 	Pari Passu Ranking.	 	 	25	 
	 
	 	9.9	 	Security.	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	10.	 	NEGATIVE COVENANTS.	 	 	26	 
	 
	 	10.1	 	Senior Debt; Consolidated Debt.	 	 	26	 
	 
	 	10.2	 	Interest Coverage.	 	 	27	 
	 
	 	10.3	 	Capitalization of Insured Subsidiaries.	 	 	27	 
	 
	 	10.4	 	Priority Debt.	 	 	27	 
	 
	 	10.5	 	Liens.	 	 	27	 
	 
	 	10.6	 	Subsidiary Debt.	 	 	29	 
	 
	 	10.7	 	Mergers, Consolidations, etc.	 	 	30	 
	 
	 	10.8	 	Sale of Assets.	 	 	30	 
	 
	 	10.9	 	Nature of Business.	 	 	31	 
	 
	 	10.10	 	Transactions with Affiliates.	 	 	31	 
	 
	 	10.11	 	Terrorism Sanctions Regulations.	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	11.	 	EVENTS OF DEFAULT.	 	 	32	 
	 
	 	 	 	 	 	 	 	 
	12.	 	REMEDIES ON DEFAULT, ETC.	 	 	34	 
	 
	 	12.1	 	Acceleration.	 	 	34	 
	 
	 	12.2	 	Other Remedies.	 	 	35	 
	 
	 	12.3	 	Rescission.	 	 	35	 






ii









 











	 	 	 	 	 	 	 	 	 
	 
	 	12.4	 	No Waivers or Election of Remedies, Expenses, etc.	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	13.	 	REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.	 	 	36	 
	 
	 	13.1	 	Registration of Notes.	 	 	36	 
	 
	 	13.2	 	Transfer and Exchange of Notes.	 	 	36	 
	 
	 	13.3	 	Replacement of Notes.	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	14.	 	PAYMENTS ON NOTES.	 	 	37	 
	 
	 	14.1	 	Place of Payment.	 	 	37	 
	 
	 	14.2	 	Home Office Payment.	 	 	37	 
	 
	 	 	 	 	 	 	 	 
	15.	 	EXPENSES, ETC.	 	 	38	 
	 
	 	15.1	 	Transaction Expenses.	 	 	38	 
	 
	 	15.2	 	Survival.	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	16.	 	SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	17.	 	AMENDMENT AND WAIVER.	 	 	39	 
	 
	 	17.1	 	Requirements.	 	 	39	 
	 
	 	17.2	 	Solicitation of Holders of Notes.	 	 	39	 
	 
	 	17.3	 	Binding Effect, etc.	 	 	40	 
	 
	 	17.4	 	Notes held by Company, etc.	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	18.	 	NOTICES.	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	19.	 	REPRODUCTION OF DOCUMENTS.	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	20.	 	CONFIDENTIAL INFORMATION.	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	21.	 	SUBSTITUTION OF PURCHASER.	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	22.	 	MISCELLANEOUS.	 	 	42	 
	 
	 	22.1	 	Successors and Assigns.	 	 	42	 
	 
	 	22.2	 	Payments Due on Non-Business Days.	 	 	42	 
	 
	 	22.3	 	Accounting Terms.	 	 	43	 
	 
	 	22.4	 	Severability.	 	 	43	 
	 
	 	22.5	 	Construction.	 	 	43	 
	 
	 	22.6	 	Counterparts.	 	 	43	 
	 
	 	22.7	 	Governing Law.	 	 	43	 
	 
	 	22.8	 	Jurisdiction and Process; Waiver of Jury Trial.	 	 	43	 
	 
	 	22.9	 	Maximum Interest Payable.	 	 	44	 






iii




 









 








	 	 	 	 	 
	SCHEDULE A

	 	—
	 	Information Relating to Purchasers

	SCHEDULE B

	 	—
	 	Defined Terms
	 
	 	 	 	 
	SCHEDULE 4.9

	 	—
	 	Changes in Corporate Structure
	SCHEDULE 5.3

	 	—
	 	Disclosure Materials
	SCHEDULE 5.4

	 	—
	 	Subsidiaries; Ownership of Subsidiary Stock; Affiliates
	SCHEDULE 5.4(d)

	 	—
	 	Agreements Limiting Subsidiary Distributions
	SCHEDULE 5.5

	 	—
	 	Financial Statements
	SCHEDULE 5.8

	 	—
	 	Litigation
	SCHEDULE 5.14

	 	—
	 	Use of Proceeds
	SCHEDULE 5.15

	 	—
	 	Existing Debt
	SCHEDULE 10.5

	 	—
	 	Liens
	SCHEDULE 10.6

	 	—
	 	Subsidiary Debt
	 
	 	 	 	 
	EXHIBIT 1(a)

	 	—
	 	Form of Series A Note
	EXHIBIT 1(b)

	 	—
	 	Form of Series B Note
	EXHIBIT 1.2

	 	—
	 	Form of Subsidiary Guaranty
	EXHIBIT 4.4(a)

	 	—
	 	Form of Opinion of Special Counsel for the Company
	EXHIBIT 4.4(b)

	 	—
	 	Form of Opinion of Special Counsel to the Purchasers






iv




 









 








ALLIANCE DATA SYSTEMS CORPORATION

17655 Waterview Parkway

Dallas, TX 75252

Phone: 972-348-5100

Fax: 972-348-5335




$250,000,000 6.00% Senior Notes, Series A, due May 16, 2009

$250,000,000 6.14% Senior Notes, Series B, due May 16, 2011




Dated as of May 1, 2006




TO EACH OF THE PURCHASERS LISTED IN

     THE ATTACHED SCHEDULE A:




Ladies and Gentlemen:




          ALLIANCE DATA SYSTEMS CORPORATION, a Delaware corporation (the “Company”), agrees with you as
follows:





	1.	 	AUTHORIZATION OF NOTES.
	 
	1.1	 	Description of Notes to be Issued.





          The Company has authorized the issue and sale of $500,000,000 aggregate principal amount of
its Senior Notes consisting of (i) $250,000,000 aggregate principal amount of its 6.00% Senior
Notes, Series A, due May 16, 2009 (the “Series A Notes”); and (ii) $250,000,000
aggregate principal amount of its 6.14% Senior Notes, Series B, due May 16, 2011 (the “Series B
Notes” and, together with the Series A Notes, the “Notes”, such term to include any such Notes
issued in substitution therefor pursuant to Section 13 of this Agreement). The Notes shall be
substantially in the form set out in Exhibits 1(a) and 1(b), with such changes therefrom, if any,
as may be approved by you, the Other Purchasers of such Notes, or series thereof, and the Company.
Certain capitalized terms used in this Agreement are defined in Schedule B; references to a
“Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to
this Agreement.





	1.2	 	Subsidiary Guaranty.





          Subject to Section 9.7, the payment by the Company of all amounts due with respect to the
Notes and the performance by the Company of its obligations under this Agreement will be guaranteed
by ADSI, any other Subsidiary that hereafter becomes a co-obligor, borrower or guarantor under a
U.S. Credit Agreement and any other Domestic Subsidiary that becomes a co-obligor, borrower or
guarantor under the Credit Agreement (Canadian) (individually, a “Subsidiary Guarantor” and
collectively, the “Subsidiary Guarantors”), pursuant to the Subsidiary Guaranty in substantially
the form of the attached Exhibit 1.2, as it hereafter may be amended or supplemented from time to
time (the “Subsidiary Guaranty”). Notwithstanding the foregoing, the provisions of this Section
1.2 shall not be


 









 







applicable to Insured Subsidiaries, Qualified Securitization Subsidiaries and Subsidiaries of
Foreign Subsidiaries, Insured Subsidiaries and Qualified Securitization Subsidiaries.





	2.	 	SALE AND PURCHASE OF NOTES.





          Subject to the terms and conditions of this Agreement, the Company will issue and sell to you
and each of the other purchasers named in Schedule A (the “Other Purchasers”), and you and the
Other Purchasers will purchase from the Company, at the Closing provided for in Section 3, Notes in
the principal amount and series specified opposite your names in Schedule A at the purchase price
of 100% of the principal amount thereof. Your obligation hereunder and the obligations of the
Other Purchasers are several and not joint obligations and you shall have no obligation and no
liability to any Person for the performance or non-performance by any Other Purchaser hereunder.





	3.	 	CLOSING.





          The sale and purchase of the Notes to be purchased by you and the Other Purchasers shall occur
at the offices of Foley & Lardner LLP, 321 North Clark Street, Suite 2800, Chicago, Illinois
60610-4764, at 9:00 a.m., Chicago time, at a closing (the “Closing”) on May 16, 2006 or on such
other Business Day thereafter on or prior to June 15, 2006 as may be agreed upon by the Company and
you and the Other Purchasers. The date or time of the Closing may be changed to such other
Business Day as may be agreed upon by the Company and the Purchasers. At the Closing the Company
will deliver to you the Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as you may request) dated the date of such
Closing and registered in your name (or in the name of your nominee), against delivery by you to
the Company or its order of immediately available funds in the amount of the purchase price
therefor by wire transfer of immediately available funds for the account of the Company to account
number 0189-1960617 at Huntington National Bank, Columbus, Ohio, ABA number 044-000-024. If at the
Closing the Company shall fail to tender such Notes to you as provided above in this Section 3, or
any of the conditions specified in Section 4 shall not have been fulfilled to your satisfaction,
you shall, at your election, be relieved of all further obligations under this Agreement, without
thereby waiving any rights you may have by reason of such failure or such nonfulfillment.





	4.	 	CONDITIONS TO CLOSING.





          Your obligation to purchase and pay for the Notes to be sold to you at the Closing is subject
to the fulfillment to your satisfaction, prior to or at the Closing, of the following conditions:





	4.1	 	Representations and Warranties.





          The representations and warranties of the Company in this Agreement shall be correct when made
and at the time of the Closing.




2









 









	4.2	 	Performance; No Default.





          The Company shall have performed and complied with all agreements and conditions contained in
this Agreement required to be performed or complied with by it prior to or at the Closing, and,
after giving effect to the issue and sale of the Notes (and the application of the proceeds thereof
as contemplated by Section 5.14), no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any transaction since
December 31, 2005 that would have been prohibited by Section 10 had such Section applied since such
date.





	4.3	 	Compliance Certificates.






      (a) Officer’s Certificate. The Company shall have delivered to you an
Officer’s Certificate, dated the date of Closing, certifying that the conditions specified
in Sections 4.1, 4.2 and 4.9 have been fulfilled.




      (b) Secretary’s Certificates. The Company shall have delivered to you
certificates of its and each Subsidiary Guarantor’s Secretary or an Assistant Secretary,
dated the date of Closing, certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of the Notes and
this Agreement.




	4.4	 	Opinions of Counsel.





          You shall have received opinions in form and substance satisfactory to you, dated the date of
such Closing (a) from Akin Gump Strauss Hauer & Feld LLP, counsel for the Company, covering the
matters set forth in Exhibit 4.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the Company instructs its
counsel to deliver such opinion to you), and (b) from Foley & Lardner LLP, your special counsel in
connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and
covering such other matters incident to such transactions as you may reasonably request.





	4.5	 	Purchase Permitted By Applicable Law, etc.





          On the date of the Closing your purchase of Notes shall (i) be permitted by the laws and
regulations of each jurisdiction to which you are subject, without recourse to provisions (such as
Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance
companies without restriction as to the character of the particular investment, (ii) not violate
any applicable law or regulation (including, without limitation, Regulation U, T or X of the Board
of Governors of the Federal Reserve System) and (iii) not subject you to any tax, penalty or
liability under or pursuant to any applicable law or regulation, which law or regulation was not in
effect on the date hereof. If requested by you in writing, you shall have received an Officer’s
Certificate certifying as to such matters of fact as you may reasonably specify to enable you to
determine whether such purchase is so permitted.




3









 









	4.6	 	Sale of Other Notes.





          Contemporaneously with the Closing, the Company shall sell to the Other Purchasers and the
Other Purchasers shall purchase the Notes to be purchased by them as specified in Schedule A.





	4.7	 	Payment of Special Counsel Fees.





          Without limiting the provisions of Section 15.1, the Company shall have paid on or before the
Closing the reasonable fees, charges and disbursements of your special counsel referred to in
Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least
one Business Day prior to such Closing.





	4.8	 	Private Placement Numbers.





          Private Placement Numbers issued by Standard & Poor’s CUSIP Service Bureau (in cooperation
with the SVO) shall have been obtained by Foley & Lardner LLP for each series of the Notes.





	4.9	 	Changes in Corporate Structure.





          Except as set forth in Schedule 4.9, the Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall not have succeeded to all or
any substantial part of the liabilities of any other entity, at any time following the date of the
most recent financial statements referred to in Schedule 5.5.





	4.10	 	Funding Instructions.





          At least three Business Days prior to the date of the Closing, you shall have received written
instructions signed by a Responsible Officer on letterhead of the Company confirming the
information specified in Section 3 including (i) the name and address of the transferee bank, (ii)
such transferee bank’s ABA number and (iii) the account name and number into which the purchase
price for the Notes is to be deposited.





	4.11	 	Proceedings and Documents.





          All corporate and other proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions shall be satisfactory to
you and your special counsel, and you and your special counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or they may reasonably
request.





	5.	 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.





          The Company represents and warrants to you that:




4









 









	5.1	 	Organization; Power and Authority.





          The Company is a corporation duly incorporated and validly existing and in good standing under
the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and
is in good standing in each jurisdiction in which such qualification is required by law, other than
those jurisdictions as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The
Company has the corporate power and authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts and proposes to transact, to
execute and deliver this Agreement and the Notes and to perform the provisions hereof and thereof.





	5.2	 	Authorization, etc.





          This Agreement and the Notes have been duly authorized by all necessary corporate action on
the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof
each Note will constitute, a legal, valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).




          The Subsidiary Guaranty has been duly authorized by all necessary corporate action on the part
of each Subsidiary Guarantor and upon execution and delivery thereof will constitute the legal,
valid and binding obligation of such Subsidiary Guarantor, enforceable against such Subsidiary
Guarantor in accordance with its terms, except as such enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance, fraudulent transfer,
moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii)
general principles of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).





	5.3	 	Disclosure.





          The Company, through its agent, J.P. Morgan Securities Inc., has delivered to you and each
Other Purchaser a copy of a Private Placement Memorandum, dated April 2006 (the “Memorandum”),
relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material
respects, the general nature of the business and principal properties of the Company and its
Subsidiaries. This Agreement, the Memorandum, the documents, certificates or other writings
identified in Schedule 5.3 by or on behalf of the Company in connection with the transactions
contemplated hereby and the financial statements listed in Schedule 5.5, in each case, delivered to
the Purchasers prior to April 26, 2006 (this Agreement, the Memorandum and such documents,
certificates or other writings and such financial statements being referred to, collectively, as
the “Disclosure Documents”), taken as a whole, do not contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements therein not misleading in
light of the circumstances under which they were made. Except as disclosed in the Disclosure
Documents, since December 31, 2005, there has

5









 








been no change in the financial condition, operations, business or properties of the Company
or any Subsidiary except changes that individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect. There is no fact known to the Company that could
reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in
the Disclosure Documents.





	5.4	 	Organization and Ownership of Shares of Subsidiaries; Affiliates.






      (a) Schedule 5.4 contains (except as noted therein) complete and correct lists of (i)
the Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the
jurisdiction of its organization, whether such Subsidiary is a Material Domestic Subsidiary,
a Foreign Subsidiary, an Insured Subsidiary, a Qualified Securitization Subsidiary or a
Subsidiary of a Foreign Subsidiary, Insured Subsidiary or a Qualified Securitization
Subsidiary, and the percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other Subsidiary, (ii) the
Company’s Affiliates, other than Subsidiaries, and (iii) the Company’s directors and senior
officers.




      (b) All of the outstanding shares of capital stock or similar equity interests of each
Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have
been validly issued, are fully paid and nonassessable and are owned by the Company or
another Subsidiary (except as otherwise disclosed in Schedule 5.4) free and clear of any
Lien (except Liens under the Pledge Agreements or as otherwise disclosed in Schedule 5.4).




      (c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity
duly organized, validly existing and in good standing or equivalent status under the laws of
its jurisdiction of organization, and is duly qualified as a foreign corporation or other
legal entity and is in good standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the failure to be so qualified
or in good standing could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold under lease
and to transact the business it transacts and proposes to transact.




      (d) No Subsidiary is a party to, or otherwise subject to any legal, regulatory,
contractual or other restriction restricting the ability of such Subsidiary to pay dividends
out of profits or make any other similar distributions of profits to the Company or any of
its Subsidiaries that owns outstanding shares of capital stock or similar equity interests
of such Subsidiary other than (i) this Agreement, (ii) the agreements listed on Schedule
5.4(d), (iii) customary restrictions imposed by corporate law or similar statutes, (iv)
restrictions applicable to Qualified Securitization Subsidiaries and Subsidiaries thereof,
(v) restrictions applicable to Insured Subsidiaries and Subsidiaries thereof required by law
or by any Governmental Authority having jurisdiction over Insured Subsidiaries, Subsidiaries
thereof or any of their respective businesses, (vi) customary supermajority voting
provisions and other customary provisions with respect to distributions, each



6









 






contained in corporate charters, bylaws, stockholders’ agreements, limited liability
company agreements, partnership agreements, joint venture agreements and similar agreements,
and (vii) restrictions on cash or other deposits or net worth imposed by customers under
contracts entered into in the ordinary course of business.




	5.5	 	Financial Statements; Material Liabilities.





          The Company has delivered to you and each Other Purchaser copies of the financial statements
of the Company and its Subsidiaries listed on Schedule 5.5. All of said financial statements
(including in each case the related schedules and notes) fairly present in all material respects
the consolidated financial position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP consistently applied
throughout the periods involved except as set forth in the notes thereto (subject, in the case of
any interim financial statements, to normal year-end adjustments and the absence of footnotes).
The Company and its Subsidiaries do not have any Material liabilities that are not disclosed on
such financial statements or otherwise disclosed in the Disclosure Documents.





	5.6	 	Compliance with Laws, Other Instruments, etc.





          The execution, delivery and performance by the Company of this Agreement and the Notes will
not (i) contravene, result in any breach of, or constitute a default under, or, except as
contemplated hereby, result in the creation of any Lien in respect of any property of the Company
or any Subsidiary under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws, or any other agreement or instrument to which the
Company or any Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to the Company or any Subsidiary or (iii) violate any provision
of any statute or other rule or regulation of any Governmental Authority applicable to the Company
or any Subsidiary.




          The execution, delivery and performance by each Subsidiary Guarantor of the Subsidiary
Guaranty will not (i) contravene, result in any breach of, or constitute a default under, or,
except as contemplated hereby, result in the creation of any Lien in respect of any property of
such Subsidiary Guarantor under, any agreement, or corporate charter or by-laws, to which such
Subsidiary Guarantor is bound or by which such Subsidiary Guarantor or any of its properties may be
bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to such Subsidiary Guarantor or (iii) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to such Subsidiary Guarantor.





	5.7	 	Governmental Authorizations, etc.





          No consent, approval or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution, delivery or

7









 








performance by the Company of this Agreement or the Notes or the execution, delivery or
performance by each Subsidiary Guarantor of the Subsidiary Guaranty. The foregoing representation
is qualified to the extent that filings with Governmental Authorities may be required of the
Company and its Subsidiaries in connection with their performance of their obligations under
Sections 9.1 through 9.5, inclusive.





	5.8	 	Litigation; Observance of Statutes and Orders.






      (a) Except as disclosed in Schedule 5.8, there are no actions, suits, investigations or
proceedings pending or, to the knowledge of the Company, threatened against or affecting the
Company or any Subsidiary or any property of the Company or any Subsidiary in any court or
before any arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.




      (b) Neither the Company nor any Subsidiary is in default under any term of any
agreement or instrument to which it is a party or by which it is bound, or any order,
judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in
violation of any applicable law, ordinance, rule or regulation (including Environmental Laws
and the USA Patriot Act) of any Governmental Authority, which default or violation,
individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect. Neither the Company (or any of its directors or officers) nor any Insured
Subsidiary (or any of its directors or officers) is a party to, or subject to, any agreement
with, or directive or order issued by, any federal or state bank or thrift regulatory
authority that imposes restrictions or requirements on it which are not generally applicable
to banks or thrifts; and no action or administrative proceeding is pending or, to the
Company’s knowledge, threatened against the Company or any Insured Subsidiary or any of
their directors or officers that seeks to impose any such restriction or requirement.




	5.9	 	Taxes.





          The Company and its Subsidiaries have filed all tax returns that are required to have been
filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and
all other taxes and assessments levied upon them or their properties, assets, income or franchises,
to the extent such taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not, individually or in
the aggregate, Material or (ii) the amount, applicability or validity of which is currently being
contested in good faith by appropriate proceedings and with respect to which the Company or a
Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The
Company knows of no basis for any other tax or assessment that could reasonably be expected to have
a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its
Subsidiaries in respect of Federal, state or other taxes for all fiscal periods are adequate. The
Federal income tax liabilities of the Company and its Subsidiaries have been finally determined
(whether by reason of completed audits or the

8









 








statute of limitations having run) for all fiscal years up to and including the fiscal year
ended December 31, 1998.





	5.10	 	Title to Property; Leases.





          The Company and its Subsidiaries have good and sufficient title to their respective properties
that individually or in the aggregate are Material, including all such properties reflected in the
most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by
the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the
ordinary course of business), in each case free and clear of Liens prohibited by this Agreement.
All leases that individually or in the aggregate are Material are valid and subsisting and are in
full force and effect in all material respects.





	5.11	 	Licenses, Permits, etc.






      (a) The Company and its Subsidiaries own or possess all licenses, permits, franchises,
authorizations, patents, copyrights, proprietary software, service marks, trademarks and
trade names, or rights thereto, that individually or in the aggregate are Material, without
known conflict with the rights of others.




      (b) To the best knowledge of the Company, no product of the Company or any of its
Subsidiaries infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, proprietary software, service mark, trademark, trade name
or other right owned by any other Person.




      (c) To the best knowledge of the Company, there is no Material violation by any Person
of any right of the Company or any of its Subsidiaries with respect to any patent,
copyright, proprietary software, service mark, trademark, trade name or other right owned or
used by the Company or any of its Subsidiaries.




	5.12	 	Compliance with ERISA.






      (a) The Company and each ERISA Affiliate have operated and administered each Plan in
compliance with all applicable laws except for such instances of noncompliance as have not
resulted in and could not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I
or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans (as defined in section 3 of ERISA), and no event, transaction or condition has
occurred or exists that could reasonably be expected to result in the incurrence of any such
liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of
the rights, properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to section
401(a)(29) or 412 of the Code or section 4068 of ERISA, other than such liabilities or Liens
as would not be individually or in the aggregate Material.



9









 






      (b) The present value of the aggregate benefit liabilities under each of the Plans
(other than Multiemployer Plans), determined as of the end of such Plan’s most recently
ended plan year on the basis of the actuarial assumptions specified for funding purposes in
such Plan’s most recent actuarial valuation report, did not exceed the aggregate current
value of the assets of such Plan allocable to such benefit liabilities by an amount that,
individually, or in the aggregate for all Plans, is Material. The term “benefit
liabilities” has the meaning specified in section 4001 of ERISA and the terms “current
value” and “present value” have the meaning specified in section 3 of ERISA.




      (c) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and
are not subject to contingent withdrawal liabilities) under section 4201 or 4204 of ERISA in
respect of Multiemployer Plans that individually or in the aggregate are Material.




      (d) The expected postretirement benefit obligation (determined as of the last day of
the Company’s most recently ended fiscal year in accordance with Financial Accounting
Standards Board Statement No. 106, without regard to liabilities attributable to
continuation coverage mandated by section 4980B of the Code) of the Company and its
Subsidiaries is not Material.




      (e) The execution and delivery of this Agreement and the issuance and sale of the Notes
hereunder will not involve any transaction that is subject to the prohibitions of section
406 of ERISA or in connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first sentence of
this Section 5.12(e) is made in reliance upon and subject to the accuracy of your
representation in Section 6.2 as to the sources of the funds used to pay the purchase price
of the Notes to be purchased by you.




      (f) All Non-US Plans have been established, operated, administered and maintained in
compliance with all laws, regulations and orders applicable thereto, except where failure so
to comply could not be reasonably expected to have a Material Adverse Effect. All premiums,
contributions and any other amounts required by applicable Non-US Plan documents or
applicable laws to be paid or accrued by the Company and its Subsidiaries have been paid or
accrued as required, except where failure so to pay or accrue could not be reasonably
expected to have a Material Adverse Effect.




	5.13	 	Private Offering by the Company.





          Neither the Company nor anyone acting on its behalf has offered the Notes or any similar
securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any person other than you, the Other Purchasers and not more
than 29 other Institutional Investors, each of which has been offered the Notes at a private sale
for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration requirements of
Section 5 of the Securities Act or to the registration requirements of any securities or blue sky
laws of any applicable jurisdiction.




10









 









	5.14	 	Use of Proceeds; Margin Regulations.





          The Company will apply the proceeds of the sale of the Notes to refinance Debt of the Company
as set forth in Schedule 5.14 and for general corporate purposes. No part of the proceeds from the
sale of the Notes will be used, directly or indirectly, for the purpose of buying or carrying any
margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve
System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under
such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR
224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220).
Margin stock does not constitute more than 1% of the value of the consolidated assets of the
Company and its Subsidiaries and the Company does not have any present intention that margin stock
will constitute more than 1% of the value of such assets. As used in this Section, the terms
“margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said
Regulation U.





	5.15	 	Existing Debt; Future Liens.






      (a) Except as described therein, Schedule 5.15 sets forth a complete and correct list
of all outstanding Debt of the Company and its Subsidiaries as of December 31, 2005
(including a description of the obligors and obligees, principal amount outstanding and
collateral therefor, if any, and guaranty thereof, if any), since which date there has been
no Material change in the amounts, interest rates, sinking funds, installment payments or
maturities of the Debt of the Company or its Subsidiaries. Neither the Company nor any
Subsidiary is in default and no waiver of default is currently in effect, in the payment of
any principal or interest on any Debt of the Company or any Subsidiary and no event or
condition exists with respect to any Debt of the Company or any Subsidiary that would permit
(or that with notice or the lapse of time, or both, would permit) one or more Persons to
cause such Debt to become due and payable before its stated maturity or before its regularly
scheduled dates of payment.




      (b) Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary has
agreed or consented to cause or permit in the future (upon the happening of a contingency or
otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a
Lien not permitted by Section 10.5.




      (c) Neither the Company nor any Subsidiary is a party to, or otherwise subject to any
provision contained in, any instrument evidencing Debt of the Company or such Subsidiary,
any agreement relating thereto or any other agreement (including its charter or other
organizational document) that limits the amount of, or otherwise imposes restrictions on the
incurring of, Debt of the Company, except as specifically indicated in Schedule 5.15.




	5.16	 	Foreign Assets Control Regulations, etc.






      (a) Neither the sale of the Notes by the Company hereunder nor its use of the proceeds
thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign
assets control regulations of the United States Treasury Department (31 CFR,



11









 






Subtitle B, Chapter V, as amended) or any enabling legislation or executive order
relating thereto.




      (b) Neither the Company nor any Subsidiary (i) is a Person described or designated in
the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets
Control or in Section 1 of the Anti-Terrorism Order or (ii) to the Company’s knowledge,
engages in any dealings or transactions with any such Person. The Company and its
Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.




      (c) No part of the proceeds from the sale of the Notes hereunder will be used, directly
or indirectly, in violation of the United States Foreign Corrupt Practices Act of 1977, as
amended, assuming in all cases that such Act applies to the Company.




	5.17	 	Status under Certain Statutes.





          Neither the Company nor any Subsidiary is subject to regulation under the Investment Company
Act of 1940, as amended, the ICC Termination Act, as amended, or the Federal Power Act, as amended.





	5.18	 	Environmental Matters.






      (a) Neither the Company nor any Subsidiary has knowledge of any claim or has received
any notice of any claim, and no proceeding has been instituted raising any claim against the
Company or any of its Subsidiaries or any of their respective real properties now or
formerly owned, leased or operated by any of them or other assets, alleging any damage to
the environment or violation of any Environmental Laws, except, in each case, such as could
not reasonably be expected to result in a Material Adverse Effect.




      (b) Neither the Company nor any Subsidiary has knowledge of any facts that would give
rise to any claim, public or private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or their use, except,
in each case, such as could not reasonably be expected to result in a Material Adverse
Effect.




      (c) Neither the Company nor any Subsidiary has stored any Hazardous Materials on real
properties now or formerly owned, leased or operated by any of them and has not disposed of
any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any
manner that could reasonably be expected to result in a Material Adverse Effect.




      (d) All buildings on all real properties now owned, leased or operated by the Company
or any Subsidiary are in compliance with applicable Environmental Laws, except where failure
to comply could not reasonably be expected to result in a Material Adverse Effect.



12









 






	5.19	 	Solvency.





          After giving effect to the transactions contemplated herein, (i) the present fair salable
value of the assets of each Subsidiary Guarantor is in excess of the amount that will be required
to pay its probable liability on its existing debts as said debts become absolute and matured, (ii)
each Subsidiary Guarantor has received reasonably equivalent value for executing and delivering the
Subsidiary Guaranty, (iii) the property remaining in the hands of each Subsidiary Guarantor is not
an unreasonably small capital, and (iv) each Subsidiary Guarantor is able to pay its debts as they
mature.





	6.	 	REPRESENTATIONS OF THE PURCHASERS.






	6.1	 	Purchase for Investment.





          You represent that you are purchasing the Notes for your own account or for one or more
separate accounts maintained by you or for the account of one or more pension or trust funds and
not with a view to the distribution thereof, provided that the disposition of your or their
property shall at all times be within your or their control. You understand that the Notes have
not been registered under the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required by law, and that
the Company is not required to register the Notes.





	6.2	 	Source of Funds.





          You represent that at least one of the following statements is an accurate representation as
to each source of funds (a “Source”) to be used by you to pay the purchase price of the Notes to be
purchased by you hereunder:





      (a) the Source is an “insurance company general account” (as the term is defined in the
United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in
respect of which the reserves and liabilities (as defined by the annual statement for life
insurance companies approved by the National Association of Insurance Commissioners (the
“NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any
employee benefit plan together with the amount of the reserves and liabilities for the
general account contract(s) held by or on behalf of any other employee benefit plans
maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the
same employee organization in the general account do not exceed 10% of the total reserves
and liabilities of the general account (exclusive of separate account liabilities) plus
surplus as set forth in the NAIC Annual Statement filed with your state of domicile; or




      (b) the Source is a separate account that is maintained solely in connection with your
fixed contractual obligations under which the amounts payable, or credited, to any employee
benefit plan (or its related trust) that has any interest in such separate



13









 






account (or to any participant or beneficiary of such plan (including any annuitant))
are not affected in any manner by the investment performance of the separate account; or




      (c) the Source is either (i) an insurance company pooled separate account, within the
meaning of PTE 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund,
within the meaning of PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to
the Company in writing pursuant to this paragraph (c), no employee benefit plan or group of
plans maintained by the same employer or employee organization beneficially owns more than
10% of all assets allocated to such pooled separate account or collective investment fund;
or




      (d) the Source constitutes assets of an “investment fund” (within the meaning of Part V
of PTE 84-14 (the “QPAM Exemption”)) managed by a “qualified professional asset manager” or
“QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s
assets that are included in such investment fund, when combined with the assets of all other
employee benefit plans established or maintained by the same employer or by an affiliate
(within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the
same employee organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption are
satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the
definition of “control” in Section V(e) of the QPAM Exemption) owns a 5% or more interest in
the Company and (i) the identity of such QPAM and (ii) the names of all employee benefit
plans whose assets are included in such investment fund have been disclosed to the Company
in writing pursuant to this clause (d); or




      (e) the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of
PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within
the meaning of Part IV of the INHAM exemption), the conditions of Part I(a), (g) and (h) of
the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled
by the INHAM (applying the definition of “control” in Section IV(h) of the INHAM Exemption)
owns a 5% or more interest in the Company and (i) the identity of such INHAM and (ii) the
name(s) of the employee benefit plan(s) whose assets constitute the Source have been
disclosed to the Company in writing pursuant to this clause (e); or




      (f) the Source is a governmental plan; or




      (g) the Source is one or more employee benefit plans, or a separate account or trust
fund comprised of one or more employee benefit plans, each of which has been identified to
the Company in writing pursuant to this paragraph (g); or




      (h) the Source does not include assets of any employee benefit plan, other than a plan
exempt from the coverage of ERISA.



14









 




As used in this Section 6.2, the terms “employee benefit plan”, “governmental plan” and “separate
account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.





	7.	 	INFORMATION AS TO COMPANY.






	7.1	 	Financial and Business Information.





               The Company will deliver to each holder of Notes that is an Institutional Investor:





      (a) Quarterly Statements — within 60 days (or such shorter period as is 15
days greater than the period applicable to the filing of the Company’s Quarterly Report on
Form 10-Q (“Form 10-Q”) with the SEC regardless of whether the Company is subject to the
filing requirements thereof) after the end of each quarterly fiscal period in each fiscal
year of the Company (other than the last quarterly fiscal period of each such fiscal year),
duplicate copies of,




      (i) a consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarter, and




      (ii) consolidated statements of income, changes in stockholders’ equity and
cash flows of the Company and its Subsidiaries for such quarter and (in the case of
the second and third quarters) for the portion of the fiscal year ending with such
quarter,




setting forth in each case in comparative form the figures for the corresponding periods in
the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP
applicable to quarterly financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial position of the
companies being reported on and their results of operations and cash flows, subject to
changes resulting from year-end adjustments and the absence of footnotes, provided that
delivery within the time period specified above of copies of the Company’s Form 10-Q
prepared in compliance with the requirements therefor and filed with the SEC shall be deemed
to satisfy the requirements of this Section 7.1(a) provided, further, that the Company shall
be deemed to have made such delivery of such Form 10-Q if it shall have timely made
Electronic Delivery thereof;




      (b) Annual Statements — within 120 days (or such shorter period as is 15 days
greater than the period applicable to the filing of the Company’s Annual Report on Form 10-K
(the “Form 10-K”) with the SEC regardless of whether the Company is subject to the filing
requirements thereof) after the end of each fiscal year of the Company, duplicate copies of




      (i) a consolidated balance sheet of the Company and its Subsidiaries, as at the
end of such year, and



15









 






      (ii) consolidated statements of income, changes in stockholders’ equity and
cash flows of the Company and its Subsidiaries for such year,




setting forth in each case in comparative form the figures for the previous fiscal year, all
in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion
thereon of independent certified public accountants of recognized national standing, which
opinion shall state that such financial statements present fairly, in all material respects,
the financial position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the examination of
such accountants in connection with such financial statements has been made in accordance
with generally accepted auditing standards, and that such audit provides a reasonable basis
for such opinion in the circumstances, provided that the delivery within the time period
specified above of the Company’s Annual Report on Form 10-K for such fiscal year (together
with the Company’s annual report to stockholders, if any, prepared pursuant to Rule 14a-3
under the Exchange Act) prepared in accordance with the requirements therefor and filed with
the SEC shall be deemed to satisfy the requirements of this Section 7.1(b) provided,
further, that the Company shall be deemed to have made such delivery of such Form 10-K if it
shall have timely made Electronic Delivery thereof;




      (c) SEC and Other Reports — promptly upon their becoming available, one copy
of (i) each financial statement, report, notice or proxy statement sent by the Company or
any Subsidiary to its public securities holders generally and (ii) each regular or periodic
report, each registration statement (without exhibits except as expressly requested by such
holder), and each prospectus and all amendments thereto filed by the Company or any
Subsidiary with the SEC and of all press releases and other statements made available
generally by the Company or any Subsidiary to the public concerning developments that are
Material; provided that timely Electronic Delivery of such documents shall be deemed to
satisfy the requirements of this Section 7.1(c);




      (d) Notice of Default or Event of Default — promptly, and in any event within
five Business Days after a Responsible Officer becoming aware of the existence of any
Default or Event of Default or that any Person has given any notice or taken any action with
respect to a claimed default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in Section 11(f), a written
notice specifying the nature and period of existence thereof, whether or not the Company
agrees that any claimed default constitutes a Default or Event of Default, and what action
the Company is taking or proposes to take with respect thereto;




      (e) ERISA Matters — promptly, and in any event within five days after a
Responsible Officer becoming aware of any of the following, a written notice setting forth
the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes
to take with respect thereto:




        (i) with respect to any Plan, any reportable event, as defined in section
4043(c) of ERISA and the regulations thereunder, for which notice thereof



16









 






has not been waived pursuant to such regulations as in effect on the date hereof; or




        (ii) the taking by the PBGC of steps to institute, or the threatening by the
PBGC of the institution of, proceedings under section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan, or the
receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan
that such action has been taken by the PBGC with respect to such Multiemployer Plan;
or




        (iii) any event, transaction or condition that could result in the incurrence
of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or
such penalty or excise tax provisions, if such liability or Lien, taken together
with any other such liabilities or Liens then existing, could reasonably be expected
to have a Material Adverse Effect; and




      (f) Notices from Governmental Authority — promptly, and in any event within 30
days of receipt thereof, copies of any notice to the Company or any Subsidiary from any
Federal or state Governmental Authority relating to any order, ruling, statute or other law
or regulation that could reasonably be expected to have a Material Adverse Effect; and




      (g) Requested Information — with reasonable promptness, and subject to
applicable privacy laws or regulations and contractual obligations, such other data and
information relating to the business, operations, affairs, financial condition, assets or
properties of the Company or any of its Subsidiaries (including actual copies of any
documents previously delivered by means of Electronic Delivery) or relating to the ability
of the Company to perform its obligations hereunder and under the Notes as from time to time
may be reasonably requested by any such holder of Notes.




	7.2	 	Officer’s Certificate.





          Each set of financial statements delivered to a holder of Notes pursuant to Section 7.1(a) or
Section 7.1(b) will be accompanied by a certificate (which, in the case of Electronic Delivery of
any such financial statements, may be by separate concurrent delivery of such certificate to each
holder of Notes or by Electronic Delivery thereof) of a Senior Financial Officer setting forth:





      (a) Covenant Compliance — the information (including detailed calculations)
required in order to establish whether the Company was in compliance with the requirements
of Section 10.1 through Section 10.8, inclusive, during the quarterly or annual period
covered by the statements then being furnished (including with respect to each such Section,
where applicable, the calculations of the maximum or minimum



17









 






amount, ratio or percentage, as the case may be, permissible under the terms of such
Sections, and the calculation of the amount, ratio or percentage then in existence); and




      (b) Event of Default — a statement that such Senior Financial Officer has
reviewed the relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its Subsidiaries
from the beginning of the quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not have disclosed the
existence during such period of any condition or event that constitutes a Default or an
Event of Default or, if any such condition or event existed or exists (including any such
event or condition resulting from the failure of the Company or any Subsidiary to comply
with any Environmental Law), specifying the nature and period of existence thereof and what
action the Company shall have taken or proposes to take with respect thereto.




	7.3	 	Visitation.





          The Company shall permit the representatives of each holder of Notes that is an Institutional
Investor:





      (a) No Default — if no Default or Event of Default then exists, at the expense
of such holder and upon reasonable prior notice to the Company, to visit the principal
executive office of the Company during normal business hours, to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with the Company’s officers, and
(with the consent of the Company, which consent will not be unreasonably withheld) to visit
the other offices and properties of the Company and each Material Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing; and




      (b) Default — if a Default or Event of Default then exists, at the expense of
the Company, to visit and inspect any of the offices or properties of the Company or any
Material Subsidiary during normal business hours, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company and its
Subsidiaries), all at such times and as often as may be requested.




	8.	 	PREPAYMENT OF THE NOTES.






	8.1	 	No Scheduled Prepayments.





          No regularly scheduled prepayments are due on the Notes prior to their stated maturity.




18









 









	8.2	 	Optional Prepayments with Make-Whole Amount.






      (a) Optional Prepayment by Series. The Company may, at its option, upon notice
as provided below, prepay at any time all, or from time to time any part of, the Notes of
any series in an amount not less than $2,000,000 in the aggregate in the case of a partial
prepayment, at 100% of the principal amount so prepaid, and the Make-Whole Amount determined
for the prepayment date with respect to such principal amount. The Company will give each
holder of Notes written notice of each optional prepayment under this Section 8.2 not less
than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each
such notice shall specify such date (which shall be a Business Day), the aggregate principal
amount of the Notes of such series to be prepaid on such date, the principal amount of each
Note held by such holder to be prepaid (determined in accordance with Section 8.4), and the
interest to be paid on the prepayment date with respect to such principal amount being
prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated as if the
date of such notice were the date of the prepayment), setting forth the details of such
computation. Two Business Days prior to such prepayment, the Company shall deliver to each
holder of Notes or the series to be prepaid a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the specified prepayment date.




      (b) Prepayments During Defaults or Events of Defaults. Anything in Section
8.2(a) to the contrary notwithstanding, during the continuance of a Default or Event of
Default, the Company may prepay less than all of the outstanding Notes pursuant to Section
8.2(a) only if such prepayment is allocated among all of the Notes at the time outstanding
in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof
not theretofore called for prepayment.




	8.3	 	Mandatory Offer to Prepay Upon Change of Control.






      (a) Notice of Change of Control or Control Event — The Company will, within
five Business Days after any Responsible Officer has knowledge of the occurrence of any
Change of Control or Control Event, give notice of such Change of Control or Control Event
to each holder of Notes unless notice in respect of such Change of Control (or the Change of
Control contemplated by such Control Event) shall have been given pursuant to subparagraph
(b) of this Section 8.3. If a Change of Control has occurred, such notice shall contain and
constitute an offer to prepay Notes as described in paragraph (c) of this Section 8.3 and
shall be accompanied by the certificate described in paragraph (g) of this Section 8.3.




      (b) Condition to Company Action — The Company will not take any action that
consummates or finalizes a Change of Control unless (i) at least 15 Business Days prior to
such action it shall have given to each holder of Notes written notice containing and
constituting an offer to prepay Notes accompanied by the certificate described in paragraph
(g) of this Section 8.3, and (ii) subject to the provisions of paragraph (d)



19









 






below, contemporaneously with such action, it prepays all Notes required to be prepaid
in accordance with this Section 8.3.




      (c) Offer to Prepay Notes — The offer to prepay Notes contemplated by
paragraphs (a) and (b) of this Section 8.3 shall be an offer to prepay, in accordance with
and subject to this Section 8.3, all, but not less than all, of the Notes held by each
holder (in this case only, “holder” in respect of any Note registered in the name of a
nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date
specified in such offer (the “Proposed Prepayment Date”). If such Proposed Prepayment Date
is in connection with an offer contemplated by paragraph (a) of this Section 8.3, such date
shall be not less than 30 days and not more than 60 days after the date of such offer.




      (d) Acceptance; Rejection — A holder of Notes may accept the offer to prepay
made pursuant to this Section 8.3 by causing a notice of such acceptance to be delivered to
the Company on or before the date specified in the certificate described in paragraph (g) of
this Section 8.3. A failure by a holder of Notes to respond to an offer to prepay made
pursuant to this Section 8.3, or to accept an offer as to all of the Notes held by the
holder, within such time period shall be deemed to constitute rejection of such offer by
such holder.




      (e) Prepayment — Prepayment of the Notes to be prepaid pursuant to this
Section 8.3 shall be at 100% of the principal amount of such Notes, together with interest
on such Notes accrued to the date of prepayment and shall not require the payment of any
Make-Whole Amount. The prepayment shall be made on the Proposed Prepayment Date except as
provided in paragraph (f) of this Section 8.3.




      (f) Deferral Pending Change of Control — The obligation of the Company to
prepay Notes pursuant to the offers required by paragraphs (a) and (b) and accepted in
accordance with paragraph (d) of this Section 8.3 is subject to the occurrence of the Change
of Control in respect of which such offers and acceptances shall have been made. In the
event that such Change of Control does not occur on or prior to the Proposed Prepayment Date
in respect thereof, the prepayment shall be deferred until and shall be made on the date on
which such Change of Control occurs. The Company shall keep each holder of Notes reasonably
and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on
which such Change of Control and the prepayment are expected to occur, and (iii) any
determination by the Company that efforts to effect such Change of Control have ceased or
been abandoned (in which case the offers and acceptances made pursuant to this Section 8.3
in respect of such Change of Control shall be deemed rescinded). Notwithstanding the
foregoing, in the event that the prepayment has not been made within 90 days after such
Proposed Prepayment Date by virtue of the deferral provided for in this Section 8.3(f), the
Company shall make a new offer to prepay in accordance with paragraph (c) of this Section
8.3.




      (g) Officer’s Certificate — Each offer to prepay the Notes pursuant to this
Section 8.3 shall be accompanied by a certificate, executed by a Senior Financial Officer of
the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment



20









 






Date, (ii) that such offer is made pursuant to this Section 8.3, (iii) the principal
amount of each Note offered to be prepaid, (iv) the interest that would be due on each Note
offered to be prepaid, accrued to the Proposed Prepayment Date, (v) that the conditions of
this Section 8.3 have been fulfilled, (vi) in reasonable detail, the nature and date or
proposed date of the Change of Control and (vii) the date by which any holder of a Note that
wishes to accept such offer must deliver notice thereof to the Company, which date shall not
be earlier than three Business Days prior to the Proposed Prepayment Date or, in the case of
a prepayment pursuant to Section 8.3(b), the date of the action referred to in Section
8.3(b)(i).




	8.4	 	Allocation of Partial Prepayments.





          In the case of each partial prepayment of Notes of a series pursuant to Section 8.2, the
principal amount of the Notes of such series to be prepaid shall be allocated among all of the
Notes of such series at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for prepayment.





	8.5	 	Maturity; Surrender, etc.





          In the case of each prepayment of Notes pursuant to this Section 8, the principal amount of
each Note to be prepaid shall mature and become due and payable on the date fixed for such
prepayment (which shall be a Business Day), together with interest on such principal amount accrued
to such date and the applicable Make-Whole Amount, if any. From and after such date, unless the
Company shall fail to pay such principal amount when so due and payable, together with the interest
and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to
accrue. Any Note paid or prepaid in full shall be surrendered to the Company and canceled and
shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any
Note.





	8.6	 	Purchase of Notes.





          The Company will not and will not permit any Affiliate to purchase, redeem, prepay or
otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or
prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company
will promptly cancel all Notes acquired by it or any Affiliate pursuant to any payment or
prepayment of Notes pursuant to any provision of this Agreement and no Notes may be issued in
substitution or exchange for any such Notes.





	8.7	 	Make-Whole Amount.





          “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of
the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of
such Note over the amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount, the following
terms have the following meanings:




21









 








          “Called Principal” means, with respect to any Note, the principal of such Note that is to be
prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.




          “Discounted Value” means, with respect to the Called Principal of any Note, the amount
obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from
their respective scheduled due dates to the Settlement Date with respect to such Called Principal,
in accordance with accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield
with respect to such Called Principal.




          “Reinvestment Yield” means, with respect to the Called Principal of any Note, .50% over the
yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New York City time) on the
second Business Day preceding the Settlement Date with respect to such Called Principal, on the
display designated as “Page PX1” (or such other display as may replace Page PX1 on Bloomberg
Financial Markets (“Bloomberg”) or, if Page PX1 (or its successor screen on Bloomberg) is
unavailable, the Telerate Access Service screen which corresponds most closely to Page PX1 for the
most recently issued actively traded on-the-run U.S. Treasury securities having a maturity equal to
the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such
yields are not reported as of such time or the yields reported as of such time are not
ascertainable (including by way of interpolation), the Treasury Constant Maturity Series Yields
reported, for the latest day for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury
security with the maturity closest to and greater than such Remaining Average Life and (2) the
actively traded U.S. Treasury security with the maturity closest to and less than such Remaining
Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears
in the interest rate of the applicable Note.




          “Remaining Average Life” means, with respect to any Called Principal, the number of years
(calculated to the nearest one-twelfth year) obtained by dividing (i) such Called Principal into
(ii) the sum of the products obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number of years (calculated to
the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled Payment.




          “Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all
payments of such Called Principal and interest thereon that would be due after the Settlement Date
with respect to such Called Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which interest payments
are due to be made under the terms of the Notes, then the amount of the

22









 








next succeeding scheduled interest payment will be reduced by the amount of interest accrued
to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or
12.1.




          “Settlement Date” means, with respect to the Called Principal of any Note, the date on which
such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context requires.





	9.	 	AFFIRMATIVE COVENANTS.





          The Company covenants that so long as any of the Notes are outstanding:





	9.1	 	Compliance with Law.





          Without limiting Section 10.11, the Company will, and will cause each Subsidiary to, comply
with all laws, ordinances or governmental rules or regulations to which each of them is subject,
including ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain in effect
all licenses, certificates, permits, franchises and other governmental authorizations necessary to
the ownership of their respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.





	9.2	 	Insurance.





          The Company will, and will cause each Subsidiary to, maintain, with financially sound and
reputable insurers, insurance with respect to their respective properties and businesses against
such casualties and contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect
thereto) as is customary in the case of entities of established reputations engaged in the same or
a similar business and similarly situated.





	9.3	 	Maintenance of Properties.





          The Company will, and will cause each Subsidiary to, maintain and keep, or cause to be
maintained and kept, their respective properties in good repair, working order and condition (other
than ordinary wear and tear), so that the business carried on in connection therewith may be
properly conducted at all times, provided that this Section shall not prevent the Company or any
Subsidiary from discontinuing the operation and the maintenance of any of its properties if such
discontinuance is desirable in the conduct of its business and the Company has concluded that such
discontinuance could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.




23









 









	9.4	 	Payment of Taxes and Claims.





          The Company will, and will cause each Subsidiary to, file all tax returns required to be filed
in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and assessments have become due
and payable and before they have become delinquent and all claims for which sums have become due
and payable that have or might become a Lien on properties or assets of the Company or any
Subsidiary, provided that neither the Company nor any Subsidiary need pay any such tax or
assessment or claims if (i) the amount, applicability or validity thereof is contested by the
Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the
Company or such Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (ii) the nonpayment of all such taxes, assessments
and claims in the aggregate could not reasonably be expected to have a Material Adverse Effect.





	9.5	 	Corporate Existence, etc.





          Subject to Section 10.7, the Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 10.7 and 10.8, the Company will at all times
preserve and keep in full force and effect the corporate (or, as applicable, limited liability
company) existence of each Subsidiary (unless merged into the Company or a Wholly-Owned Subsidiary)
and all rights and franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in full force and
effect such corporate existence, right or franchise could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.





	9.6	 	Books and Records.





          The Company will, and will cause each Subsidiary to, maintain proper books of record and
account in conformity with GAAP and all applicable requirements of any Governmental Authority
having legal or regulatory jurisdiction over the Company or such Subsidiary, as the case may be.





	9.7	 	Subsidiary Guaranty; Release.






      (a) Subsidiary Guarantors. The Company will cause each (A) Subsidiary that, on
or after the date of the Closing, is or becomes a co-obligor, borrower or guarantor of Debt
in respect of a U.S. Credit Agreement or (B) Domestic Subsidiary that, on or after the date
of the Closing, is or becomes a co-obligor, borrower or guarantor of Debt in respect of the
Credit Agreement (Canadian), on the date of the Closing or within 10 Business Days of its
thereafter becoming a co-obligor, borrower or a guarantor of Debt in respect of a U.S.
Credit Agreement or a co-obligor, borrower or guarantor of Debt in respect of the Credit
Agreement (Canadian), as the case may be, to become a party to the Subsidiary Guaranty, and
shall deliver to each holder:



24









 






            (i) an executed counterpart of the Subsidiary Guaranty, or, if the Subsidiary
Guaranty has been previously executed and delivered, an executed counterpart of a
Joinder thereto;




            (ii) copies of such directors’ or other authorizing resolutions, charter,
bylaws and other constitutive documents of such Subsidiary as the Required Holders
may reasonably request; and




            (iii) an opinion of independent counsel reasonably satisfactory to the Required
Holders covering the authorization, execution, delivery, compliance with law, no
conflict with other documents, no consents and enforceability of the Subsidiary
Guaranty against such Subsidiary in form and substance reasonably satisfactory to
the Required Holders.




      (b) Release of Subsidiary Guarantor. Each holder of a Note fully releases and
discharges from the Subsidiary Guaranty a Subsidiary Guarantor, immediately and without any
further act, upon such Subsidiary Guarantor being released and discharged as a co-obligor,
borrower or guarantor under and in respect of each U.S. Credit Agreement and, in the case of
a Domestic Subsidiary, the Credit Agreement (Canadian); provided that (i) no Default or
Event of Default exists or will exist immediately following such release and discharge; (ii)
if any fee or other consideration is paid or given to any holder of Debt under any of the
U.S. Credit Agreements or the Credit Agreement (Canadian) in connection with such release,
other than the repayment of all or a portion of such Debt under such U.S. Credit Agreement
or the Credit Agreement (Canadian), each holder of a Note receives equivalent consideration
on a pro rata basis; and (iii) at the time of such release and discharge, the Company
delivers to each holder of Notes a certificate of a Responsible Officer certifying (x) that
such Subsidiary Guarantor has been or is being released and discharged as a co-obligor,
borrower or guarantor under and in respect of each of the U.S. Credit Agreements and, in the
case of a Domestic Subsidiary, the Credit Agreement (Canadian) and (y) as to the matters set
forth in clauses (i) and (ii). Any outstanding Debt of a Subsidiary Guarantor shall be
deemed to have been incurred by such Subsidiary Guarantor as of the date it is released and
discharged from the Subsidiary Guaranty.




	9.8	 	Pari Passu Ranking.





          The Debt evidenced by the Notes will at all times rank at least pari passu with all senior
unsecured Debt of the Company and on and at all times after September 30, 2006 will rank at least
pari passu with the Company’s Debt under the U.S. Credit Agreements.





	9.9	 	Security.





          Not later than September 30, 2006, the Company, each relevant Subsidiary and each other party
thereto, will either:





      (a) Deliver to each holder of Notes (i) an instrument or instruments, in form
reasonably satisfactory to the Required Holders, executed by Harris N.A., as collateral



25









 






agent, acknowledging that each of the Pledge Agreements has been satisfied and
terminated and that the Intercreditor Agreement has been terminated and (ii) a certificate
of a Responsible Officer certifying that the Collateral Agent has duly assigned, transferred
and delivered to the Company and its Subsidiaries the collateral subject to any Pledge
Agreement; or




      (b) If any of the deliveries set forth in Section 9.9(a) has not occurred, enter into
(i) an amendment of the Intercreditor Agreement, in form and substance reasonably
satisfactory to the Required Holders, adding each holder of Notes as a Senior Creditor under
and as defined in such agreement and providing, among other things, for the ratable sharing
of all payments received by any Senior Creditor following an Enforcement (as defined
therein), so that the holders of Notes are pari passu with all other Senior Creditors and
(ii) an amendment of the Pledge Agreement if it has not been satisfied and terminated, in
form and substance reasonably satisfactory to the Required Holders, adding each holder of
Notes as a Secured Creditor under and as defined in the Pledge Agreement. The Intercreditor
Agreement, as amended, will contain a provision obligating each holder of Notes to direct
the collateral agent to release the interest of the holders in any collateral under the
Pledge Agreement, if clause (ii) applies, if the required holders of Debt under the U.S.
Credit Agreements release such collateral; provided that (i) no Default or Event of Default
exists or will exist immediately following such release and discharge; (ii) if any fee or
other consideration is paid or given to any holder of Debt under any of the U.S. Credit
Agreements in connection with such release, other than the repayment of all or a portion of
such Debt under such U.S. Credit Agreement, each holder of a Note receives equivalent
consideration on a pro rata basis and (iii) the Intercreditor Agreement is terminated
concurrently therewith or the sharing mechanism contained in the Intercreditor Agreement is
modified so that the holders of Notes remain pari passu with all other Senior Creditors.




	10.	 	NEGATIVE COVENANTS.





               The Company covenants that so long as any of the Notes are outstanding:






	10.1	 	Senior Debt; Consolidated Debt.






      The Company will not permit:




      (a) the ratio of Senior Debt (as of any date) to Consolidated Operating EBITDA (for the
Company’s most recently completed four fiscal quarters) to exceed 2.75 to 1.00 at any time;
and




      (b) the ratio of Consolidated Debt (as of any date) to Consolidated Operating EBITDA
(for the Company’s most recently completed four fiscal quarters) to exceed 3.75 to 1.00 at
any time.



26









 






	10.2	 	Interest Coverage.





          The Company will not permit the ratio of Consolidated Operating EBITDA to Consolidated
Interest Expense, in each case for the Company’s most recently completed four fiscal quarters, to
be less than 3.00 to 1.00 as of the end of any fiscal quarter.





	10.3	 	Capitalization of Insured Subsidiaries.





          The Company will at all times cause each Insured Subsidiary to be “well capitalized” within
the meaning of 12 C.F.R. 208.43(b)(1) or any successor regulations and will not permit any Insured
Subsidiary to be reclassified by any Governmental Authority as anything other than “well
capitalized” at any time.





	10.4	 	Priority Debt.





          The Company will not create, assume, incur or suffer to be created, assumed or incurred
additional Priority Debt, if immediately thereafter, Priority Debt exceeds 20% of Consolidated Net
Worth as of the end of the most recently completed fiscal quarter of the Company.





	10.5	 	Liens.





          The Company will not, and will not permit any Subsidiary to, permit to exist, create, assume
or incur, directly or indirectly, any Lien on its properties or assets, whether now owned or
hereafter acquired, unless the Notes are simultaneously equally and ratably secured by a Lien on
the same property and assets pursuant to an agreement or agreements reasonably acceptable to the
Required Holders, except:





      (a) Liens under the Pledge Agreements and Liens permitted by Section 9.9(b);




      (b) Liens for taxes, assessments or governmental charges or levies not then due and
delinquent or the nonpayment of which is permitted by Section 9.4;




      (c) any attachment or judgment Lien not constituting a Default or Event of Default
under Section 11(i);




      (d) Liens incurred or deposits or pledges made in the ordinary course of business (i)
in connection with workers’ compensation, unemployment insurance and other types of social
security, (ii) to secure the payment or performance of tenders, statutory or regulatory
obligations, bids, leases, contracts (including contracts to provide customer care services,
billing services, transaction processing services and other services), performance and
return of money bonds and other similar obligations, including letters of credit and bank
guarantees required or requested by the United States, any state thereof or any foreign
government or any subdivision, department, agency, organization or instrumentality of any of
the foregoing in connection with any contract or statute (exclusive of obligations for the
payment of borrowed money), or (iii) for the



27









 






benefit of the sponsor or its customers, to cover anticipated costs of future
redemptions of awards under loyalty marketing programs;




      (e) encumbrances in the nature of leases, subleases, zoning restrictions, easements,
rights of way, minor survey exceptions and other rights and restrictions of record on the
use of real property and defects in title arising or incurred in the ordinary course of
business, which, individually and in the aggregate, do not materially detract from the value
of such property or assets subject thereto or materially impair the use of the property or
assets subject thereto by the Company or such Subsidiary;




      (f) Liens (other than those referred to in Section 10.5(a)) existing on property or
assets of the Company or any Subsidiary as of the date of this Agreement that are described
in Schedule 10.5;




      (g) Liens,




      (i) existing on property at the time of its acquisition by the Company or a
Subsidiary and not created in contemplation thereof, whether or not the Debt secured
by such Lien is assumed by the Company or a Subsidiary; or




      (ii) on property or in rights related thereto created contemporaneously with
its acquisition or within 180 days of the acquisition or completion of construction
or development thereof to secure or provide for all or a portion of the purchase
price or cost of the acquisition, construction or development of such property after
the date of the Closing; or




      (iii) existing on property of a Person at the time such Person is merged or
consolidated with, or becomes a Subsidiary of, or substantially all of its assets
are acquired by, the Company or a Subsidiary and not created in contemplation
thereof;




provided that in the case of each of clauses (i), (ii) and (iii) such Liens do not extend to
additional property of the Company or any Subsidiary (other than property that is an
improvement to or is acquired for specific use in connection with the subject property) and
that the aggregate principal amount of Debt secured by each such Lien does not exceed the
fair market value of the property subject thereto (as determined in good faith by one or
more officers of the Company to whom authority to enter into the transaction has been
delegated by the board of directors);




      (h) Liens resulting from extensions, renewals or replacements of Liens permitted by
paragraphs (f) or (g) or this paragraph (h), provided that (i) there is no increase in the
principal amount or decrease in maturity of the Debt secured thereby at the time of such
extension, renewal or replacement other than by the amount of related fees, costs, expenses
and accrued but unpaid interest on such Debt, (ii) any new Lien attaches only to the same
property theretofore subject to such earlier Lien and (iii) immediately after such
extension, renewal or replacement no Default or Event of Default would exist;



28









 






      (i) Liens incurred in connection with a Qualified Securitization Transaction;




      (j) Liens securing Debt of a Subsidiary owed to the Company or to a Wholly Owned
Subsidiary or of the Company owed to a Wholly Owned Subsidiary; and




      (k) Liens securing Debt not otherwise permitted by paragraphs (a) through (j) of this
Section 10.5, provided that, at the time of creation, assumption or incurrence thereof,
Priority Debt does not exceed 20% of Consolidated Net Worth as of the end of the most
recently completed fiscal quarter of the Company.


In each case set forth above, notwithstanding any stated limitation on the assets that may be
subject to such Lien, a permitted Lien on a specified asset or group or type of assets may include
Liens on all improvements, additions and accessions thereto, property acquired for a specific use
in connection therewith, and all products and proceeds thereof and of any of the foregoing
(including, without limitation, dividends, distributions and increases in respect thereof).





	10.6	 	Subsidiary Debt.





          The Company will not permit any Subsidiary, directly or indirectly, to at any time create,
incur, assume, guarantee, have outstanding, or otherwise become or remain directly or indirectly
liable for, any Debt other than:





      (a) Debt of a Subsidiary Guarantor;




      (b) Debt outstanding (or permitted to be outstanding up to the full $35 million in the
case of the Credit Agreement (Canadian)) on the date of this Agreement that is described on
Schedule 10.6 and any extension, renewal, refinancing or refunding thereof, provided that
the principal amount thereof is not increased other than by the amount of related fees,
costs, expenses and accrued but unpaid interest on such Debt;




      (c) Debt owed to the Company or a Wholly Owned Subsidiary;




      (d) Debt of a Person outstanding at the time it becomes a Subsidiary provided that (i)
such Debt was not incurred in contemplation of such Person’s becoming a Subsidiary and (ii)
immediately after such Person becomes a Subsidiary no Default or Event of Default exists;
and any extension, renewal or refunding of such Debt, provided that the principal amount
thereof is not increased other than by the amount of related fees, costs, expenses and
accrued but unpaid interest on such Debt;




      (e) Debt of an Insured Subsidiary, consisting of certificates of deposit or other
similar items;




      (f) Debt not otherwise permitted by the preceding clauses (a) through (e), provided
that immediately after giving effect thereto and to the application of the proceeds thereof,




      (i) no Default or Event of Default exists, and



29









 






      (ii) Priority Debt does not exceed 20% of Consolidated Net Worth as of the end
of the most recently completed fiscal quarter of the Company.




	10.7	 	Mergers, Consolidations, etc.





          The Company will not consolidate with or merge with any other Person or convey, transfer, sell
or lease all or substantially all of its assets in a single transaction or series of transactions
to any Person unless:





      (a) the successor formed by such consolidation or the survivor of such merger or the
Person that acquires by conveyance, transfer, sale or lease all or substantially all of the
assets of the Company as an entirety, as the case may be, is a solvent corporation or
limited liability company organized and existing under the laws of the United States or any
state thereof (including the District of Columbia), and, if the Company is not such
successor or survivor, such corporation or limited liability company (i) shall have executed
and delivered to each holder of any Notes its assumption of the due and punctual performance
and observance of each covenant and condition of this Agreement and the Notes and (ii) shall
have caused to be delivered to each holder of any Notes an opinion of nationally recognized
independent counsel or other independent counsel reasonably satisfactory to the Required
Holders, to the effect that all agreements or instruments effecting such assumption are
enforceable in accordance with their terms and comply with the terms hereof; and




      (b) after giving effect to such transaction, no Default or Event of Default shall
exist.




	10.8	 	Sale of Assets.





          Except as permitted by Section 10.7, the Company will not, and will not permit any Subsidiary
to, sell, lease, transfer or otherwise dispose of, including by way of merger (collectively a
“Disposition”), any assets, in one or a series of transactions, to any Person, other than:





      (a) Dispositions in the ordinary course of business;




      (b) Dispositions by a Subsidiary to the Company or a Wholly Owned Subsidiary or by the
Company to a Wholly Owned Subsidiary;




      (c) Dispositions of accounts or notes receivable and rights related thereto in a
Qualified Securitization Transaction;




      (d) Dispositions not otherwise permitted by clauses (a), (b) or (c) of this Section
10.8 provided that (i) the aggregate net book value of all assets so disposed of in any
fiscal year pursuant to this Section 10.8(d) does not exceed 15% of Consolidated Total
Assets as of the last day of the most recently ended fiscal year and (ii) after giving
effect to such transaction, no Default or Event of Default shall exist.



30









 




Notwithstanding the foregoing, the Company may, or may permit a Subsidiary to, make a Disposition
and the assets subject to such Disposition shall not be subject to or included in the foregoing
limitation and computation contained in clause (d)(i) of the preceding sentence if, within 365 days
of such Disposition, an amount equal to the net proceeds from such Disposition is:





      (A) reinvested in productive assets to be used in the existing business of the Company
or a Subsidiary; or




      (B) applied to the payment or prepayment of the Notes or any other outstanding Debt of
the Company or any Subsidiary that is not subordinated in right of payment to the Notes.


For purposes of foregoing clause (B), the Company shall offer to prepay (on a Business Day not less
than 30 or more than 60 days following such offer) the Notes on a pro rata basis with any such
other Debt that the Company elects to include in such offer at a price of 100% of the principal
amount of the Notes to be prepaid (without any Make-Whole Amount) together with interest accrued to
the date of prepayment; provided that if any holder of the Notes declines or rejects such offer,
the proceeds that would have been paid to such holder shall be offered pro rata to the other
holders of the Notes that have accepted the offer. A failure by a holder of Notes to respond in
writing not later than 10 Business Days prior to the proposed prepayment date to an offer to prepay
made pursuant to this Section 10.8 shall be deemed to constitute a rejection of such offer by such
holder. Solely for the purposes of foregoing clause (B), whether or not such offers are accepted
by the holders, the entire principal amount of the Notes subject thereto shall be deemed to have
been prepaid.




          For avoidance of doubt, this Section 10.8 is not applicable to Dispositions of cash or cash
equivalents.





	10.9	 	Nature of Business.





          The Company will not, and will not permit any Subsidiary to, engage in any business if, as a
result, the general nature of the business in which the Company and its Subsidiaries, taken as a
whole, would then be engaged would be substantially changed from the general nature of the business
in which the Company and its Subsidiaries, taken as a whole, are engaged on the date of this
Agreement as described in the Memorandum.





	10.10	 	Transactions with Affiliates.





          The Company will not, and will not permit any Subsidiary to, enter into directly or indirectly
any Material transaction or Material group of related transactions (including the purchase, lease,
sale or exchange of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course and pursuant to the
reasonable requirements of the Company’s or such Subsidiary’s business and upon fair and reasonable
terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable
arm’s-length transaction with a Person not an Affiliate.




31









 









	10.11	 	Terrorism Sanctions Regulations.





          The Company will not and will not permit any Subsidiary to (a) become a Person described or
designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign
Assets Control or in Section 1 of the Anti Terrorism Order or (b) knowingly engage in any dealings
or transactions with any such Person.





	11.	 	EVENTS OF DEFAULT.





          An “Event of Default” shall exist if any of the following conditions or events shall occur and
be continuing:





      (a) the Company defaults in the payment of any principal or Make-Whole Amount, if any,
on any Note when the same becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise; or




      (b) the Company defaults in the payment of any interest on any Note for more than five
Business Days after the same becomes due and payable; or




      (c) the Company defaults in the performance of or compliance with any term contained in
Section 7.1(d) or Sections 10.1 through 10.11; or




      (d) the Company defaults in the performance of or compliance with any term contained
herein (other than those referred to in paragraphs (a), (b) and (c) of this Section 11) and
such default is not remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company receiving written notice of
such default from any holder of a Note (any such written notice to be identified as a
“notice of default” and to refer specifically to this paragraph (d) of Section 11); or




      (e) any representation or warranty made in writing by or on behalf of the Company or by
any officer of the Company in this Agreement or in any writing furnished in connection with
the transactions contemplated hereby or thereby proves to have been false or incorrect in
any material respect on the date as of which made; or




      (f) (i) the Company or any Subsidiary is in default (as principal or as guarantor or
other surety) in the payment of any principal of or premium or make-whole amount or interest
on any Debt that is outstanding in an aggregate principal amount of at least $25,000,000
beyond any period of grace provided with respect thereto, or (ii) the Company or any
Subsidiary is in default in the performance of or compliance with any term of any evidence
of any Debt that is outstanding in an aggregate principal amount of at least $25,000,000 or
of any mortgage, indenture or other agreement relating thereto or any other condition
exists, and as a consequence of such default or condition such Debt has become, or has been
declared (or one or more Persons are entitled to declare such Debt to be), due and payable
before its stated maturity or before its regularly scheduled dates of payment, or (iii) as a
consequence of the occurrence or continuation of any event or condition (other than the
passage of time or the right of the holder of Debt to convert



32









 






such Debt into equity interests), (x) the Company or any Subsidiary has become
obligated to purchase or repay Debt before its regular maturity or before its regularly
scheduled dates of payment in an aggregate outstanding principal amount of at least
$25,000,000, or (y) one or more Persons have the right to require the Company or any
Subsidiary so to purchase or repay such Debt; or




      (g) the Company or any Material Subsidiary (i) is generally not paying, or admits in
writing its inability to pay, its debts as they become due, (ii) files, or consents by
answer or otherwise to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction,
(iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with respect to it or
with respect to any substantial part of its property, (v) is adjudicated as insolvent or to
be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or




      (h) a court or Governmental Authority of competent jurisdiction enters an order
appointing, without consent by the Company or any Material Subsidiary, a custodian,
receiver, trustee or other officer with similar powers with respect to it or with respect to
any substantial part of its property, or constituting an order for relief or approving a
petition for relief or reorganization or any other petition in bankruptcy or for liquidation
or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering
the dissolution, winding-up or liquidation of the Company or any Material Subsidiary, or any
such petition shall be filed against the Company or any Material Subsidiary and such
petition shall not be dismissed within 90 days; or




      (i) a final judgment or judgments for the payment of money aggregating in excess of
$25,000,000 are rendered against one or more of the Company and its Subsidiaries, which
judgments are not, within 75 days after entry thereof, bonded, discharged or stayed pending
appeal, or are not discharged within 75 days after the expiration of such stay;




      (j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the
Code for any plan year or part thereof or a waiver of such standards or extension of any
amortization period is sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected to be filed with the
PBGC or the PBGC shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the
aggregate “amount of unfunded benefit liabilities” (within the meaning of section
4001(a)(18) of ERISA) under all Plans determined in accordance with Title IV of ERISA, shall
exceed $25,000,000, (iv) the Company or any ERISA Affiliate shall have incurred or is
reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or
any ERISA Affiliate withdraws from any



33









 






Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or amends any
employee welfare benefit plan that provides post-employment welfare benefits in a manner
that would increase the liability of the Company or any Subsidiary thereunder; and any such
event or events described in clauses (i) through (vi) above, either individually or together
with any other such event or events, could reasonably be expected to have a Material Adverse
Effect;




      (k) the Subsidiary Guaranty ceases to be in full force and effect (except in accordance
with and by reason of the provisions of Section 9.7(b)) or is declared to be null and void
in whole or in material part by a court or other governmental or regulatory authority having
jurisdiction or the validity or enforceability thereof shall be contested by the Company or
any Subsidiary Guarantor or any of them renounces any of the same or denies that it has any
or further liability thereunder;




      (l) at any time after completion of the actions required by Section 9.9(b), the
security interest in the Collateral created by the Pledge Agreements ceases to be in full
force and effect or is declared to be null and void in whole or in material part by a court
or other governmental or regulatory authority having jurisdiction or the validity,
enforceability or priority thereof shall be contested by the Company or any Subsidiary party
to either Pledge Agreement or any of them renounces any of the same or asserts any of the
foregoing; or



      (m)
at any time after completion of the actions required by Section 9.9(b), any of the
Collateral is transferred in violation of the terms of either Pledge Agreement.




As used in Section 11(j), the terms “employee benefit plan” and “employee welfare benefit plan”
shall have the respective meanings assigned to such terms in section 3 of ERISA.





	12.	 	REMEDIES ON DEFAULT, ETC.






	12.1	 	Acceleration.






      (a) If an Event of Default with respect to the Company described in paragraph (g) or
(h) of Section 11 (other than an Event of Default described in clause (i) of paragraph (g)
or described in clause (vi) of paragraph (g) by virtue of the fact that such clause
encompasses clause (i) of paragraph (g)) has occurred, all the Notes then outstanding shall
automatically become immediately due and payable.




      (b) If any other Event of Default has occurred and is continuing, any holder or
holders of at least 51% in principal amount of the Notes at the time outstanding may at any
time at its or their option, by notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.




      (c) If any Event of Default described in paragraph (a) or (b) of Section 11 has
occurred and is continuing, any holder or holders of Notes at the time outstanding affected
by such Event of Default may at any time, at its or their option, by notice or



34









 





          notices to the Company, declare all the Notes held by it or them to be immediately due
and payable.




          Upon any Notes becoming due and payable under this Section 12.1, whether automatically or by
declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes,
plus (x) all accrued and unpaid interest thereon (including, but not limited to, interest accrued
thereon at the Default Rate) and (y) the Make-Whole Amount determined in respect of such principal
amount (to the fullest extent permitted by applicable law), shall all be immediately due and
payable, in each and every case without presentment, demand, notice of acceleration, notice of
intent to accelerate, protest or further notice, all of which are hereby waived. The
Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to
maintain its investment in the Notes free from repayment by the Company (except as herein
specifically provided for) and that the provision for payment of a Make-Whole Amount by the Company
in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is
intended to provide compensation for the deprivation of such right under such circumstances.





	12.2	 	Other Remedies.





          If any Default or Event of Default has occurred and is continuing, and irrespective of whether
any Notes have become or have been declared immediately due and payable under Section 12.1, the
holder of any Note at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an injunction against
a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted
hereby or thereby or by law or otherwise.





	12.3	 	Rescission.





          At any time after any Notes have been declared due and payable pursuant to clause (b) or (c)
of Section 12.1, the holder or holders of at least 51% in principal amount of the Notes then
outstanding, by written notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by
reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if
any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes,
at the Default Rate, (b) all Events of Default and Defaults, other than non-payment of amounts that
have become due solely by reason of such declaration, have been cured or have been waived pursuant
to Section 17, and (c) no judgment or decree has been entered for the payment of any monies due
pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend
to or affect any subsequent Event of Default or Default or impair any right consequent thereon.





	12.4	 	No Waivers or Election of Remedies, Expenses, etc.





          No course of dealing and no delay on the part of any holder of any Note in exercising any
right, power or remedy shall operate as a waiver thereof or otherwise prejudice




35









 







such holder’s rights, powers or remedies. No right, power or remedy conferred by this
Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or
otherwise. Without limiting the obligations of the Company under Section 15, the Company will pay
to the holder of each Note on demand such further amount as shall be sufficient to cover all costs
and expenses of such holder incurred in any enforcement or collection under this Section 12,
including reasonable attorneys’ fees, expenses and disbursements.





	13.	 	REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.






	13.1	 	Registration of Notes.





          The Company shall keep at its principal executive office a register for the registration and
registration of transfers of Notes. The name and address of each holder of one or more Notes, each
transfer thereof and the name and address of each transferee of one or more Notes shall be
registered in such register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note that is an Institutional Investor,
promptly upon request therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.





	13.2	 	Transfer and Exchange of Notes.





          Upon surrender of any Note to the Company at the address and to the attention of the
designated officer (all as specified in Section 18(iii)), for registration of transfer or exchange
(and in the case of a surrender for registration of transfer accompanied by a written instrument of
transfer duly executed by the registered holder of such Note or such holder’s attorney duly
authorized in writing and accompanied by the relevant name, address and other information for
notices of each transferee of such Note or part thereof), the Company shall execute and deliver
within 10 Business Days, at the Company’s expense (except as provided below), one or more new Notes
(as requested by the holder thereof) in exchange therefor, in an aggregate principal amount equal
to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to
such Person as such holder may request and shall be substantially in the form of Exhibit 1(a) or
1(b). Each such new Note shall be dated and bear interest from the date to which interest shall
have been paid on the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon. The Company may require payment of a sum sufficient to cover any
stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not
be transferred in denominations of less than $100,000, provided that if necessary to enable the
registration of transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000. Any transferee, by its acceptance of a Note registered in its
name (or the name of its nominee), shall be deemed to have made the representations and agreements
set forth in Section 6.2.




36









 









	13.3	 	Replacement of Notes.





          Upon receipt by the Company at the address and to the attention of the designated officer
(all as specified in Section 18(iii)) of evidence reasonably satisfactory to it of the ownership of
and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of
an Institutional Investor, notice from such Institutional Investor of such ownership and such loss,
theft, destruction or mutilation), and





      (a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to
it (provided that if the holder of such Note is, or is a nominee for, an original Purchaser
or another holder of a Note with a minimum net worth of at least $50,000,000 or a Qualified
Institutional Buyer, such Person’s own unsecured agreement of indemnity shall be deemed to
be satisfactory), or




      (b) in the case of mutilation, upon surrender and cancellation thereof,


the Company at its own expense shall execute and deliver within 10 Business Days, in lieu thereof,
a new Note, dated and bearing interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or
mutilated Note if no interest shall have been paid thereon.





	14.	 	PAYMENTS ON NOTES.






	14.1	 	Place of Payment.





          Subject to Section 14.2, payments of principal, Make-Whole Amount, if any, and interest
becoming due and payable on the Notes shall be made in New York, New York at the principal office
of JPMorgan Chase Bank, N.A. in such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as such place of payment shall
be either the principal office of the Company in such jurisdiction or the principal office of a
bank or trust company in such jurisdiction.





	14.2	 	Home Office Payment.





          So long as you or your nominee shall be the holder of any Note, and notwithstanding anything
contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming
due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the
address specified for such purpose below your name in Schedule A, or by such other method or at
such other address as you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any notation thereon,
except that upon written request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its principal executive office or at
the place of payment most recently designated by the Company pursuant to Section 14.1. Prior to
any sale or other disposition of any Note held by you or your nominee you will, at your election,
either endorse thereon the amount of principal paid thereon and the last date to which interest has
been paid thereon or




37









 







surrender such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14.2 to any Institutional Investor that
is the direct or indirect transferee of any Note purchased by you under this Agreement and that has
made the same agreement relating to such Note as you have made in this Section 14.2.





	15.	 	EXPENSES, ETC.






	15.1	 	Transaction Expenses.





          Whether or not the transactions contemplated hereby are consummated, the Company will pay all
costs and expenses (including reasonable attorneys’ fees of one special counsel and, if reasonably
required by the Required Holders, local or other counsel) incurred by you and each Other Purchaser
or holder of a Note in connection with such transactions and in connection with any amendments,
waivers or consents under or in respect of this Agreement, the Notes, the Subsidiary Guaranty, the
Pledge Agreements or the Intercreditor Agreement (whether or not such amendment, waiver or consent
becomes effective), including, without limitation: (a) the costs and expenses incurred in enforcing
or defending (or determining whether or how to enforce or defend) any rights under this Agreement,
the Notes, the Subsidiary Guaranty, the Pledge Agreements or the Intercreditor Agreement or in
responding to any subpoena or other legal process or informal investigative demand issued in
connection with this Agreement, the Notes, the Subsidiary Guaranty, the Pledge Agreements or the
Intercreditor Agreement, or by reason of being a holder of any Note, (b) the costs and expenses,
including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the
Company or any Subsidiary or in connection with any work-out or restructuring of the transactions
contemplated hereby, by the Notes, by the Subsidiary Guaranty, the Pledge Agreements and the
Intercreditor Agreement and (c) the costs and expenses incurred in connection with the initial
filing of this Agreement and all related documents and financial information with the SVO. The
Company will pay, and will save you and each Other Purchaser or holder of a Note harmless from, all
claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those,
if any, retained by a Purchaser or other holder in connection with its purchase of the Notes).





	15.2	 	Survival.





          The obligations of the Company under this Section 15 will survive the payment or transfer of
any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and
the termination of this Agreement (other than an amendment, waiver or termination that specifically
references this Section 15.2).





	16.	 	SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.





          All representations and warranties contained herein shall survive the execution and delivery
of this Agreement and the Notes, the purchase or transfer by you of any Note or portion thereof or
interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a
Note, regardless of any investigation made at any time by or on behalf of you or any other holder
of a Note. All statements contained in any certificate or other instrument




38









 







delivered by or on behalf of the Company pursuant to this Agreement shall be deemed
representations and warranties of the Company under this Agreement. Subject to the preceding
sentence, this Agreement and the Notes embody the entire agreement and understanding between you
and the Company and supersede all prior agreements and understandings relating to the subject
matter hereof.





	17.	 	AMENDMENT AND WAIVER.






	17.1	 	Requirements.





          This Agreement, the Notes and the Subsidiary Guaranty may be amended, and the observance of
any term hereof or thereof may be waived (either retroactively or prospectively), with (and only
with) the written consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as
it is used therein), will be effective as to you unless consented to by you in writing, and (b) no
such amendment or waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration
or rescission, change the amount or time of any prepayment or payment of principal of, or reduce
the rate or change the time of payment or method of computation of interest or of the Make-Whole
Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders
of which are required to consent to any such amendment or waiver, or (iii) amend any of Sections 8,
11(a), 11(b), 12, 17 or 20.




17.2 Solicitation of Holders of Notes.





      (a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to enable such holder to
make an informed and considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof or of the Notes. The Company will
deliver executed or true and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.




      (b) Payment. The Company will not directly or indirectly pay or cause to be
paid any remuneration, whether by way of supplemental or additional interest, fee or
otherwise, or grant any security, to any holder of Notes as consideration for or as an
inducement to the entering into by any holder of Notes of any waiver or amendment of any of
the terms and provisions hereof unless such remuneration is concurrently paid, or security
is concurrently granted, on the same terms, ratably to each holder of Notes then outstanding
that also enters into any waiver or amendment of any of the terms and provisions hereto. If
any such remuneration is paid to any holder of Notes that for any reason does not enter into
any waiver or amendment of any of the terms and provisions hereof, such remuneration shall
also be paid to all other non-consenting holders.



39









 






	17.3	 	Binding Effect, etc.





          Any amendment or waiver consented to as provided in this Section 17 applies equally to all
holders of Notes and is binding upon them and upon each future holder of any Note and upon the
Company without regard to whether such Note has been marked to indicate such amendment or waiver.
No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default
or Event of Default not expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the holder of any Note nor any delay in exercising any
rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such
Note. As used herein, the term “this Agreement” or “the Agreement” and references thereto shall
mean this Note Purchase Agreement as it may from time to time be amended or supplemented.





	17.4	 	Notes held by Company, etc.





          Solely for the purpose of determining whether the holders of the requisite percentage of the
aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver
or consent to be given under this Agreement or the Notes, or have directed the taking of any action
provided herein or in the Notes to be taken upon the direction of the holders of a specified
percentage of the aggregate principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be deemed not to be outstanding.





	18.	 	NOTICES.





          All notices and communications provided for hereunder shall be in writing and sent (a) by
telecopy if the sender on the same day sends a confirming copy of such notice by a recognized
overnight delivery service (charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with
charges prepaid). Any such notice must be sent:





      (i) if to you or your nominee, to you or it at the address specified for such
communications in Schedule A, or at such other address as you or it shall have
specified to the Company in writing,




      (ii) if to any other holder of any Note, to such holder at such address as such
other holder shall have specified to the Company in writing, or




      (iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of the General Counsel, with a copy to the Company
at 800 Tech Center Drive, Gahanna, Ohio 43230, telephone (614) 729-4701, fax (614)
729-4899, to the attention of the Treasurer, or at such other address as the Company
shall have specified to the holder of each Note in writing.


Notices under this Section 18 will be deemed given only when actually received.




40









 









	19.	 	REPRODUCTION OF DOCUMENTS.





          This Agreement and all documents relating hereto, including (a) consents, waivers and
modifications that may hereafter be executed, (b) documents received by you at a Closing (except
the Notes themselves), and (c) financial statements, certificates and other information previously
or hereafter furnished to you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process and you may destroy any
original document so reproduced. The Company agrees and stipulates that, to the extent permitted
by applicable law, any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in existence and whether
or not such reproduction was made by you in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be admissible in evidence.
This Section 19 shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from introducing
evidence to demonstrate the inaccuracy of any such reproduction.





	20.	 	CONFIDENTIAL INFORMATION.





          For the purposes of this Section 20, “Confidential Information” means information delivered to
any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was
clearly marked or labeled or otherwise adequately identified when received by you as being
confidential information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior to the time of such
disclosure, (b) subsequently becomes publicly known through no act or omission by you or any Person
acting on your behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary, or (d) constitutes financial statements delivered to you under Section
7.1 that are otherwise publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you in good faith to protect
confidential information of third parties delivered to you, provided that you may deliver or
disclose Confidential Information to (i) your directors, officers, employees, agents, attorneys and
affiliates (to the extent such disclosure reasonably relates to the administration of the
investment represented by your Notes), (ii) your financial advisors and other professional advisors
who agree to hold confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any Institutional Investor to
which you sell or offer to sell such Note or any part thereof or any participation therein (if such
Person has agreed in writing prior to its receipt of such Confidential Information to be bound by
the provisions of this Section 20), (v) any Person from which you offer to purchase any security of
the Company (if such Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (vi) any federal or state regulatory
authority having jurisdiction over you, (vii) the NAIC or the SVO or, in each case, any similar
organization, or any nationally recognized rating agency that requires access to information about
your investment portfolio or (viii) any other Person to which such delivery or disclosure may be
necessary or appropriate (w) to effect compliance with any law, rule, regulation or order
applicable to you, (x) in response to any subpoena or other legal process, (y) in connection with
any litigation to which you are a party or




41









 







(z) if an Event of Default has occurred and is continuing, to the extent you may reasonably
determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each holder of a Note,
by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the
benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by
the Company in connection with the delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such holder (other than a holder that
is a party to this Agreement or its nominee), such holder will enter into an agreement with the
Company embodying the provisions of this Section 20.





	21.	 	SUBSTITUTION OF PURCHASER.





          You shall have the right to substitute any one of your Affiliates as the purchaser of the
Notes that you have agreed to purchase hereunder, by written notice to the Company, which notice
shall be signed by both you and such Affiliate, shall contain such Affiliate’s agreement to be
bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with
respect to it of the representations set forth in Section 6. Upon receipt of such notice, wherever
the word “you” is used in this Agreement (other than in this Section 21), such word shall be deemed
to refer to such Affiliate in lieu of you. In the event that such Affiliate is so substituted as a
purchaser hereunder and such Affiliate thereafter transfers to you all of the Notes then held by
such Affiliate, upon receipt by the Company of notice of such transfer, wherever the word “you” is
used in this Agreement (other than in this Section 21), such word shall no longer be deemed to
refer to such Affiliate, but shall refer to you, and you shall have all the rights of an original
holder of the Notes under this Agreement.





	22.	 	MISCELLANEOUS.






	22.1	 	Successors and Assigns.





          All covenants and other agreements contained in this Agreement by or on behalf of any of the
parties hereto bind and inure to the benefit of their respective successors and assigns (including
any subsequent holder of a Note) whether so expressed or not.





	22.2	 	Payments Due on Non-Business Days.





          Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting
the requirement in Section 8.2 that the notice of any optional prepayment specify a Business Day as
the date fixed for such prepayment), any payment of principal of or Make-Whole Amount or interest
on any Note that is due on a date other than a Business Day shall be made on the next succeeding
Business Day without including the additional days elapsed in the computation of the interest
payable on such next succeeding Business Day; provided that if the maturity date of any Note is a
date other than a Business Day, the payment otherwise due on such maturity date shall be made on
the next succeeding Business Day and shall include the additional days elapsed in the computation
of interest payable on such next succeeding Business Day.




42









 









	22.3	 	Accounting Terms.





          All accounting terms used herein that are not expressly defined in this Agreement have the
meanings respectively given to them in accordance with GAAP. Except as otherwise specifically
provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance
with GAAP and (ii) all financial statements shall be prepared in accordance with GAAP.





	22.4	 	Severability.





          Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall (to the fullest extent permitted by law) not invalidate or render
unenforceable such provision in any other jurisdiction.





	22.5	 	Construction.





          Each covenant contained herein shall be construed (absent express provision to the contrary)
as being independent of each other covenant contained herein, so that compliance with any one
covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person.




          For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be
deemed to be a part hereof.





	22.6	 	Counterparts.





          This Agreement may be executed in any number of counterparts, each of which shall be an
original but all of which together shall constitute one instrument. Each counterpart may consist
of a number of copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.





	22.7	 	Governing Law.





          This Agreement shall be construed and enforced in accordance with, and the rights of the
parties shall be governed by, the law of the state of New York excluding choice of law principles
of the law of such state that would require the application of the laws of a jurisdiction other
than such state.





	22.8	 	Jurisdiction and Process; Waiver of Jury Trial.






      (a) The Company irrevocably submits to the non-exclusive jurisdiction of any New York
state or federal court sitting in the Borough of Manhattan, The City of New York, over any
suit, action or proceeding arising out of or relating to this Agreement or



43









 







the Notes. To the fullest extent permitted by applicable law, the Company irrevocably
waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that
it is not subject to the jurisdiction of any such court, any objection that it may now or
hereafter have to the laying of the venue of any such suit, action or proceeding brought in
any such court and any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.




      (b) The Company consents to process being served by or on behalf of any holder of Notes
in any suit, action or proceeding of the nature referred to in Section 22.8(a) by mailing a
copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, return receipt requested, to it at its address specified in Section 18 or
at such other address of which such holder shall then have been notified pursuant to said
Section. The Company agrees that such service upon receipt (i) shall be deemed in every
respect effective service of process upon it in any such suit, action or proceeding and (ii)
shall, to the fullest extent permitted by applicable law, be taken and held to be valid
personal service upon and personal delivery to it. Notices hereunder shall be conclusively
presumed received as evidenced by a delivery receipt furnished by the United States Postal
Service or any reputable commercial delivery service.




      (c) Nothing in this Section 22.8 shall affect the right of any holder of a Note to
serve process in any manner permitted by law, or limit any right that the holders of any of
the Notes may have to bring proceedings against the Company in the courts of any appropriate
jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in
any other jurisdiction.




      (d) THE PARTIES HERETO WAIVE TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO
THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR
THEREWITH.




	22.9	 	Maximum Interest Payable.





          The Company, each Purchaser and any other holder of the Notes specifically intend and agree to
limit contractually the amount of interest payable under this Agreement, the Notes and all other
instruments and agreements related hereto and thereto to the maximum amount of interest lawfully
permitted to be charged under applicable law. Therefore, none of the terms of this Agreement, the
Notes or any instrument pertaining to or relating to this Agreement or the Notes shall ever be
construed to create a contract to pay interest at a rate in excess of the maximum rate permitted to
be charged under applicable law, and none of the Company, any Subsidiary Guarantor or any other
party liable or to become liable hereunder, under the Notes, the Subsidiary Guaranty or under any
other instruments and agreements related hereto and thereto shall ever be liable for interest in
excess of the amount determined at such maximum rate, and the provisions of this Section 22.9 shall
control over all other provisions of this Agreement, the Notes, the Subsidiary Guaranty or any
other instrument pertaining to or relating to the transactions herein contemplated. If any amount
of interest taken or received by a Purchaser or

44









 








any holder of a Note shall be in excess of said maximum amount of interest which, under
applicable law, could lawfully have been collected by such Purchaser or such holder incident to
such transactions, then such excess shall be deemed to have been the result of a mathematical error
by all parties hereto and shall be refunded promptly by the Person receiving such amount to the
party paying such amount, or, at the option of the recipient, credited ratably against the unpaid
principal amount of the Note or Notes held by a Purchaser or such holder, respectively. All
amounts paid or agreed to be paid in connection with such transactions which would under applicable
law be deemed “interest” shall, to the extent permitted by such applicable law, be amortized,
prorated, allocated and spread throughout the stated term of this Agreement and the Notes.
“Applicable law” as used in this Section 22.9 means that law in effect from time to time that
permits the charging and collection of the highest permissible lawful, nonusuriouis rate of
interest on the transactions herein contemplated including laws of the state of Texas and of the
United States of America, and “maximum rate” as used in this paragraph means, with respect to each
of the Notes, the maximum lawful, nonusurious rates of interest (if any) which under applicable law
may be charged to the Company from time to time with respect to such Notes.




45








 








          If you are in agreement with the foregoing, please sign the form of agreement on a counterpart
of this Agreement and return it to the Company, whereupon this Agreement shall become a binding
agreement between you and the Company.




	 	 	 
	Very truly yours,
	 
	 	 
	ALLIANCE DATA SYSTEMS
CORPORATION
	 
	 	 
	By:

	 	/s/ Michael D. Kubic
	 

	 	 
	Name:

Title:

	 	Michael D. Kubic

 Senior Vice President, Corporate

	Controller and Chief Accounting Officer






S-1









 






This Agreement is accepted and

agreed to as of the date thereof.




AIG Annuity Insurance Company




The Variable Annuity Life Insurance Company




	 	 	 
	By:

	 	AIG Global Investment Corp., investment adviser
	 
	 	 
	By:

	 	/s/ Ted Etlinger
	 

	 	 
	Name:

	 	Ted Etlinger
	 

	 	 
	Title:

	 	Vice President
	 

	 	 





S-2









 






	 	 	 	 	 
	METROPOLITAN LIFE INSURANCE COMPANY
	 
	 	 
	/s/ Judith A. Gulotta
	 
	 	 

	Name:

	 	Judith A. Gulotta
	 

	 	 
	Title:

	 	Director
	 

	 	 
	 
	 	 
	METLIFE INSURANCE COMPANY OF CONNECTICUT
	 
	 	 
	/s/ Judith A. Gulotta
	 
	Name:

	 	Judith A. Gulotta
	 

	 	 
	Title:

	 	Director
	 

	 	 





S-3









 






	 	 	 	 	 
	AMERICAN STATES LIFE INSURANCE COMPANY,

an Indiana corporation
	 

	 	 	 	 
	By:	 	Principal Global Investors, LLC

a Delaware limited liability company,

its authorized signatory
	 

	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Henderson
	 

	 	 	 	 
	 

	 	Its:
	 	Vice President and Senior Investment Counsel
	 

	 	 	 	 
	 

	 	 	 	 
	 

	 	By:
	 	/s/ James C. Field
	 

	 	 	 	 
	 

	 	Its:
	 	Counsel
	 

	 	 	 	 
	 

	 	 	 	 
	PRINCIPAL LIFE INSURANCE COMPANY,

ON BEHALF OF ONE OR MORE SEPARATE ACCOUNTS
	 

	 	 	 	 
	By:	 	Principal Global Investors, LLC

a Delaware limited liability company,

its authorized signatory
	 

	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Henderson
	 

	 	 	 	 
	 

	 	Its:
	 	Vice President and Senior Investment Counsel
	 

	 	 	 	 
	 

	 	 	 	 
	 

	 	By:
	 	/s/ James C. Field
	 

	 	 	 	 
	 

	 	Its:
	 	Counsel
	 

	 	 	 	 
	 

	 	 	 	 
	PRINCIPAL LIFE INSURANCE COMPANY
	 

	 	 	 	 
	By:	 	Principal Global Investors, LLC

a Delaware limited liability company,

its authorized signatory
	 

	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Henderson
	 

	 	 	 	 
	 

	 	Its:
	 	Vice President and Senior Investment Counsel
	 

	 	 	 	 
	 

	 	 	 	 
	 

	 	By:
	 	/s/ James C. Field
	 

	 	 	 	 
	 

	 	Its:
	 	Counsel
	 

	 	 	 	 





S-4









 






	 	 	 	 	 
	SYMETRA LIFE INSURANCE COMPANY,

a Washington corporation
	 

	 	 	 	 
	By:	 	Principal Global Investors, LLC

a Delaware limited liability company,

its authorized signatory
	 

	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Henderson
	 

	 	 	 	 
	 

	 	Its:
	 	Vice President and Senior Investment Counsel
	 

	 	 	 	 
	 

	 	 	 	 
	 

	 	By:
	 	/s/ James C. Field
	 

	 	 	 	 
	 

	 	Its:
	 	Counsel
	 

	 	 	 	 
	 

	 	 	 	 
	VANTISLIFE INSURANCE COMPANY,

a Connecticut company
	 

	 	 	 	 
	By:	 	Principal Global Investors, LLC

a Delaware limited liability company,

its authorized signatory
	 

	 	 	 	 
	 

	 	By:
	 	/s/ Christopher J. Henderson
	 

	 	 	 	 
	 

	 	Its:
	 	Vice President and Senior Investment Counsel
	 

	 	 	 	 
	 

	 	 	 	 
	 

	 	By:
	 	/s/ James C. Field
	 

	 	 	 	 
	 

	 	Its:
	 	Counsel
	 

	 	 	 	 





S-5









 






	 	 	 
	ALLSTATE LIFE INSURANCE COMPANY
	 
	 	 
	By:

	 	/s/ Robert B. Bodett
	 

	 	 
	Name:

	 	Robert B. Bodett
	 

	 	 
	 
	 	 
	By:

	 	/s/ Jerry D. Zinkula
	 

	 	 
	Name:

	 	Jerry D. Zinkula
	 

	 	 
	 
	 	 
	Authorized Signatories
	 
	 	 
	ALLSTATE INSURANCE COMPANY
	 
	 	 
	By:

	 	/s/ Robert B. Bodett
	 

	 	 
	Name:

	 	Robert B. Bodett
	 

	 	 
	 
	 	 
	By:

	 	/s/ Jerry D. Zinkula
	 

	 	 
	Name:

	 	Jerry D. Zinkula
	 

	 	 
	 
	 	 
	Authorized Signatories






S-6









 






	 	 	 
	THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
	 
	 	 
	By:

	 	/s/ Mark E. Kishler
	 

	 	 
	Name:

	 	Mark E. Kishler
	 

	 	 
	Title:

	 	Its Authorized Representative
	 

	 	 





S-7









 






	 	 	 
	TRANSAMERICA LIFE INSURANCE COMPANY
	 
	 	 
	By:

	 	/s/ Allen R. Cantrell
	 

	 	 
	Name:

	 	Allen R. Cantrell
	 

	 	 
	Title:

	 	Vice President
	 

	 	 





S-8









 






	 	 	 
	HARTFORD LIFE INSURANCE COMPANY

  By: Hartford Investment Management Company

  Its: Agent and Attorney-in-Fact
	 

	 	 
	By:

	 	/s/ Ronald A. Mendel
	 

	 	 
	Name:

	 	Ronald A. Mendel
	 

	 	 
	Title:

	 	Managing Director
	 

	 	 
	 

	 	 
	PHYSICIANS LIFE INSURANCE COMPANY

  By: Hartford Investment Management Company

  Its: Investment Advisor
	 

	 	 
	By:

	 	/s/ Ronald A. Mendel
	 

	 	 
	Name:

	 	Ronald A. Mendel
	 

	 	 
	Title:

	 	Managing Director
	 

	 	 





S-9









 






	 	 	 
	NEW YORK LIFE INSURANCE COMPANY
	 
	 	 
	By:

	 	/s/ Lisa A. Scuderi
	 

	 	 
	Name:

	 	Lisa A. Scuderi
	 

	 	 
	Title:

	 	Investment Vice President
	 

	 	 
	 
	 	 
	NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION
	 
	 	 
	By: New York Life Investment Management LLC,

its Investment Manager
	 
	 	 
	By:

	 	/s/ Lisa A. Scuderi
	 

	 	 
	Name:

	 	Lisa A. Scuderi
	 

	 	 
	Title:

	 	Director
	 

	 	 
	 
	 	 
	NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION

INSTITUTIONALLY OWNED LIFE INSURANCE SEPARATE ACCOUNT
	 
	 	 
	By: New York Life Investment Management LLC,

its Investment Manager
	 
	 	 
	By:

	 	/s/ Lisa A. Scuderi
	 

	 	 
	Name:

	 	Lisa A. Scuderi
	 

	 	 
	Title:

	 	Director
	 

	 	 





S-10









 






	 	 	 
	NATIONWIDE LIFE INSURANCE COMPANY

NATIONWIDE MULTIPLE MATURITY SEPARATE ACCOUNT
	 
	 	 
	/s/ Joseph P. Young

	 
	Joseph P. Young

Authorized Signatory






S-11









 






	 	 	 
	THE PRUDENTIAL INSURANCE COMPANY
 OF AMERICA
	 
	 	 
	By:

	 	/s/ Brien N. Davis
	 

	 	 
	 

	 	Vice President
	 
	 	 
	PRUDENTIAL RETIREMENT INSURANCE
 AND ANNUITY COMPANY
	 
	 	 
	By:

	 	Prudential Investment Management, Inc.,

as investment manager
	 
	 	 
	By:

	 	/s/ Brien N. Davis
	 

	 	 
	 

	 	Vice President
	 
	 	 
	FARMERS NEW WORLD LIFE INSURANCE
 COMPANY
	 
	 	 
	By:

	 	Prudential Private Placement Investors,

L.P. (as Investment Advisor)
	 
	 	 
	By:

	 	Prudential Private Placement Investors, Inc.

(as its General Partner)
	 
	 	 
	By:

	 	/s/ Brien N. Davis
	 

	 	 
	 

	 	Vice President






S-12









 






	 	 	 
	THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
	 

	 	 
	By:

	 	/s/ Ellen I. Whitaker
	 

	 	 
	Name:

	 	Ellen I. Whitaker
	 

	 	 
	Title:

	 	Director, Fixed Income Investments
	 

	 	 
	 

	 	 
	FORT DEARBORN LIFE INSURANCE COMPANY
	 

	 	 
	By: Guardian Investor Services LLC
	 

	 	 
	By:

	 	/s/ Ellen I. Whitaker
	 

	 	 
	Name:

	 	Ellen I. Whitaker
	 

	 	 
	Title:

	 	Director, Fixed Income Investments
	 

	 	 
	 

	 	 
	THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
	 

	 	 
	By:

	 	/s/ Ellen I. Whitaker
	 

	 	 
	Name:

	 	Ellen I. Whitaker
	 

	 	 
	Title:

	 	Director, Fixed Income Investments
	 

	 	 





S-13









 






	 	 	 
	TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
	 
	 	 
	By:

	 	/s/ Lisa M. Ferraro
	 

	 	 
	Name:

	 	Lisa M. Ferraro
	 

	 	 
	Title:

	 	Director
	 

	 	 





S-14









 






	 	 	 
	THRIVENT FINANCIAL FOR LUTHERANS
	 
	 	 
	By:

	 	/s/ Glen J. Vanic
	 

	 	 
	Name:

	 	Glen J. Vanic
	 

	 	 
	Title:

	 	Portfolio Manager
	 

	 	 





S-15









 






	 	 	 
	ALLIANZ LIFE INSURANCE COMPANY OF NORTH AMERICA

By: Allianz of America, Inc. as the authorized signatory and investment manager
	 
	 	 
	By:

	 	/s/ Gary Brown
	 

	 	 
	Name:

	 	Gary Brown
	Title:

	 	Assistant Treasurer







S-16










 








	 	 	 
	PACIFIC LIFE INSURANCE COMPANY
	 
	 	 
	By:

	 	/s/ Cathy Schwartz
	 

	 	 
	Name:

	 	Cathy Schwartz
	 

	 	 
	Title:

	 	Assistant Vice President
	 

	 	 
	 
	 	 
	By:

	 	/s/ David C. Patch
	 

	 	 
	Name:

	 	David C. Patch
	 

	 	 
	Title:

	 	Assistant Secretary
	 

	 	 





S-17









 






	 	 	 
	Fidelity Life Association
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Christopher R. Sebald
	 

	 	 
	Name:

	 	Christopher R. Sebald
	 

	 	 
	Title:

	 	Senior Vice President
	 

	 	 
	 
	 	 
	MTL Insurance Company
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Christopher R. Sebald
	 

	 	 
	Name:

	 	Christopher R. Sebald
	 

	 	 
	Title:

	 	Senior Vice President
	 

	 	 
	 
	 	 
	Great Western Insurance Company
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Christopher R. Sebald
	 

	 	 
	Name:

	 	Christopher R. Sebald
	 

	 	 
	Title:

	 	Senior Vice President
	 

	 	 
	 
	 	 
	The Catholic Aid Association
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Christopher R. Sebald
	 

	 	 
	Name:

	 	Christopher R. Sebald
	 

	 	 
	Title:

	 	Senior Vice President
	 

	 	 
	 
	 	 
	American Fidelity Assurance Company
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Christopher R. Sebald
	 

	 	 
	Name:

	 	Christopher R. Sebald
	 

	 	 
	Title:

	 	Senior Vice President
	 

	 	 
	 
	 	 
	American Republic Insurance Company
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Christopher R. Sebald
	 

	 	 
	Name:

	 	Christopher R. Sebald
	 

	 	 
	Title:

	 	Senior Vice President
	 

	 	 





S-18









 






	 	 	 
	Trustmark Insurance Company
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Steven R. Lane
	 

	 	 
	Name:

	 	Steven R. Lane
	 

	 	 
	Title:

	 	Vice President
	 

	 	 
	 
	 	 
	GuideOne Property & Casualty Insurance Company
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Steven R. Lane
	 

	 	 
	Name:

	 	Steven R. Lane
	 

	 	 
	Title:

	 	Vice President
	 

	 	 
	 
	 	 
	Security National Life Insurance Company
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Steven R. Lane
	 

	 	 
	Name:

	 	Steven R. Lane
	 

	 	 
	Title:

	 	Vice President
	 

	 	 
	 
	 	 
	Fort Dearborn Life Insurance Company
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Steven R. Lane
	 

	 	 
	Name:

	 	Steven R. Lane
	 

	 	 
	Title:

	 	Vice President
	 

	 	 
	 
	 	 
	Blue Cross and Blue Shield of Florida, Inc.
	By: Advantus Capital Management, Inc.
	 
	 	 
	By:

	 	/s/ Steven R. Lane
	 

	 	 
	Name:

	 	Steven R. Lane
	 

	 	 
	Title:

	 	Vice President
	 

	 	 





S-19









 






	 	 	 
	CUNA Mutual Life Insurance Company
	 
	 	 
	By:

	 	MEMBERS Capital Advisors, Inc., acting as Investment Advisor:
	 
	 	 
	By

	 	/s/ James E. McDonald, Jr.
	 

	 	 
	Name:

	 	James E. McDonald, Jr.
	Title:

	 	Director, Private Placements
	 
	 	 
	CUNA Mutual Insurance Society
	 
	 	 
	By:

	 	MEMBERS Capital Advisors, Inc., acting as Investment Advisor:
	 
	 	 
	By

	 	/s/ James E. McDonald, Jr.
	 

	 	 
	Name:

	 	James E. McDonald, Jr.
	Title:

	 	Director, Private Placements
	 
	 	 
	CUMIS Insurance Society, Inc.
	 
	 	 
	By:

	 	MEMBERS Capital Advisors, Inc., acting as Investment Advisor:
	 
	 	 
	By

	 	/s/ James E. McDonald, Jr.
	 

	 	 
	Name:

	 	James E. McDonald, Jr.
	Title:

	 	Director, Private Placements
	 
	 	 
	MEMBERS Life Insurance Company
	 
	 	 
	By:

	 	MEMBERS Capital Advisors, Inc., acting as Investment Advisor:
	 
	 	 
	By

	 	/s/ James E. McDonald, Jr.
	 

	 	 
	Name:

	 	James E. McDonald, Jr.
	Title:

	 	Director, Private Placements






S-20









 






	 	 	 
	American Equity Investment Life Insurance Co.
	 
	 	 
	By:

	 	/s/ Rachel Stauffer
	 

	 	 
	Name:

	 	Rachel Stauffer
	 

	 	 
	Title:

	 	Vice President — Investments
	 

	 	 





S-21









 






	 	 	 
	American Investors Life Insurance Company
	 
	 	 
	By:

	 	AmerUs Capital Management Group, Inc., its
authorized attorney-in-fact
	 
	 	 
	By:

	 	/s/ Roger D. Fors
	 

	 	 
	Name:

	 	Roger D. Fors
	 

	 	 
	Title:

	 	Vice President — Private Placements
	 

	 	 





S-22









 






	 	 	 
	AMERICAN FAMILY LIFE INSURANCE COMPANY
	 
	 	 
	By:

	 	/s/ Phillip Hannifan
	 

	 	 
	Name:

	 	Phillip Hannifan
	Title:

	 	Investment Director






S-23









 






	 	 	 
	OHIO NATIONAL LIFE ASSURANCE CORPORATION
	THE OHIO NATIONAL LIFE INSURANCE COMPANY
	 
	 	 
	By:

	 	/s/ Jed R. Martin
	 

	 	 
	Name:

	 	Jed R. Martin
	 

	 	 
	Title:

	 	Vice President, Private Placements
	 

	 	 







S-24










 






SCHEDULE B




DEFINED TERMS




     As used herein, the following terms have the respective meanings set forth below or set forth
in the Section hereof following such term:



     “ADSI” means ADS Alliance Data Systems, Inc., a Delaware corporation and a Wholly Owned
Subsidiary of the Company.



     “Affiliate” means, at any time, and with respect to any Person, (a) any other Person that at
such time directly or indirectly through one or more intermediaries Controls, or is Controlled by,
or is under common Control with, such first Person, and (b) any Person beneficially owning or
holding, directly or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially
own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity
interests. As used in this definition, “Control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise. Unless the context otherwise
clearly requires, any reference to an “Affiliate” is a reference to an Affiliate of the Company.



     “Anti-Terrorism Order” means Executive Order 13224 of September 23, 2001, Blocking Property
and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66
Fed. Reg. 49079 (2001)).



     “Banks” means the lenders party to any of the Credit Agreements.



     “Business Day” means (a) for the purposes of Section 8.7 only, any day other than a Saturday,
a Sunday or a day on which commercial banks in New York City are required or authorized to be
closed, and (b) for the purposes of any other provision of this Agreement, any day other than a
Saturday, a Sunday or a day on which commercial banks in Dallas, Texas or New York City are
required or authorized to be closed.



     “Canadian Pledge Agreement” means the Canadian Pledge Agreement dated as of April 10, 2003
between Harris N.A., as Collateral Agent for the benefit of the Secured Creditors (as defined
therein) and each of the Pledgors party thereto, as amended to the date of Closing and as such
agreement may be amended, modified or supplemented from time to time.



     “Capital Lease” means, at any time, a lease with respect to which the lessee is required
concurrently to recognize the acquisition of an asset and the incurrence of a liability in
accordance with GAAP.



     “Capital Stock” means (a) in the case of a corporation, capital stock, (b) in the case of a
partnership, partnership interests (whether general or limited), (c) in the case of a limited
liability company, membership interests and (d) any other interest or participation in a Person
that confers on the holder the right to receive a share of the profits and losses of, or
distributions of assets of, such Person.



Schedule B




 









 





     “Change of Control” means an event or series of events by which any “person” or “group”
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the WCAS
Partnerships) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of more than 50% of the voting power of the then outstanding Capital Stock
of the Company entitled to vote generally in the election of the directors of the Company.



     “Closing” is defined in Section 3.



     “Code” means the Internal Revenue Code of 1986, as amended from time to time, and the rules
and regulations promulgated thereunder from time to time.



     “Company” means Alliance Data Systems Corporation, a Delaware corporation.



     “Confidential Information” is defined in Section 20.



     “Consolidated Debt” means, as of any date, outstanding Debt of the Company and its
Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP.



     “Consolidated EBIT” means, for any period, the sum of Consolidated Net Income for such period,
plus, to the extent deducted in determining such Consolidated Net Income, (i) Consolidated Interest
Expense and (ii) federal, state, local and foreign income, value added and similar taxes. If,
during the period for which Consolidated EBIT is being calculated, the Company or any Subsidiary
has (i) acquired sufficient Capital Stock of a Person to cause such Person to become a Subsidiary;
(ii) acquired all or substantially all of the assets or operations, division or line of business of
a Person; (iii) disposed of sufficient Capital Stock of a Subsidiary to cause such Subsidiary to
cease to be a Subsidiary; or (iv) disposed or all or substantially all of the assets or operations
of a Subsidiary, Consolidated EBIT shall be calculated after giving pro forma effect thereto as if
such acquisition or disposition had occurred on the first day of such period.



     “Consolidated Interest Expense” means, for any period, the total interest expense paid on Debt
of the Company and its Subsidiaries (including the interest component of Capital Leases) for such
period, determined on a consolidated basis in accordance with GAAP.



     “Consolidated Net Income” means, for any period, the net income or loss of the Company and its
Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, but in
any event exclusive of the effect of any extraordinary or other nonrecurring gain and loss and
excluding all non-cash adjustments; provided that any cash payment made or received with respect to
any such non-cash charge, expense or loss shall be subtracted or added in computing Consolidated
Net Income during the period in which such cash payment is made or received.



     “Consolidated Net Worth” means, as of any date, the stockholders’ equity of the Company and
its Subsidiaries, determined on a consolidated basis in accordance with GAAP.



2



Schedule B




 









 





     “Consolidated Operating EBITDA” means, for any period, the sum of Consolidated EBIT for such
period, plus, to the extent deducted in determining Consolidated Net Income, (i) depreciation and
amortization expense, including amortization of goodwill and other intangible assets and (ii) the
amount of any change in the Deferred Revenue Account from the beginning of such period to the last
day of such period, less (iii) the amount of any change in the Restricted Cash Account from the
beginning of such period to the last day of such period. If, during the period for which
Consolidated Operating EBITDA is being calculated, the Company or any Subsidiary has (i) acquired
sufficient Capital Stock of a Person to cause such Person to become a Subsidiary; (ii) acquired all
or substantially all of the assets or operations, division or line of business of a Person; (iii)
disposed of sufficient Capital Stock of a Subsidiary to cause such Subsidiary to cease to be a
Subsidiary; or (iv) disposed or all or substantially all of the assets or operations of a
Subsidiary, Consolidated Operating EBITDA shall be calculated after giving pro forma effect thereto
as if such acquisition or disposition had occurred on the first day of such period.



     “Consolidated Total Assets” means, as of any date, the assets and properties of the Company
and its Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP,
less any amount of assets reflected therein to the extent that they have been sold or pledged
pursuant to a Qualified Securitization Transaction, which amount shall be deemed to be equal to the
amount excluded from the calculation of Debt pursuant to clauses (i)(A) and (ii) of the last
sentence of the definition thereof.



     “Control Event” means:




     (a) the execution by the Company or any of its Subsidiaries or Affiliates of any
agreement with respect to any proposed transaction or event or series of transactions or
events that, individually or in the aggregate, may reasonably be expected to result in a
Change of Control, or




     (b) the execution of any written agreement that, when fully performed by the parties
thereto, would result in a Change of Control.



     “Credit Agreement (Canadian)” means the Credit Agreement (Canadian) dated as of April 10, 2003
among Loyalty Management, the guarantors party thereto, the Banks from time to time parties
thereto, Bank of Montreal, as Letter of Credit Issuer, and Harris N.A., as Administrative Agent, as
amended prior to the date of Closing and as such agreement hereafter may be amended, restated,
supplemented, modified, refinanced, extended or replaced.



     “Credit Agreement (3-Year)” means the Credit Agreement (3-Year) dated as of April 10, 2003
among the Company, the Subsidiary Guarantors, the Banks from time to time parties thereto and
Harris N.A. as Letter of Credit Issuer and as Administrative Agent, as amended prior to the date of
Closing and as such agreement hereafter may be amended, restated, supplemented, modified,
refinanced, extended or replaced.



     “Credit Agreement (364-Day)” means the Credit Agreement (364-Day) dated as of April 10, 2003
among the Company, the Subsidiary Guarantors, the Banks from time to time



3



Schedule B




 









 




parties thereto and Harris N.A., as Letter of Credit Issuer and as Administrative Agent, as
amended prior to the date of Closing and as such agreement hereafter may be amended, restated,
supplemented, modified, refinanced, extended or replaced.




     “Credit Agreements” means the Credit Agreement (Canadian), the Credit Agreement (3-Year) and
the Credit Agreement (364-Day), collectively.



“Debt” with respect to any Person means, at any time, without duplication,





     (a) its liabilities for borrowed money;




     (b) its liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable and other accrued liabilities arising in the ordinary course of
business but including all liabilities created or arising under any conditional sale or
other title retention agreement with respect to any such property);




     (c) all liabilities appearing on its balance sheet in accordance with GAAP in respect
of Capital Leases;




     (d) all liabilities for borrowed money secured by any Lien with respect to any property
owned by such Person (whether or not it has assumed or otherwise become liable for such
liabilities);




     (e) all its liabilities in respect of letters of credit or instruments serving a
similar function issued or accepted for its account by banks and other financial
institutions (whether or not representing obligations for borrowed money); and




     (f) any Guaranty of such Person with respect to liabilities of a type described in any
of clauses (a) through (e) hereof.


Notwithstanding the foregoing, (i) there shall be excluded from the Debt of any Person (A) any
obligations of such Person under a Qualified Securitization Transaction that are or may be
reflected as Debt on a balance sheet of such Person and (B) any Qualifying Deposits of such Person
and (ii) there shall be included as Debt of any Person only the amount by which (A) certificates of
deposit reflected as a liability on the balance sheet of such Person exceed (B) Seller’s Interest
and Credit Card Receivables, Net, reflected as an asset on such balance sheet.




     “Default” means an event or condition the occurrence or existence of which would, with the
lapse of time or the giving of notice or both, become an Event of Default.



     “Default Rate” means that rate of interest that is the greater of (i) 2% per annum above the
rate of interest stated in clause (a) of the first paragraph of the Notes or (ii) 2% over the rate
of interest publicly announced by JPMorgan Chase Bank, N.A. as its “base” or “prime” rate.



4



Schedule B




 









 





     “Deferred Revenue Account” means the account on the consolidating balance sheet of the Company
associated solely with the change in revenue recognition by Loyalty Management.



     “Disclosure Documents” is defined in Section 5.3.



     “Disposition” is defined in Section 10.8.



     “Domestic Subsidiary” means any Subsidiary of the Company that is organized under the laws of
any state of the United States of America or the District of Columbia.



     “Electronic Delivery” means (i) for reports, registration statements and other documents
required to be filed with the SEC, the timely filing and availability thereof on “EDGAR” and the
timely availability thereof on the Company’s home page on the worldwide web (at the date of this
Agreement located at: http//www.alliancedatasystems.com) and (ii) for any documents not required
to be filed with the SEC, the timely availability thereof on the Company’s home page on the
worldwide web for a period of no less than 60 days, and in every case, the prior notice by the
Company to each holder of Notes of such availability, with such notice containing either (y) an
attachment of such reports, registration statements or other documents or (z) a link to the site on
the worldwide web containing such documents.



     “Environmental Laws” means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the environment, including those
related to Hazardous Materials.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time in effect.



     “ERISA Affiliate” means any trade or business (whether or not incorporated) that is treated as
a single employer together with the Company under section 414 of the Code.



     “Event of Default” is defined in Section 11.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “Foreign Subsidiary” means each Subsidiary of the Company other than a Domestic Subsidiary.



     “Form 10-K” is defined in Section 7.1(b).



     “Form 10-Q” is defined in Section 7.1(a).



     “GAAP” means generally accepted accounting principles as in effect from time to time in the
United States of America.



5



Schedule B




 









 





     “Governmental Authority” means




     (a) the government of




     (i) the United States of America or any state or other political subdivision
thereof, or




     (ii) any jurisdiction in which the Company or any Subsidiary conducts all or
any part of its business, or which asserts jurisdiction over any properties of the
Company or any Subsidiary, or




     (b) any entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government.



     “Guaranty” means, with respect to any Person, any obligation (except the endorsement in the
ordinary course of business of negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Debt, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including obligations incurred through an agreement,
contingent or otherwise, by such Person:




     (a) to purchase such Debt or obligation or any property constituting security therefor;




     (b) to advance or supply funds (i) for the purchase or payment of such Debt or
obligation, or (ii) to maintain any working capital or other balance sheet condition or any
income statement condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such Debt or obligation;




     (c) to lease properties or to purchase properties or services primarily for the purpose
of assuring the owner of such Debt or obligation of the ability of any other Person to make
payment of the Debt or obligation; or




     (d) otherwise to assure the owner of such Debt or obligation against loss in respect
thereof.


In any computation of the Debt or other liabilities of the obligor under any Guaranty, the Debt or
other obligations that are the subject of such Guaranty shall be assumed to be direct obligations
of such obligor.




     “Hazardous Material” means any and all pollutants, toxic or hazardous wastes or other
substances that might pose a hazard to health and safety, the removal of which may be required or
the generation, manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law including, but not
limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum,
petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized
substances.



6



Schedule B




 









 





     “holder” means, with respect to any Note, the Person in whose name such Note is registered in
the register maintained by the Company pursuant to Section 13.1.



     “INHAM Exemption” is defined in Section 6.2(e).



     “Institutional Investor” means (a) any original purchaser of a Note, (b) any holder of more
than $2,000,000 in aggregate principal amount of the Notes at the time outstanding, and (c) any
bank, trust company, savings and loan association or other financial institution, any pension plan,
any investment company, any insurance company, any broker or dealer, or any other similar financial
institution or entity, regardless of legal form and (d) any Related Fund of any holder of any Note.



     “Insured Subsidiary” means a Subsidiary of the Company that is an “insured depositary
institution” under and as defined in the Federal Deposit Insurance Act (12 U.S.C. 1813(c)(2)) or
any successor statute.



     “Intercreditor Agreement” means the Intercreditor and Collateral Agency Agreement dated as of
April 10, 2003 among Harris N.A., as Collateral Agent and the Senior Creditors party thereto, as
amended prior to the date of Closing and as such agreement may be amended, modified or supplemented
from time to time.



     “Lien” means, with respect to any Person, any mortgage, lien, pledge, charge, security
interest or other encumbrance, or any interest or title of any vendor, lessor, lender or other
secured party to or of such Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such Person (including in the case
of stock, stockholder agreements, voting trust agreements and all similar arrangements).



     “Loyalty Management” means Loyalty Management Group Canada Inc., an Ontario corporation and a
Wholly Owned Subsidiary of the Company.



     “Make-Whole Amount” is defined in Section 8.7.



     “Material” means material in relation to the business, operations, affairs, financial
condition, assets or properties of the Company and its Subsidiaries taken as a whole.



     “Material Adverse Effect” means a material adverse effect on (a) the business, operations,
financial condition, assets or properties of the Company and its Subsidiaries taken as a whole, (b)
the ability of the Company to perform its obligations under this Agreement, the Notes or any Pledge
Agreement to which it is a party, (c) the ability of any Subsidiary to perform its obligations
under the Subsidiary Guaranty if it is a party thereto or any Pledge Agreement to which it is a
party, or (d) the validity or enforceability of this Agreement, the Notes, the Subsidiary Guaranty
or any of the Pledge Agreements.



     “Material Domestic Subsidiary” means, at any time, any Domestic Subsidiary that as of the end
of the most recently completed fiscal quarter (in the case of clause (i) below) or the most
recently completed fiscal year (in the case of clause (ii) below) accounted (or in the



7



Schedule B




 









 




case of an acquired Subsidiary, on a pro forma basis would have accounted) for more than 10%
of (i) Consolidated Total Assets as of the end of the most recently completed fiscal quarter or
(ii) consolidated revenue of the Company and its Subsidiaries for the most recently completed
fiscal year of the Company.




     “Memorandum” is defined in Section 5.3.



     “Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in
section 4001(a)(3) of ERISA).



     “NAIC” means the National Association of Insurance Commissioners or any successor thereto.



     “NAIC Annual Statement” is defined in Section 6.2(a).



     “Non-U.S.
Plan” means any plan, fund or other similar program that (a) is established or
maintained outside the United States of America by the Company or any Subsidiary primarily for the
benefit of employees of the Company or one or more Subsidiaries residing outside the United States
of America, which plan, fund or other similar program provides, or results in, retirement income, a
deferral of income in contemplation of retirement or payments to be made upon termination of
employment, and (b) is not subject to ERISA or the Code.



     “Notes” is defined in Section 1.



     “Officer’s Certificate” means a certificate of a Senior Financial Officer or of any other
officer of the Company whose responsibilities extend to the subject matter of such certificate.



     “Other Purchasers” is defined in Section 2.



     “PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any
successor thereto.



     “Person” means an individual, partnership, corporation, limited liability company,
association, trust, unincorporated organization, business entity or a government or agency or
political subdivision thereof.



     “Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) that is or,
within the preceding five years, has been established or maintained, or to which contributions are
or, within the preceding five years, have been made or required to be made, by the Company or any
ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.



     “Pledge Agreement” means the Pledge Agreement dated as of April 10, 2003 between Harris N.A.,
as Collateral Agent for the benefit of the Secured Creditors (as defined



8



Schedule B




 









 




therein) and each of the Pledgors party thereto, as amended to the date of Closing and as such
agreement may be amended, modified or supplemented from time to time.




     “Pledge Agreements” means the Canadian Pledge Agreement and the Pledge Agreement,
collectively.



     “Priority Debt” means, as of any date, the sum (without duplication) of (a) Debt of the
Company and its Subsidiaries secured by Liens not otherwise permitted by Sections 10.5(a) through
(j) and (b) outstanding unsecured Debt of Subsidiaries not otherwise permitted by Sections 10.6(a)
through (e).



     “property” or “properties” means, unless otherwise specifically limited, real or personal
property of any kind, tangible or intangible, choate or inchoate.



     “Proposed Prepayment Date” is defined in Section 8.3(c).



     “PTE” is defined in Section 6.2(a).



     “Purchaser” means each purchaser listed in Schedule A.



     “QPAM Exemption” is defined in Section 6.2(d).



     “Qualified Institutional Buyer” means any Person that is a “qualified institutional buyer”
within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.



     “Qualified Securitization Subsidiary” means a Subsidiary that is a special purpose entity used
in connection with a Qualified Securitization Transaction.



     “Qualified Securitization Transaction” means a securitization or other sale or financing of
credit card receivables.



     “Qualifying Deposits” means deposits that are (i) insured by the Federal Deposit Insurance
Corporation and (ii) do not exceed the difference between (A) the amount of seller’s interest and
credit card receivables minus (B) the allowance for doubtful accounts related to seller’s interest
and credit card receivables, in each case as shown on the consolidated balance sheet of the Company
and its Subsidiaries.



     “Related Fund” means, with respect to any holder of any Note, any fund or entity that (i)
invests in securities or bank loans, and (ii) is advised or managed by such holder, the same
investment advisor as such holder or by an affiliate of such holder or such investment
advisor.



     “Required Holders” means, at any time, the holders of at least 51% in principal amount of
the Notes at the time outstanding (exclusive of Notes then owned by the Company or any of its
Affiliates).



9



Schedule B




 









 





     “Responsible Officer” means any Senior Financial Officer and any other officer of the Company
with responsibility for the administration of the relevant portion of this Agreement.



     “Restricted Cash Account” means the account on the consolidating balance sheet of the Company
related solely to redemption settlement assets of Loyalty Management’s “Air Miles Program.”



     “SEC” shall mean the Securities and Exchange Commission of the United States, or any successor
thereto.



     “Securities Act” means the Securities Act of 1933, as amended from time to time.



     “Seller’s Interest and Credit Card Receivables, Net” means, for any Person, the sum of (i) the
residual interest, if any, of such Person in credit card receivables that are subject to a
Qualified Securitization Transaction, plus (ii) credit card receivables of such Person, less an
allowance for doubtful accounts, that are not subject to a Qualified Securitization Transaction,
all as appear or would appear on a balance sheet of such Person determined in accordance with GAAP.



     “Senior Debt” means, at any date, all Debt owing by the Company and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP, as of such date under the Notes and the
Credit Agreements.



     “Senior Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Company.



     “Series A Notes” is defined in Section 1.1.



     “Series B Notes” is defined in Section 1.1.



     “Source” is defined in Section 6.2.



     “Subsidiary” means, as to any Person, any corporation, association or other business entity in
which such Person or one or more of its Subsidiaries owns sufficient equity or voting interests to
enable it or them (as a group) ordinarily, in the absence of contingencies, to elect a majority of
the directors (or Persons performing similar functions) of such entity, and any partnership,
limited liability company, or joint venture if more than a 50% interest in the profits or capital
thereof is owned by such Person or one or more of its Subsidiaries (unless such partnership,
limited liability company or joint venture can and does ordinarily take major business actions
without the prior approval of such Person or one or more of its Subsidiaries). Unless the context
otherwise clearly requires, any reference to a “Subsidiary” is a reference to a Subsidiary of the
Company.



     “Subsidiary Guarantor” is defined in Section 1.2.



10



Schedule B




 









 





     “Subsidiary Guaranty” is defined in Section 1.2.



     “SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.



     “this Agreement” or “the Agreement” is defined in Section 17.3.



     “USA Patriot Act” means United States Public Law 107-56, Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of
2001, as amended from time to time, and the rules and regulations promulgated thereunder from time
to time in effect.



     “U.S. Credit Agreements” means, collectively, the Credit Agreement (3-Year) and the Credit
Agreement (364-Day).



     “WCAS Partnerships” means each current and future Welsh, Carson, Anderson & Stowe limited
partnership, any partner, partnership or Affiliate of such limited partnership, and their
respective successors and assigns.



     “Wholly Owned Subsidiary” means, at any time, any Subsidiary 100% of all of the Capital Stock
(except directors’ qualifying shares and other minority shares held solely to satisfy organization
requirements of the applicable jurisdiction) and voting interests of which are owned by any one or
more of the Company and the Company’s other Wholly Owned Subsidiaries at such time.



11



Schedule B