Document:

<PAGE>

                                                                       EXHIBIT A

                              AMENDED AND RESTATED

                             STOCKHOLDERS AGREEMENT

                           dated as of August 30, 1996

                                      among

                  WORLD FINANCIAL NETWORK HOLDING CORPORATION,

                             LIMITED COMMERCE CORP.,

                    WELSH, CARSON, ANDERSON & STOWE VII, L.P.

                                       and

            THE SEVERAL OTHER WCAS INVESTORS NAMED IN ANNEX I HERETO

<PAGE>

                                TABLE OF CONTENTS

                                    ARTICLE I

                                   DEFINITIONS

SECTION 1.1    Definitions...................................................2

                                   ARTICLE II

                           RIGHTS AND OBLIGATIONS WITH
                               RESPECT TO TRANSFER

SECTION 2.1    General Restrictions..........................................7
SECTION 2.2    Restrictive Legend............................................8
SECTION 2.3    Rights of First Refusal.......................................9
SECTION 2.4    Tag-along Rights.............................................10
SECTION 2.5    Improper Transfer............................................13
SECTION 2.6    Preemptive Rights............................................13
SECTION 2.7    Termination..................................................13

                                   ARTICLE III

                               REGISTRATION RIGHTS

SECTION 3.1    Demand Registration..........................................14
SECTION 3.2    Piggy-Back Registration......................................15
SECTION 3.3    Reduction of Offering........................................15
SECTION 3.4    Registration Procedures......................................16
SECTION 3.5    Registration Expenses........................................19
SECTION 3.6    Indemnification by the Issuer................................19
SECTION 3.7    Indemnification by Selling Holders...........................20
SECTION 3.8    Conduct of Indemnification Proceedings ......................21
SECTION 3.9    Contribution.................................................22
SECTION 3.10   Participation in Underwritten Registrations..................23
SECTION 3.11   Current and Periodic Reports.................................24
SECTION 3.12   Holdback Agreements..........................................24

                                   ARTICLE IV

                         CORPORATE GOVERNANCE; COVENANTS

SECTION 4.1    Composition of the Board.....................................24
SECTION 4.2    Action by the Board..........................................25
SECTION 4.3    Consent of the Board of Directors............................26
SECTION 4.4    Charter and Bylaws...........................................28
SECTION 4.5    Information..................................................28
SECTION 4.6    Non-Solicitation.............................................29

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SECTION 4.7    Protection of the Business; Investment Opportunities.........29
SECTION 4.8    Capital Commitments..........................................30
SECTION 4.9    Termination..................................................31

                                    ARTICLE V

                                  MISCELLANEOUS

SECTION 5.1    Headings.....................................................31
SECTION 5.2    No Inconsistent Agreements...................................31
SECTION 5.3    Entire Agreement; Amendments; No Waivers.....................31
SECTION 5.4    Notices......................................................32
SECTION 5.5    Applicable Law...............................................32
SECTION 5.6    Severability.................................................32
SECTION 5.7    Successors, Assigns, Transferees.............................32
SECTION 5.8    Counterparts; Effectiveness..................................33
SECTION 5.9    Fees and Expenses............................................33
SECTION 5.10   Recapitalization, etc........................................33
SECTION 5.11   Remedies.....................................................33
SECTION 5.12   Jurisdiction.................................................33

Annex I -- WCAS Investors

Exhibit A - Form of Agreement to be Bound

                                       ii
<PAGE>

                   AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

         AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated as of August __,
1996 among World Financial Network Holding Corporation (the "Issuer"),
Limited Commerce Corp. ("Limited Commerce"), Welsh, Carson, Anderson & Stowe
VII, L.P. ("WCAS VII") and the several investors named in Annex I hereto
(collectively with WCAS VII, the "WCAS Investors").

         WHEREAS, the Issuer, Limited Commerce and WCAS VII are parties to
the WFN Stock Purchase Agreement (as defined below) pursuant to which certain
WCAS Investors are the holders of an aggregate of 60% of the outstanding
Common Stock, par value $.01 per share, of the Issuer, after giving effect to
such sale from the Issuer and Limited Commerce;

         WHEREAS, the Issuer, Limited Commerce and certain of the WCAS
Investors are parties to a Stockholders Agreement, dated as of January 31,
1996 (the "Original Agreement");

         WHEREAS, the Issuer and Business Services Holdings, Inc., a Delaware
corporation ("BSH"), have entered into an Agreement and Plan of Merger dated as
of August __, 1996 pursuant to which BSH has been merged (the "Merger") with and
into the Issuer, and shares of BSH Common Stock and BSH Preferred Stock (as
defined in said Agreement and Plan of Merger) have been converted into the right
to receive WFN Common Stock;

         WHEREAS, the Issuer, Limited Commerce and the WCAS Investors have
entered into a Securities Purchase Agreement dated as of August __, 1996 (as the
same may be amended or modified from time to time, the "1996 Securities Purchase
Agreement") whereby (i) the WCAS Investors have agreed to sell, and Limited
Commerce has agreed to purchase, shares of Common Stock and Notes (as each such
term is defined therein) and (ii) Limited Commerce has agreed to assume certain
obligations of certain WCAS Investors under Section 1.04 of the BSH Securities
Purchase Agreement (as defined below);

         WHEREAS, the parties to the Original Agreement desire to amend and
restate the Original Agreement in order to reflect the rights and obligations of
the Issuer, Limited Commerce and the WCAS Investors after giving effect to the
transactions contemplated by the Merger Agreement and the 1996 Securities
Purchase Agreement and to confirm the restrictions contained in the Original
Agreement on the sale, assignment, transfer, encumbrance or other disposition of
the Common Stock and the provision of certain rights and obligations relating to
the Common Stock, all as more particularly set forth herein;

         NOW THEREFORE, the parties hereto agree as follows:

<PAGE>

                                    ARTICLE I

                                   DEFINITIONS

         Section 1.1 DEFINITIONS. (a) The following terms, as used herein, have
the following meanings:

         "Affiliate", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, such
Person. For purposes of this definition, "control" (including, with correlative
meaning, the terms "controlling", "controlled by" and "under common control
with"), as applied to any Person means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise.

         "BSH Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of January 24, 1996 among BSH and the several Purchasers
named in Schedule I and Schedule II thereto, as the same may be amended or
modified from time to time.

         "Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized by law to close.

         "Commission" means the Securities and Exchange Commission and any
successor having similar powers.

         "Common Stock" means the shares of common stock, par value $.01 per
share, of the Issuer.

         "Competitor" means any Person which competes, directly or
indirectly, with any operations of Parent or any of its Subsidiaries, as such
operations exist as of the date hereof.

         "Convertible Securities" means securities convertible into or
exercisable for Issuer equity securities.

         "Credit Card Processing Agreement" means each Credit Card Processing
Agreement in effect from time to time between the Issuer and Limited Commerce or
one of its Affiliates which is a party thereto, as the same may be modified or
amended from time to time.

         "Debt" means, with respect to any Person, at any date, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes

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or other similar instruments, (iii) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
arising in the ordinary course of business, (iv) all obligations of such Person
as lessee under leases which are capitalized in accordance with generally
accepted accounting principles, (v) all Debt of others secured by a Lien on any
asset of such Person, whether or not such Debt is assumed by such Person, and
(vi) all Debt of others guaranteed by such Person.

         "Duly Endorsed" means duly endorsed in blank by the Person or Persons
in whose name a stock certificate is registered or accompanied by a duly
executed stock assignment separate from the certificate with the signature(s)
thereon guaranteed by a commercial bank or trust company or a member of a
national securities exchange or of the National Association of Securities
Dealers, Inc.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "GAAP" means generally accepted accounting principles.

         "Holder" means each Person (other than the Issuer) who shall be a party
to this Agreement, whether in connection with the transactions contemplated by
WFN Stock Purchase Agreement, the Merger Agreement, the 1996 Securities Purchase
Agreement or otherwise, so long as such Person shall "beneficially own" (as such
term is defined in Rule 13d-3 under the Exchange Act) any shares of Common
Stock.

         "Incurrence" means the incurrence, creation, assumption or in any other
manner becoming liable with respect to, or responsible for the payment of, any
Debt.

         "Issuer Board" means the Board of Directors of the Issuer.

         "Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset.

         "Merger Agreement" means the Agreement and Plan of Merger dated as of
August , 1996 between the Issuer and BSH, as the same may be amended or modified
from time to time.

         "Parent" means The Limited, Inc., a Delaware corporation.

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         "Permitted Transferee" means (i) in the case of Limited Commerce,
Parent or any Subsidiary of Parent and (ii) in the case of a WCAS Investor
listed on Annex I hereto, if such WCAS Investor is an individual, such
individual's spouse or lineal descendants, or a trust for the benefit of same.

         "Person" means an individual, partnership, corporation, trust, joint
stock company, association, joint venture, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.

         "Processing Business" means the business of processing private label or
bank credit card transactions initiated by consumers primarily for the retail
industry (it being understood that a Person shall be deemed to be engaged in the
private label or bank credit card processing business if such Person performs
any one or more of the following functions: (i) transaction authorization, (ii)
data capture, (iii) statement preparation, (iv) credit extension and (v) related
customer and merchant services); PROVIDED that a Person outside North America
shall not be deemed to be engaged in the Processing Business unless at least 50%
of such Person's operations are of the type described in this paragraph.

         "Public Offering" means any primary or secondary public offering of
equity securities of the Issuer pursuant to an effective registration statement
under the Securities Act other than pursuant to a registration statement on Form
S-4 or Form S-8 or any successor or similar form.

         "Qualified Public Offering" shall mean an underwritten Public Offering
of Common Stock of the Issuer in which the aggregate price paid by the public
shall be at least $30 million.

         "Registrable Securities" means the Common Stock held by Limited
Commerce, the WCAS Investors and the respective Transferees of Limited Commerce
or any WCAS Investor and any capital stock for which Common Stock is exchanged
or into which it is converted; PROVIDED that such securities shall cease to be
Registrable Securities when (x) a registration statement relating to such
securities shall have been declared effective by the Commission, and such
securities shall have been disposed of pursuant to such effective registration
statement, or (y) such securities are sold under circumstances in which all of
the applicable conditions of Rule 144 (or any similar provisions then in effect)
under the Securities Act are met or such shares may be sold pursuant to Rule
144 (k).

         "Registration Expenses" means all (i) registration and filing fees,
(ii) fees and expenses of compliance with securities

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or blue sky laws (including reasonable fees and disbursements of a qualified
independent underwriter, if any, counsel in connection therewith and the
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), (iii) printing expenses, (iv)
internal expenses of the Issuer (including, without limitation, all salaries and
expenses of officers and employees performing legal or accounting duties), (v)
fees and disbursements of counsel for the Issuer, (vi) customary fees and
expenses for independent certified public accountants retained by the Issuer
(including the expenses of any comfort letters), (vii) fees and expenses of any
special experts retained by the Issuer in connection with such registration,
(viii) reasonable fees and expenses of (A) one counsel for Limited Commerce and
its Permitted Transferees and (B) one counsel for the WCAS Investors and their
Permitted Transferees, (ix) fees and expenses of listing the Registrable
Securities on a securities exchange or on the NASDAQ National Market System, (x)
rating agency fees, (xi) reasonable fees and expenses of counsel for the
Underwriter, (xii) reasonable fees and expenses of the Underwriter (excluding
discounts or commissions relating to the distribution of the Registrable
Securities) and (xiii) out-of-pocket expenses of the Issuer.

         "Related Business" means (i) the business of providing one or more
processing functions (as set forth in the definition of "Processing Business")
for private label or bank credit card transactions initiated by consumers in
particular consumer markets other than retail and (ii) the business of providing
data base management services primarily for retailers.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Selling Holder" means Limited Commerce or any Transferees of Limited
Commerce or any WCAS Investor or any Transferees of any WCAS Investor who
propose to Transfer Registrable Securities pursuant to Article III.

         "Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.

         "Third Party" means a prospective purchaser of Common Stock from a
Holder in an arm's-length transaction where such Purchaser is not the Issuer or
an Affiliate of the Issuer.

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<PAGE>

         "Underwriter" means a securities dealer who purchases any Registrable
Securities as a principal in connection with a distribution of such Registrable
Securities and not as part of such dealer's market-making activities.

         "Voting Securities" means any class or series of capital stock and any
bond, debenture or other obligation of the Issuer or WFN having the right to
vote generally on matters voted on by the stockholders of the Issuer or WFN, as
the case may be.

         "WFN" means World Financial Network National Bank, a national banking
association and a wholly owned subsidiary of the Issuer.

         "WFN Board" means the Board of Directors of WFN.

         "WFN Stock Purchase Agreement" means the Stock Purchase Agreement dated
as of October 24, 1995 among the Issuer, Limited Commerce and WCAS VII, as the
same may be amended or modified from time to time.

         (b) Each of the following terms is defined in the Section opposite such
term:

<TABLE>
<CAPTION>

         Term                                                        Section
         ----                                                        -------
<S>                                                                <C>
    Additional Shares                                                   5.1
    BSH                                                            Preamble
    Charter Documents                                                   4.4
    Demand Registrant                                                   3.1
    Demand Registration                                                 3.1
    Effective Date                                                      5.9
    Existing Portfolio Company                                          4.7
    Indemnified Party                                                   3.8
    Indemnifying Party                                                  3.8
    Issuer                                                         Preamble
    Limited Commerce                                               Preamble
    Merger                                                         Preamble
    Nominee                                                             4.1
    Offer                                                               2.3
    Offer Notice                                                        2.3
    Offer Price                                                         2.3
    Offered Stock                                                       2.3
    Offeree Holder                                                      2.3
    Offering Holder                                                     2.3
    Original Agreement                                             Preamble
    Piggy-Back Registration                                             3.2
    Preemptive Rights Notice                                            2.6
    Registration Request                                                3.1
    Sale Date                                                           2.4

                                       6
<PAGE>

    1996 Securities Purchase                                       Preamble
      Agreement
    Tag-along Notice                                                    2.4
    Tag-along Notice Date                                               2.4
    Tag-along Notice Period                                             2.4
    Tag-along Offer                                                     2.4
    Tag-along Offer Notice                                              2.4
    Tag-along Offeree                                                   2.4
    Tag-along Purchaser                                                 2.4
    Tag-along Ratio                                                     2.4
    Transfer                                                            2.1
    Transferee                                                          2.1
    Transferring Party                                                  2.4
    WCAS VII                                                       Preamble
    WCAS Investors                                                 Preamble
</TABLE>

                                   ARTICLE II

                           RIGHTS AND OBLIGATIONS WITH
                               RESPECT TO TRANSFER

         SECTION 2.1 GENERAL RESTRICTIONS. (a) No Holder shall, directly or
indirectly, transfer, sell, assign, pledge, hypothecate, encumber or otherwise
dispose of any Common Stock to any Person (any such act being referred to as a
"Transfer", with the term "Transferee" to mean any transferee in a Transfer)),
except (i) in compliance with all applicable federal and state securities laws
and (ii) as expressly permitted by this Agreement.

         (b) The WCAS Investors shall be permitted to Transfer any or all of
their Common Stock after January 31, 1998 (i) in a Public Offering upon exercise
of the Registration Rights provided for in Article III, subject to Section 3.2,
or (ii) subject to Sections 2.3 and 2.4 and with the consent of Limited
Commerce, to a Third Party; provided that any Transferee pursuant to clause (ii)
shall have agreed in writing to be bound (through execution of an agreement
substantially in the form of Exhibit A hereto) by the terms of this Agreement
applicable to Holders.

         (c) The WCAS Investors shall be permitted to Transfer any or all of
their Common Stock after January 31, 2000, subject to Sections 2.3 and 2.4, to
any Person other than a Competitor; provided that any Transferee pursuant to
this paragraph shall have agreed in writing to be bound (through execution of an
agreement substantially in the form of Exhibit A hereto) by the terms of this
Agreement applicable to Holders.

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         (d) Limited Commerce shall be permitted to Transfer any or all of its
Common Stock after January 31, 1998 (i) in a Public Offering upon exercise of
the registration rights provided for in Article III, subject to Section 3.2, or
(ii) subject to Sections 2.3 and 2.4, and with the consent of WCAS VII, to a
Third Party; provided that any Transferee pursuant to clause (ii) shall have
agreed in writing to be bound (through execution of an agreement substantially
in the form of Exhibit A hereto) by the terms of this Agreement applicable to
Holders.

         (e) Limited Commerce shall be permitted to Transfer any or all of its
Common Stock after January 31, 2000, subject to Sections 2.3 and 2.4, to any
Person; provided that any Transferee pursuant to this paragraph shall have
agreed in writing to be bound (through execution of an agreement substantially
in the form of Exhibit A hereto) by the terms of this Agreement applicable to
Holders.

         (f) Notwithstanding any other provision of this Agreement to the
contrary, any Holder may at any time Transfer any or all shares of Common Stock
to one or more of its Permitted Transferees so long as (i) such Permitted
Transferee shall have agreed in writing to be bound (through execution of an
agreement substantially in the form of Exhibit A hereto) by the terms of this
Agreement applicable to Holders and (ii) the Transfer to such Permitted
Transferee is not in violation of any applicable federal or state securities
laws.

         SECTION 2.2 RESTRICTIVE LEGEND. (a) For so long as this Agreement
remains in effect, each certificate representing Common Stock owned by any
Holder shall include a legend in substantially the following form:

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
         EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS SUBJECT TO ADDITIONAL
         RESTRICTIONS ON TRANSFER AS SET FORTH IN THE AMENDED AND RESTATED
         STOCKHOLDERS AGREEMENT, DATED AS OF AUGUST   , 1996, A COPY OF WHICH
         MAY BE OBTAINED FROM WORLD FINANCIAL NETWORK HOLDING CORPORATION.

         (b) If any shares of Common Stock shall cease to be Registrable
Securities, the Issuer shall, upon the written request of the holder thereof,
issue to such holder a new certificate evidencing such shares without the first
sentence of the legend required by Section 2.2(a) endorsed thereon. If any
shares of Common Stock cease to be subject to any restrictions on Transfer set
forth in this Agreement, the Issuer shall, upon the written request of the
Holder thereof, issue to such Holder a new

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certificate evidencing such shares without the second sentence of the legend
required by Section 2.2(a) endorsed thereon.

         SECTION 2.3 RIGHTS OF FIRST REFUSAL. (a) No Holder (each an "Offering
Holder") will Transfer any Common Stock pursuant to Section 2.1(b) (ii), 2.1(c),
2.1(d) (ii) or 2.1(e) without first giving Limited Commerce (in the case of
transfers by any WCAS Investor or any of its Permitted Transferees) or WCAS VII
(in the case of any transfer by Limited Commerce or any of its Permitted
Transferees) (each an "Offeree Holder") prior notice thereof (an "Offer Notice")
and the opportunity (as hereinafter provided) to purchase all but not less than
all such Common Stock (the "Offered Stock") at a cash price (the "Offer Price")
equal to the sum of the amount of any cash plus the fair market value of any
other consideration offered by the prospective purchaser or other transferee
pursuant to a bona fide offer to purchase. The Offer Notice shall constitute an
offer (the "Offer") by an Offering Holder to sell the Offered Stock to the
Offeree Holder at the Offer Price and shall state the identity of the purchaser
or the Transferee and the terms of the proposed Transfer.

         (b) The Offer may be accepted within 45 days of receipt by the Offeree
Holder of the Offer Notice and, if accepted, such acceptance shall constitute
the Offeree Holder's binding agreement to purchase the Offered Stock by the
later of (i) the date 30 days after such acceptance or (ii) the date by which
the prospective purchaser or Transferee would have been obligated to purchase
the Offered Stock. If the Offer is not accepted or the Offered Stock is not
purchased as contemplated above, the Offering Holder may Transfer the Offered
Stock to such prospective purchaser or Transferee at a price not less than the
Offer Price and on substantially the same terms as described in the Offer
Notice. If the Transfer to such prospective purchaser or Transferee is not
consummated as contemplated above within 30 days after the expiration of the
45-day offer period or earlier irrevocable rejection of the Offer or failure to
purchase the Offered Stock after acceptance of the Offer, no Transfer may be
made by the Offering Holder without again complying with this Section 2.3.
Notwithstanding the foregoing, if the purchase and sale of the Offered Stock is
subject to any prior regulatory approval, the time periods specified above
within which such purchase and sale must be consummated shall be extended until
the expiration of five Business Days after all such approvals shall have been
received.

         (c) If the consideration offered by the prospective purchaser or
Transferee includes non-cash consideration, the Offeree Holder and Offering
Holder shall negotiate in good faith with a view to agreeing upon the fair
market value of such non-

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cash consideration. If, despite such good faith negotiations, the Offering
Holder and Offeree Holder are unable to agree on such fair market value within
15 days following receipt by the Offeree Holder of the Offer Notice, each of the
Offering Holder and the Offeree Holder shall, at its own expense, retain an
investment banking firm of national reputation to determine such fair market
value. If such two investment banking firms do not make substantially similar
determinations and neither determination is acceptable to both the Offering
Holder and the Offeree Holder, then such investment banking firms shall, at the
equally shared expense of the Offering Holder and the Offeree Holder, retain a
third investment banking firm of national reputation to select between the two
determinations, which selection shall be binding upon each party. If a
determination under this subsection (c) is required, the deadline for acceptance
provided for in this Section 2.3 shall be postponed until the fifth Business Day
after the date of such determination.

         (d) The rights of Limited Commerce and the WCAS Investors under this
Section 2.3 are transferable to any Permitted Transferee of Limited Commerce or
any WCAS Investor, as the case may be, that executes an agreement substantially
in the form of Exhibit A hereto.

         SECTION 2.4 TAG-ALONG RIGHTS. (a) Except as provided in Section
2.4(e), if any Holder ("Transferring Party") proposes to sell or otherwise
dispose of any of its Common Stock pursuant to Section 2.1(b) (ii), 2.1(c),
2.1(d) (ii) or 2.1(e) to any Third Party (a "Tag-along Purchaser") pursuant
to a bona fide offer to purchase (a "Tag-along Offer"), the Transferring
Party shall provide written notice (the "Tag-along Offer Notice") of such
Tag-along Offer to the Issuer and the Issuer shall promptly provide written
notice (the effective date of such notice being the "Tag-along Notice Date")
of such Tag-along Offer to such other Holder and its Permitted Transferees
(the "Tag-along Offeree"), the Tag-along Ratio (as defined below), the
consideration per share of Common Stock and other material terms and
conditions of the Tag-along Ratio (as defined below), the consideration per
share of Common Stock and other material terms and conditions of the
Tag-along Offer and, in the case of a Tag-along Offer in which the
consideration payable for Common Stock consists in part or in whole of
consideration other than cash, such information relating to such
consideration as the Tag-along Offeree may reasonably request as being
necessary for such Tag-along Offeree to evaluate such non-cash consideration,
it being understood that such request shall not obligate the Transferring
Party to deliver any information to such Tag-along Offeree not provided to
the Transferring Party by the Tag-along Purchaser.

                                       10
<PAGE>

         Each Tag-along Offeree shall have the right, exercisable as set forth
below, to accept the Tag-along Offer for up to the number of shares of Common
Stock determined pursuant to Section 2.4(b). The consideration per share paid to
any Tag-along Offeree shall be not less than the highest price paid per share to
the Transferring Party in respect of its Common Stock. Each Tag-along Offeree
that desires to accept the Tag-along Offer shall provide the Transferring Party
with written revocable notice (a "Tag-along Notice") (specifying, subject to
Section 2.4(b), the number of Common Stock which such Tag-along Offeree desires
to sell) within 45 days after the Tag-along Notice Date, and shall
simultaneously provide a copy of such Tag-along Notice to the Issuer, and the
Issuer shall forward a copy of each such Tag-along Notice to the Transferring
Party and each other Tag-along Offeree. Such Tag-along Notice may be withdrawn
or modified at any time until the expiration of 45 days after the Tag-along
Notice Date (the "Tag-along Notice Period"). At the expiration of the Tag-along
Notice Period, the most recent Tag-along Notice shall become irrevocable and
binding, and shall constitute an irrevocable acceptance of the Tag-along Offer
by the Tag-along Offeree for the Common Stock specified therein.

         As soon as practicable after the expiration of the Tag-along Notice
Period, the Transferring Party shall notify the Issuer and each accepting
Tag-along Offeree of the number of shares of Common Stock such Tag-along Offeree
is obligated to sell or otherwise dispose of pursuant to the Tag-along Offer,
such number to be calculated in accordance with Section 2.4(b). The Transferring
Party shall notify the Issuer and each accepting Tag-along Offeree of the
proposed date of any sale ("Sale Date") pursuant to this Section 2.4 no less
than five days prior to the Sale Date, and each accepting Tag-along Offeree
shall deliver to the Transferring Party the Duly Endorsed certificate or
certificates representing the Common Stock to be sold or otherwise disposed of
pursuant to such offer by such Tag-along Offeree, together with a limited
power-of-attorney authorizing the Transferring Party to sell or otherwise
dispose of such Common Stock pursuant to the terms of the Tag-along Offer and
all other documents required to be executed in connection with such Tag-along
Offer, no less than two days prior to the Sale Date.

         (b) Each Tag-along Offeree shall have the right to sell, pursuant to
any Tag-along Offer, a number of shares of Common Stock less than or equal to
the product of the total number of Common Stock offered to be sold by the
Transferring Party or offered to be purchased by the Tag-along Purchaser as set
forth in such Tag-along Offer multiplied by a fraction (the "Tag-along Ratio"),
the numerator of which is the number of Common Stock then held by such Tag-along
Offeree and the denominator of which shall be an amount equal to the total
number of

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<PAGE>

shares of Common Stock then held by all Tag-along Offerees exercising rights
under this Section 2.4 PLUS the total number of shares of Common Stock then
held by the Transferring Party. The number of shares of Common Stock sold by
each Tag-along Offeree in a Tag-along Offer shall be equal to the lesser of
the number of shares of Common Stock calculated pursuant to the formula set
forth in this Section 2.4(b) and the number of shares of Common Stock
specified in such Tag-along Offeree's Tag-along Notice in respect of such
Tag-along Offer. If at the termination of the Tag-along Notice Period any
Tag-along Offeree shall not have accepted the Tag-along Offer, such Tag-along
Offeree will be deemed to have waived any and all of its rights under this
Section 2.4 with respect to the sale of other disposition of any of its
Common Stock pursuant to such Tag-along Offer and no Common Stock held by any
such Tag-along Offeree will be included in such Tag-along Offer.

         (c) The Transferring Party shall have 45 days from the termination of
the Tag-along Notice Period in which to consummate the sale contemplated by the
Tag-along Offer to the Tag-along Purchaser at the price and on the terms set
forth in the Tag-along Offer Notice; PROVIDED that if the purchase and sale of
such Common Stock is subject to any prior regulatory approval, the time period
during which such purchase and sale may be consummated shall be extended until
the expiration of five Business Days after all such approvals shall have been
received. If, at the end of the period set forth in this Section 2.4(c) the
Transferring Party has not completed the sale contemplated by the Tag-along
Offer Notice, all the restrictions on sale or other disposition contained in
this Agreement with respect to Common Stock owned by the Transferring Party
shall again be in effect.

         (d) Within one Business Day after the consummation of the sale or other
disposition of the Common Stock pursuant to the Tag-along Offer, the
Transferring Party shall notify the Tag-along Offeree thereof, shall remit to
each of the Tag-along Offerees the total sales price specified in the Tag-along
Offer Notice of the Common Stock of such Tag-along Offeree sold or otherwise
disposed of pursuant thereto, and shall furnish such other evidence of such sale
(including the time of completion) and the terms thereof as may be reasonably
requested by the Tag-along Offeree.

         (e) Notwithstanding anything contained in this Section 2.4, there shall
be no liability on the part of a Transferring Party to any Tag-along Offeree if
the same of Common Stock pursuant to Section 2.4(c) is not consummated for
whatever reason. Whether to effect a sale of Common Stock pursuant to this
Section 2.4 by a Transferring Party is in the sole and absolute discretion of
the Transferring Party.

                                       12
<PAGE>

         (f) Each Tag-along Offeree shall be required to bear its proportionate
share of any escrows, holdbacks or adjustments in purchase price under the terms
of the purchase agreement relating to such Tag-along Offer; PROVIDED that the
amount borne by any Tag-along Offeree shall not exceed the net proceeds received
by such Tag-along Offeree for the Common Stock sold by it pursuant to such
Tag-along Offer.

         SECTION 2.5 IMPROPER TRANSFER. (a) Any attempt to Transfer any Common
Stock not in compliance with this Agreement shall be null and void and neither
the Issuer nor any transfer agent of the Issuer shall register, or otherwise
recognize in the Issuer's stock records, any such improper Transfer.

         SECTION 2.6 PREEMPTIVE RIGHTS. If the Issuer shall, other than (i)
pursuant to any employee incentive arrangement, (ii) upon conversion of
Convertible Securities of the Issuer outstanding on January 31, 1996, (iii) in a
Public Offering, (iv) as a dividend on or other distribution in respect of all
outstanding shares of Common Stock, (v) pursuant to Sections 1.03 and 1.04 of
the BSH Securities Purchase Agreement or (vi) in connection with any merger,
acquisition or other business combination, issue any of its equity securities or
Convertible Securities, each Holder shall have the right to purchase for cash
the number or amount of such equity securities or Convertible Securities on the
same terms and at the same price as the issue price of such equity security or
Convertible Security so that, after the issuance of all such equity securities
or Convertible Securities, such Holder would, in the aggregate, hold the same
proportional interest of such equity securities (or, in the case of Convertible
Securities, to be outstanding upon conversion or exercise of all such
Convertible Securities) as is held by it prior to the issuance of any such
additional equity securities or Convertible Securities. Upon consummation of any
issuance by the Issuer subject to the provisions of this Section 2.6, the Issuer
shall promptly deliver written notice (a "Preemptive Rights Notice") of such
issuance to the other Holders. Each Holder's right to purchase securities under
this Section 2.6 with respect to any issuance of securities shall terminate 15
days after the delivery of the Preemptive Rights Notice.

         SECTION 2.7 TERMINATION. The provisions of Article II shall terminate
and be of no further force and effect from and after the date of the
consummation of a Qualified Public Offering.

                                       13
<PAGE>

                                   ARTICLE III

                               REGISTRATION RIGHTS

         SECTION 3.1 DEMAND REGISTRATION. (a) REQUEST FOR REGISTRATION. At any
time after the consummation of a Public Offering, Limited Commerce, any WCAS
Investor or any other Holder to which rights under this Section 3.1 have been
transferred or assigned (a "Demand Registrant") may make a written request (the
"Registration Request") for registration (a "Demand Registration") under the
Securities Act of Registrable Securities having a value (determined in the good
faith judgment of Limited Commerce (in the case of a Registration Request by
Limited Commerce or any Transferee of Limited Commerce) or WCAS VII (in the case
of a Registration Request by any WCAS Investor or any Transferee of any WCAS
Investor)) of not less than $10 million (or, if less, all of the Registrable
Securities then owned by such Demand Registrant). The Registration Request will
specify the number of shares of Registrable Securities proposed to be sold and
will also specify the intended method of disposition thereof; PROVIDED that the
Issuer shall not be obligated to effect (i) more than two Demand Registrations
for the WCAS Investors and their Transferees in the aggregate, (ii) more than
two Demand Registrations for Limited Commerce and its Transferees in the
aggregate or (iii) a Demand Registration if counsel to the Issuer delivers to
the Demand Registrant a written opinion in form and substance satisfactory to
the Demand Registrant to the effect that registration under the Securities Act
is not necessary in order for the Demand Registrant to sell the Registrable
Securities in the manner contemplated by the Demand Registrant and, following
such sale, the Transferee (assuming such Transferee is not the Issuer or an
affiliate of the Issuer within the meaning of the Securities Act) will be free
to resell such Registrable Securities without restriction and without
registration under the Securities Act.

         (b) EFFECTIVE REGISTRATION. For purposes of Section 3.1(a), a
registration of Registrable Securities will not count as a Demand Registration
until it has become effective under the Securities Act.

         (c) UNDERWRITING. If the Demand Registrant so elects, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form of
an underwritten offering. The Board of Directors shall select the book-running
managing Underwriter in connection with such offering, and Limited Commerce and
the WCAS Investors (taken as a group) may each select one additional investment
banking firm to serve as co-managing underwriter in connection with the
offering.

                                       14
<PAGE>

         (d) BEST EFFORTS OF THE ISSUER. The Issuer will use its best efforts to
effect the registration and the sale of Registrable Securities in accordance
with the intended method of disposition thereof as quickly as practicable in
connection with any Registration Request.

         SECTION 3.2 PIGGY-BACK REGISTRATION. If the Issuer proposes to file a
registration statement under the Securities Act with respect to an offering of
its Registrable Securities (i) for its own account (other than a registration
statement on Form S-4 or S-8 (or any substitute form that may be adopted by the
Commission)), or (ii) for the account of any holders of its capital stock, then
the Issuer shall give written notice of such proposed filing to Limited
Commerce, the WCAS Investors and all Transferees of Limited Commerce or any WCAS
Investor to which Limited Commerce or such WCAS Investor shall have transferred
any of its rights under this Section 3.2 (a "Piggyback Holder") as soon as
practicable (but in any event not less than 20 days before the anticipated
filing date), and such notice shall offer such Piggyback Holders the opportunity
to register any and all shares of Registrable Securities owned by such Piggyback
Holders. If such Holders wish to register securities of the same class or series
as the Issuer or such holders, such registration shall be on the same terms and
conditions as the registration of the Issuer's or such holders' securities (a
"Piggy-Back Registration"). No registration effected under this Section 3.2
shall relieve the Issuer of its obligations to effect Demand Registrations to
the extent required by Section 3.1 hereof.

         SECTION 3.3 REDUCTION OF OFFERING.

         (a) If a Demand Registration involves an underwritten Public Offering
and the managing Underwriter shall advise the Issuer and the Selling Holders
that, in its view, (i) the number of shares of Common Stock requested to be
included in such registration (including Common Stock which the Issuer proposes
to be included) or (ii) the inclusion of some or all of the shares of Common
Stock owned by the Holders, in either case, exceeds the greatest number of
shares of Common Stock which can be sold without having an adverse effect on
such offering, including the price at which such shares of Common Stock can be
sold (the "Maximum Offering Size"), the Issuer will include in such
registration, in the priority listed below, up to the Maximum Offering Size:

          (i) first, all shares of Common Stock requested to be registered by
     the Selling Holders (allocated, if necessary for the offering not to exceed
     the Maximum Offering Size, pro rata among such entities on the basis of the
     relative

                                       15
<PAGE>

     number of shares of Registrable Stock requested to be registered);

          (ii) second, all Registrable Stock requested to be included in such
     registration by any other Holder (allocated, if necessary for the offering
     not to exceed the Maximum Offering Size, pro rata among such other Holders
     on the basis of the relative number of shares of Registrable Stock
     requested to be included in such registration); and

          (iii) third, any Common Stock proposed to be registered by the Issuer.

          (b) If a registration pursuant to Section 3.2 involves an
underwritten Public Offering (other than in the case of an underwritten
Public Offering requested by any Demand Registrant in a Demand Registration,
in which case the provisions with respect to priority of inclusion in such
offering set forth in Section 3.3(a) shall apply) and the managing
Underwriter advises the Issuer that, in its view, the number of shares of
Common Stock which the Issuer and the selling Holders intend to include in
such registration exceeds the Maximum Offering Size, the Issuer will include
in such registration, in the following priority, up to the Maximum Offering
Size:

          (i) first, so much of the Common Stock proposed to be registered by
     the Issuer as would not cause the offering to exceed the Maximum Offering
     Size; and

          (ii) second, all Registrable Stock requested to be included in such
     registration statement by any Holder pursuant to Section 3.2 or otherwise
     (allocated, if necessary for the offering not to exceed the Maximum
     Offering Size, pro rata among such entities on the basis of the relative
     number of shares of Registrable Stock requested to be so included).

         SECTION 3.4 REGISTRATION PROCEDURES. Whenever the Issuer is required to
effect the registration of Registrable Securities pursuant to Section 3.1 or 3.2
hereof, the Issuer will use its best efforts to effect the registration and the
sale of such Registrable Securities in accordance with the intended method of
disposition thereof as quickly as practicable, and in connection with any such
Registration Request:

          (a) The Issuer will as expeditiously as possible prepare and file with
     the Commission a registration statement on any form for which the Issuer
     then qualifies or which counsel for the Issuer shall deem appropriate and
     which form shall be available for the sale of the Registrable Securities to
     be registered thereunder in accordance

                                       16
<PAGE>

     with the intended method of distribution thereof, and use its best efforts
     to cause such filed registration statement to become and remain effective
     for a period of not less than 120 days; PROVIDED that in the case of a
     Demand Registration, if the Issuer shall furnish to any Selling Holder a
     certificate signed by either its Chairman, Chief Executive Officer or
     President stating that in his good faith judgment it would materially
     adversely affect the Issuer or its shareholders for such a registration
     statement to be filed as expeditiously as possible, the Issuer shall have a
     period of not more than 120 days within which to file such registration
     statement measured from the date of receipt of the Registration Request in
     accordance with Section 3.1.

          (b) The Issuer will, if requested, prior to filing a registration
     statement or prospectus or any amendment or supplement thereto, furnish to
     any Selling Holder and each Underwriter, if any, drafts of such documents
     proposed to be filed, and thereafter furnish to the Selling Holders and
     such Underwriter, if any, such number of copies of such registration
     statement, each amendment and supplement thereto (in each case including
     all exhibits thereto and documents incorporated by reference therein), the
     prospectus included in such registration statement (including each
     preliminary prospectus) and such other documents as any Selling Holders or
     such Underwriter may reasonably request in order to facilitate the sale of
     the Registrable Securities.

          (c) After the filing of the registration statement, the Issuer will
     promptly notify any Selling Holders of any stop order issued or threatened
     by the Commission and take all reasonable actions required to prevent the
     entry of such stop order or to remove it if entered.

          (d) The Issuer will use its best efforts to (i) register or qualify
     the Registrable Securities under such other securities or blue sky laws of
     such jurisdictions in the United States as any Selling Holders reasonably
     (in light of their intended plan of distribution) request and (ii) cause
     such Registrable Securities to be registered with or approved by such other
     governmental agencies or authorities as may be necessary by virtue of the
     business and operations of the Issuer and do any and all other acts and
     things that may be reasonably necessary or advisable to enable the Selling
     Holders to consummate the disposition of their Registrable Securities;
     PROVIDED, that the Issuer will not be required to (i) qualify generally to
     do business in any jurisdiction where it would not otherwise be required to
     qualify but for this paragraph (d), (ii) subject itself to taxation in any

                                       17
<PAGE>

     such jurisdiction other than taxation arising with respect to the
     registration of securities or (iii) consent to general service of process
     in any such jurisdiction.

          (e) At any time when a prospectus relating to the sale of Registrable
     Securities is required to be delivered under the Securities Act, the Issuer
     will immediately notify the Selling Holders of the occurrence of any event
     requiring the preparation of a supplement or amendment to such prospectus
     so that, as thereafter delivered to the purchasers of such Registrable
     Securities, such prospectus will not contain an untrue statement of a
     material fact or omit to state any material fact required to be stated
     therein or necessary to make the statements therein not misleading and
     promptly make available to the Selling Holders and the Underwriters any
     such supplement or amendment. The Selling Holders agree that, upon receipt
     of any notice from the Issuer of the happening of any event of the kind
     described in the preceding sentence, the Selling Holders will forthwith
     discontinue the offer and sale of Registrable Securities pursuant to the
     registration statement covering such Registrable Securities until receipt
     of the copies of such supplemented or amended prospectus and, if so
     directed by the Issuer, the Selling Holders will deliver to the Issuer all
     copies, other than permanent file copies then in the possession of the
     Selling Holders, of the most recent prospectus covering such Registrable
     Securities at the time of receipt of such notice. In the event the issuer
     shall give such notice, the Issuer shall extend the period during which
     such registration statement shall be maintained effective as provided in
     Section 3.4(a) hereof by the number of days during the period from and
     including the date of the giving of such notice to the date when the Issuer
     shall make available to the Selling Holders such supplemented or amended
     prospectus.

          (f) The Issuer will enter into customary agreements (including an
     underwriting agreement in customary form) and take such other actions as
     are reasonably required in order to expedite or facilitate the disposition
     of such Registrable Securities.

          (g) The Issuer will make available for inspection by any Selling
     Holder and any Underwriter participating in any disposition pursuant to a
     registration statement being filed by the Issuer pursuant to this Article
     III any attorney, accountant or other professional retained by any such
     Shareholder or Underwriter (collectively, the "Inspectors"), all financial
     and other records, pertinent corporate documents and properties of the
     Issuer's (collectively, the "Records") as shall be reasonably requested by
     any such Person, and

                                       18
<PAGE>

     cause the Issuer's officers, directors and employees to supply all
     information reasonably requested by any Inspectors in connection with such
     registration statement.

          (h) The Issuer will furnish to the Selling Holders and to each
     Underwriter, if any, a signed counterpart, addressed to the Selling Holders
     or such Underwriter, of (i) an opinion or opinions of counsel to the Issuer
     and (ii) a comfort letter or comfort letters from the Issuer's independent
     public accountants, each in customary form and covering such matters as are
     customarily covered by opinions and comfort letters, as the Selling Holders
     or the managing Underwriter therefor reasonably request.

          (i) The Issuer will otherwise use its best efforts to comply with all
     applicable rules and regulations of the Commission, and make available to
     its securityholders, as soon as reasonably practicable, an earnings
     statement covering a period of 12 months, beginning within three months
     after the effective date of the registration statement, which earnings
     statement shall satisfy the provisions of Section 11(a) of the Securities
     Act.

          (j) The Issuer will use its best efforts to cause all such Registrable
     Securities to be listed on each securities exchange on which similar
     securities issued by the Issuer are then listed.

         The Issuer may require any Selling Holder, and each Selling Holder
agrees, to furnish promptly in writing to the Issuer such information regarding
such Selling Holder, the plan of distribution of the Registrable Securities and
other information as the Issuer may from time to time reasonably request or as
may be legally required in connection with such registration.

         SECTION 3.5 REGISTRATION EXPENSES. Registration Expenses incurred in
connection with any registration made or requested to be made pursuant to this
Article III will be borne by the Issuer, whether or not any such registration
statement becomes effective.

         SECTION 3.6 INDEMNIFICATION BY THE ISSUER. The Issuer agrees to
indemnify and hold harmless each Selling Holder, its officers, directors and
agents, and each Person, if any, who controls each such Selling Holder within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act from and against any and all losses, claims, damages, liabilities and
expenses caused by any untrue statement or alleged untrue statement of a
material fact contained in any registration statement or prospectus relating to
the Registrable Securities (as amended

                                       19
<PAGE>

or supplemented if the Issuer shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Issuer by or on behalf of any such
Selling Holder expressly for use therein; PROVIDED that with respect to any
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus, or in any prospectus, as the case may be, the indemnity
agreement contained in this paragraph shall not apply to the extent that any
such loss, claim, damage, liability or expense results from the fact that a
current copy of the prospectus (or, in the case of a prospectus, the prospectus
as amended or supplemented) was not sent or given to the Person asserting any
such loss, claim, damage, liability or expense at or prior to the written
confirmation of the sale of the Registrable Stock concerned to such Person if it
is determined that the Issuer has provided such prospectus and it was the
responsibility of such Selling Holder to provide such Person with a current copy
of the prospectus (or such amended or supplemented prospectus, as the case may
be) and such current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) would have cured the defect giving rise to such
loss, claim, damage, liability or expense. The Issuer also agrees to indemnify
any Underwriters of the Registrable Securities, their officers and directors and
each Person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 3.6.

         SECTION 3.7 INDEMNIFICATION BY SELLING HOLDERS. Each Selling Holder
agrees, severally but not jointly, to indemnify and hold harmless the Issuer,
its officers, directors and agents and each Person, if any, who controls the
Issuer within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the foregoing indemnity from the
Issuer to such Selling Holder, but only with reference to information related to
such Selling Holder furnished in writing by or on behalf of such Selling Holder
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. Each Selling Holder also agrees to indemnify and hold
harmless Underwriters of the Registrable Securities, their officers and
directors and each Person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Issuer provided in this Section
3.7.

                                       20
<PAGE>

         SECTION 3.8 CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 3.6 or 3.7, such Person (the "Indemnified Party") shall promptly notify
the Person against whom such indemnity may be sought (the "Indemnifying Party")
in writing and the Indemnifying Party upon request of the Indemnified Party
shall retain counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to the proceeding; PROVIDED that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder except to the extent that the Indemnifying
Party is materially prejudiced by such failure to notify. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for
all such Indemnified Parties, and that all such fees and expenses shall be
reimbursed as they are incurred. In the case of any such separate firm for the
Indemnified Parties, such firm shall be designated in writing by the Indemnified
Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Party shall have requested an Indemnifying Party to reimburse the Indemnified
Party for fees and expenses of counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 business days after receipt by such
Indemnifying Party of the aforesaid request and (ii) such Indemnifying Party
shall not have reimbursed the Indemnified Party in accordance with such request
prior to the date of such settlement, unless the Indemnifying Party has

                                       21
<PAGE>

contested such reimbursement obligation and provides reasonable assurances that
such payment can be made upon resolution of such dispute. No Indemnifying Party
shall, without the prior written consent of the Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement (x) includes
an unconditional release of such Indemnified Party from all liability arising
out of such proceeding and (y) provides that such Indemnified Party does not
admit any fault or guilt with respect to the subject matter of such proceeding.

         SECTION 3.9 CONTRIBUTION. (a) If the indemnification provided for
herein is for any reason unavailable to the Indemnified Parties in respect of
any losses, claims, damages or liabilities referred to herein, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (i) as between the Issuer and the
Selling Holders on the one hand and the Underwriters on the other, in such
proportion as is appropriate to reflect the relative benefits received by the
Issuer and such Selling Holders on the one hand and the Underwriters on the
other from the offering of the securities, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits but also the relative fault of the Issuer and the
Selling Holders on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations and (ii) as between the Issuer on the one hand and any Selling
Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Issuer and of such Selling Holder in connection with such
statements or omissions, as well as any other relevant equitable considerations.
The relative benefits received by the Issuer and the Selling Holders on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Issuer
and such Selling Holders bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in the table
on the cover page of the prospectus. The relative fault of the Issuer and the
Selling Holders on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuer and any Selling
Holder or by the Underwriters. The

                                       22
<PAGE>

relative fault of the Issuer on the one hand and any Selling Holder on the other
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

         (b) The Issuer and each Selling Holder agree that it would not be just
and equitable if contribution pursuant to this Section 3.9 were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 3.9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Selling Holder
shall be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities of such Selling Holder were
offered to the public (less underwriters' discounts and commissions) exceeds the
amount of any damages which such Selling Holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.

         SECTION 3.10 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any underwritten registration hereunder unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and these
registration rights.

                                       23
<PAGE>

         SECTION 3.11 CURRENT AND PERIODIC REPORTS. The Issuer covenants that it
will file any reports required to be filed by it under the Securities Act and
the Exchange Act. Upon the request of Limited Commerce or the WCAS Investors,
the Issuer will deliver to Limited Commerce or the WCAS Investors, a written
statement as to whether it has complied with such requirements.

         SECTION 3.12 HOLDBACK AGREEMENTS. If and to the extent requested by the
Issuer, in the case of a non-underwritten public offering, and if and to the
extent requested by the managing Underwriter or Underwriters, in the case of an
underwritten public offering, the Holders agree not to effect, except as part of
such registration, any public sale or distribution of the issue being registered
or a similar security of the Issuer, or any securities convertible into or
exchangeable or exercisable for such securities, including a sale pursuant to
Rule 144, during the 14 days prior to, and during the 120-day period beginning
on, the effective date of such registration statement.

                                   ARTICLE IV

                         CORPORATE GOVERNANCE; COVENANTS

         SECTION 4.1 COMPOSITION OF THE BOARD. (a) The Issuer Board shall
consist of five members. WCAS VII shall be entitled, but not required, to
designate three members of the Issuer Board, and Limited Commerce shall be
entitled, but not required, to designate two members of the Issuer Board. Each
Holder entitled to vote for the election of directors to the Board agrees that
it will vote all of its Voting Securities or execute consents, as the case may
be, and take all other necessary action (including causing the Issuer to call a
special meeting of stockholders) in order to ensure that the composition of the
Board is as set forth in this Section 4.1(a). Notwithstanding the foregoing, if,
pursuant to the terms of the Issuer's 6 1/4% Redeemable Exchangeable Preferred
Stock (the "Preferred Stock"), the holders thereof are entitled to elect one
member of the Issuer Board, WCAS VII shall be entitled, but not required, to
expand the size of the Issuer Board to seven members (including the member
elected by the holders of the Preferred Stock) and designate one additional
member of the Issuer Board. The term of the additional member of the Issuer
Board designated by WCAS VII pursuant to the immediately preceding sentence
shall expire simultaneously with the expiration of the term of the member of the
Issuer Board designated by the holders of the Preferred Stock, and the Issuer
Board shall thereupon consist of five members as contemplated by the first two
sentences of this Section 4.1(a); PROVIDED that the right of WCAS VII to enlarge
the Issuer Board and to designate one additional member shall be reinstated in
accordance with, and

                                       24
<PAGE>

subject to the provisions of this Section 4.1(a), at any subsequent time at
which the holders of the Preferred Stock are entitled to elect one member of the
Issuer Board.

         (b) Each Holder and the Issuer agrees that if, at any time, it is
entitled to vote for the removal of directors of the Issuer, it will not vote
any of its Voting Securities in favor of the removal of any director who shall
have been designated or nominated pursuant to Section 4.1(a) unless such removal
shall be for Cause or the Person entitled to designate or nominate such director
shall have consented to such removal in writing. Removal for "Cause" shall mean
removal of a director because of such director's (a) willful and continued
failure to substantially perform his duties with the Issuer in his established
position, (b) willful conduct which is significantly injurious to the Issuer,
monetarily or otherwise, or (c) conviction for, or a guilty plea to, a felony.

         (c) If, as a result of death, disability, retirement, resignation,
removal (with or without Cause) or otherwise, there shall exist or occur any
vacancy on the Issuer Board:

          (i) the Person entitled under Section 4.1(a) to designate or nominate
     such director whose death, disability, retirement, resignation or removal
     resulted in such vacancy may designate another individual (the "Nominee")
     to fill such capacity and serve as a director of the Issuer; and

          (ii) each Holder then entitled to vote for the election of the Nominee
     as a director of the Issuer agrees that it will vote all of its Voting
     Securities, or execute a written consent, as the case may be, in order to
     ensure that the Nominee be elected to the Issuer Board.

         SECTION 4.2 ACTION BY THE BOARD. A quorum of the Issuer Board shall
consist of four directors (or, at any time at which the holders of the Preferred
Stock are entitled to elect a member of the Issuer Board, five directors). All
actions of the Issuer Board shall require the affirmative vote of at least a
majority of the directors at a duly convened meeting of the Issuer Board at
which a quorum is present or the unanimous written consent of the Issuer Board;
PROVIDED that, in the event there is a vacancy on either such Board of Directors
and an individual has been nominated to fill such vacancy, the first order of
business shall be to fill such vacancy.

                                       25
<PAGE>

         SECTION 4.3 CONSENT OF THE BOARD OF DIRECTORS.

         (a) From and after January 31, 1996 through January 31, 1998, the
Issuer shall not, and shall not permit any of its Subsidiaries to, take any
action regarding any of the following matters without the affirmative vote of at
least one member of the Issuer Board designated by Limited Commerce:

         (i)      appointment or removal of the Chief Executive Officer (or
                  Person with comparable duties) of the Issuer;

         (ii)     the Incurrence by the Issuer or any Subsidiary of the Issuer
                  of Debt where, after giving effect to such Incurrence, the
                  Issuer would have a consolidated ratio of Debt to equity in
                  excess of 1.5 to 1.0 excluding securitized Debt and Debt
                  issued upon the exchange of Preferred Stock;

         (iii)    any transaction with any Affiliate of the Issuer or any
                  Subsidiary of the Issuer other than (A) transactions that are
                  at least as favorable to the Issuer or any Subsidiary of the
                  Issuer, as the case may be, as could have been obtained on an
                  arm's-length basis with a Person who is not an Affiliate of
                  the Issuer or any Subsidiary of the Issuer, as the case may be
                  (as determined in the good faith judgment of the Issuer Board)
                  or (B) the transactions contemplated by the Credit Card
                  Processing Agreement;

         (iv)     entry into any line of business other than the Processing
                  Business or a Related Business;

         (v)      issuance or sale of any capital stock of the Issuer or any
                  Subsidiary of the Issuer, whether publicly or privately, other
                  than, in the case of Issuer, (A) to or for the benefit of
                  employees of Issuer any Subsidiary of the Issuer pursuant to
                  stock option plans or other employee compensation or benefit
                  arrangements, (B) upon conversion of Convertible Securities of
                  the Issuer outstanding on January 31, 1996, (C) as a dividend
                  on or other distribution in respect of all outstanding shares
                  of Common Stock or (D) except as provided in clause (viii)
                  below, in connection with any merger, acquisition or other
                  business combination;

         (vi)     the declaration or payment, whether directly or indirectly, of
                  any dividend or any distribution on

                                       26
<PAGE>

                  its capital stock or to the holders of its capital stock that
                  would impair the capital of the Issuer or any Subsidiary of
                  the Issuer; or

         (vii)    the purchase or other acquisition (by merger, business
                  combination or otherwise) of assets with a fair market value
                  in excess of $10,000,000, except for any such purchase or
                  acquisition the consideration for which is being funded out of
                  the Remaining Capital Commitments (as defined in Section 4.8)
                  of the WCAS Investors and Limited Commerce.

         (b) From and after the date hereof, the Issuer will not, and will not
permit any of its Subsidiaries to, take any action regarding any of the
following matters without the affirmative vote of at least one member of the
Issuer Board designated by Limited Commerce:

         (i)      any consolidation, combination or merger of the Issuer with or
                  into any other Person, other than any such consolidation,
                  combination or merger if, after the consummation thereof, the
                  WCAS Investors (taken as a group) constitute the largest
                  stockholder of the surviving entity and designees of the WCAS
                  Investors constitute a majority of the Board of Directors (or
                  similar governing body of such surviving entity);

         (ii)     the sale, assignment, transfer or lease of all or
                  substantially all of the assets of the Issuer;

         (iii)    the dissolution of the Issuer; or

         (iv)     the voluntary bankruptcy of the Issuer or any Subsidiary of
                  the Issuer.

         (c) Unless earlier terminated in accordance with the terms of this
Agreement, the rights granted to Limited Commerce pursuant to Sections 4.1, 4.2
and 4.3 shall terminate at such time as Limited Commerce (i) shall have sold to
Persons other than Permitted Transferees at least 50% of the shares of Common
Stock owned by it as of the date hereof or (ii) Limited Commerce and its
Permitted Transferees (taken as a group) shall own less than 5% of the Common
Stock outstanding; provided that the requirement that at least one member of the
Issuer Board designated by Limited Commerce vote in favor of any matter referred
to in Section 4.3(b)(i) before the Issuer or any of its Subsidiaries may take
any action with respect to such matter shall terminate on January 31, 2000.

                                       27
<PAGE>

         SECTION 4.4 CHARTER AND BYLAWS. (a) The Issuer's Certificate of
Incorporation and Bylaws, each in the form in which it is in effect on the date
hereof (the "Charter Documents"), are attached as Exhibits A and B hereto.

         (b) The Issuer agrees not to amend, or permit the amendment of, the
Charter Documents or the Certificate of Incorporation or Bylaws of any
Subsidiary of the Issuer in a way that would be material and adverse to the
rights of the Holders hereunder without the written consent of the Holders
holding at least 66 2/3% of the Common Stock then outstanding.

         SECTION 4.5 INFORMATION. (a) For so long as Limited Commerce and its
Permitted Transferees (taken as a group), or the WCAS Investors and their
Permitted Transferees (taken as a group) own at least 5% of the Common Stock
then outstanding, the Issuer shall deliver to Limited Commerce and/or the WCAS
Investors, as the case may be, the following information:

          (i) as promptly as practicable but not later than 90 days after the
     end of the Issuer's fiscal year, audited financial statements for such
     fiscal year;

          (ii) as promptly a practicable but not later than 30 days after the
     end of each quarter, the Issuer's unaudited financial statements for such
     month; and

          (iii) from time to time such additional information regarding the
     financial position or business of the Issuer and its Subsidiaries as
     Limited Commerce or the WCAS Investors may reasonably request.

         (b) The Issuer agrees to provide all members of the Issuer Board with
unaudited financial statements for each fiscal month of the Issuer within 30
days after the end of such month.

         (c) Limited Commerce and the WCAS Investors agree that they will keep
all confidential information received by them in strictest confidence and will
limit the dissemination of such information to those persons who reasonable
require access to such information; PROVIDED that Limited Commerce and the WCAS
Investors may disseminate such information without restriction to the extent
required to satisfy the safe harbor provided by Rule 144(c) (2) in conjunction
with Rule 15c2-11(a) (5) (i)-(xiv) and (xvi) under the Exchange Act. The term
"confidential information" does not include (i) any information that is or
becomes publicly available through no fault of Limited Commerce and the WCAS
Investors, (ii) information that is in or comes into the possession of Limited
Commerce and the WCAS Investors on a nonconfidential basis from a person other
than the Issuer or any

                                       28
<PAGE>

of its Affiliates and (iii) any information that is required to be disclosed by
Limited Commerce and the WCAS Investors under compulsion of law.

         SECTION 4.6 NON-SOLICITATION. For so long as Limited Commerce and its
Permitted Transferees (taken as a group) own at least 5% of the outstanding
Common Stock, none of the WCAS Investor or any Affiliate of any WCAS Investor
shall, without the prior written approval of Limited Commerce, directly or
indirectly solicit any Person who is an employee of the Issuer or any Affiliate
of the Issuer at any time on or after the date of this Agreement to terminate
his or her relationship with the Issuer or any Affiliate of the Issuer; PROVIDED
that the foregoing shall not apply to persons hired as a result of the use of an
independent employment agency (so long as the agency was not directed to solicit
such person) or as a result of the use of a general solicitation (such as an
advertisement) not specifically directed to employees of the Issuer or any
Affiliate of the Issuer; PROVIDED, FURTHER, that the provisions of this Section
4.6 (i) shall not apply to the activities of officers or employees of companies
in which any WCAS Investor has invested in the ordinary course of business and
(ii) shall not prohibit any WCAS Investor from assisting any such officer or
employee in evaluating the qualifications of any employee contacted without the
intervention of such WCAS Investor.

         SECTION 4.7 PROTECTION OF THE BUSINESS; INVESTMENT OPPORTUNITIES. (a)
WCAS VII hereby covenants and agrees that neither WCAS VII nor any Affiliate of
WCAS VII shall, directly or indirectly, invest in any Processing Business other
than the Issuer; PROVIDED that this Section 4.7(a) shall not (i) apply to
investments by WCAS VII or any of its Affiliates in securities of another entity
which constitute, in the aggregate, less than 5% of the outstanding shares of
such entity entitled to vote generally in the election of directors or similar
persons, (ii) apply to any Transferee of WCAS VII where the relevant Transfer is
effected in accordance with the terms of this Agreement, (iii) prohibit WCAS VII
or any Affiliate of WCAS VII from investing in any Person engaged in the
Processing Business where such Processing Business is ancillary to another
existing business of such WCAS Investor or any such Affiliate, as the case
maybe, and constitutes less than 10% of the total gross revenues of such
business and (iv) prohibit WCAS VII or any Affiliates of WCAS VII from investing
in any Person engaged in the Processing Business where Limited Commerce has
blocked the acquisition of such Processing Business by the Issuer or any
Subsidiary of the Issuer in accordance with the exercise of Limited Commerce's
rights under Section 4.3(a).

                                       29
<PAGE>

         (b) WCAS VII agrees to present to the Issuer Board investment
opportunities in the Processing Business or any Related Business that come to
the attention of WCAS VII or any Affiliate of WCAS VII for the purpose of
allowing the Issuer Board to consider pursuing those opportunities it considers
appropriate.

         (c) Notwithstanding any provisions of this Section 4.7 to the contrary,
the provisions of this Section 4.7(i) shall not restrict the investment
activities of any Existing Portfolio Company and (ii) shall not apply to
investment opportunities in the healthcare industry. For purposes of the
foregoing, an "Existing Portfolio Company" shall mean any Person in which WCAS
VII or any other investment fund managed by Welsh, Carson, Anderson & Stowe or
any of its Affiliates shall have made an investment on or prior to the date
hereof in the ordinary course of such fund's business.

         (d) Unless earlier terminated in accordance with the terms hereof, the
provisions of this Section 4.7 shall terminate on the earliest to occur of (i)
the date on which Limited Commerce and its Permitted Transferees shall own less
than 5% of the Common Stock outstanding, (ii) the date on which Limited Commerce
shall have sold to Persons other than Permitted Transferees at least 50% of the
shares of Common Stock owned by it as of the date hereof and (iii) the fourth
anniversary of the Closing Date.

         SECTION 4.8 CAPITAL COMMITMENTS. The WCAS Investors and their
Permitted Transferees (as a group) and Limited Commerce and its Permitted
Transferees (as a group) shall be obligated, upon not less than 15 days'
written notice from the Issuer, to contribute an amount in cash equal to its
or their Remaining Capital Commitment to fund any acquisition approved by the
Issuer Board. For purposes of this Section 4.8, the term "Remaining Capital
Commitment" shall mean (i) in the case of the WCAS Investors and their
Permitted Transferees (as a group), an amount equal to $75 million MINUS all
amounts theretofore contributed to the Issuer pursuant to this Section 4.8 and
(ii) in the case of Limited Commerce and its Permitted Transferees, $50
million MINUS all amounts theretofore contributed to the Issuer pursuant to
this Section 4.8. It is hereby acknowledged and agreed that, as of the date
of this Agreement, the WCAS Investors have heretofore contributed an
aggregate $________________ to the Issuer pursuant to this Section 4.8, and
Limited Commerce has heretofore contributed an aggregate $_______________ to
the Issuer pursuant to this Section 4.8. It is further acknowledged and
agreed that, for purposes of calculating the Remaining Capital Commitment of
any person or entity under this Section 4.8, (i) any amounts actually
contributed pursuant to Section 1.04 of the 1996 Securities Purchase
Agreement shall be deemed to constitute contribu-

                                       30
<PAGE>

tions pursuant to this Section 4.8 and (ii) until such time as the final amount
of any contribution pursuant to such Section 1.04 of the 1996 Securities
Purchase Agreement is determined, the maximum amounts that may be required to be
contributed by such person or entity pursuant to said Section 1.04 shall be
deemed to have heretofore been contributed to the Issuer pursuant to this
Section 4.8. Unless earlier terminated in accordance with the terms hereof, the
provisions of this Section 4.8 shall terminate on January 31, 1998.

         SECTION 4.9 TERMINATION. Unless earlier terminated in accordance with
the terms hereof, the provisions of Article IV shall terminate and be of no
further force or effect upon the consummation of a Qualified Public Offering.

                                    ARTICLE V

                                  MISCELLANEOUS

         SECTION 5.1 HEADINGS. The headings in this Agreement are for
convenience of reference only and shall not control or affect the meaning or
construction of any provisions hereof.

         SECTION 5.2 NO INCONSISTENT AGREEMENTS. The Issuer is not a party to
and will not hereafter enter into any agreement with respect to its securities
which is inconsistent with, or otherwise grant rights superior to, the rights
granted to Limited Commerce under this Agreement. Each of the Issuer, Limited
Commerce and the WCAS Investors represents that it is not and agrees that it
will not become a party to any other agreement relating to the voting of Voting
Securities.

         SECTION 5.3 ENTIRE AGREEMENT; AMENDMENTS; NO WAIVERS. (a) This Amended
and Restated Stockholders Agreement contains the entire agreement among the
parties hereto with respect to the subject matter hereof and supersedes (i) the
Original Agreement, (ii) the Registration Rights Agreement dated as of January
24, 1996 among BSH, the WCAS Investors party thereto and JCP Telecom Systems,
Inc. and (iii) all other prior written agreements and negotiations and oral
understandings, if any, with respect to such subject matter. This Agreement may
be amended but only in a writing signed by the Issuer, the WCAS Investors and
Limited Commerce. Any provision hereof may be waived but only in a writing
signed by the party against which such waiver is sought to be enforced.

         (b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude

                                       31
<PAGE>

any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided shall be cumulative and
not exclusive of any rights or remedies provided by law.

         SECTION 5.4 NOTICES. Any notice, request, instruction or other document
to be given hereunder by any party hereto to another party hereto shall be in
writing (including telecopier or similar writing) and shall be given to such
party at its address, or telecopier number set forth on its signature page or,
in the case of a Transfer, to the address, or telecopier number of the party
executing the written agreement pursuant to Sections 2.1 hereof, or to such
other address as the party to whom notice is to be given may provide in a
written notice to the party giving such notice, a copy of which written notice
shall be on file with the Secretary of the Issuer. Each such notice, request or
other communication shall be effective (i) if given by telecopy, which such
telecopy is transmitted to the telex or telecopy number specified in its
signature page and the appropriate answerback or confirmation, as the case may
be, is received, (ii) if given by mail, 72 hours after such communication is
deposited in the mails with first class postage prepaid addressed as aforesaid
or (iii) if given by any other means, when delivered at the address specified in
this Section 5.4.

         SECTION 5.5 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles.

         SECTION 5.6 SEVERABILITY. The invalidity or unenforceability of any
provisions of this Agreement in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Agreement in such
jurisdiction or the validity, legality or enforceability of this Agreement,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

         SECTION 5.7 SUCCESSORS, ASSIGNS, TRANSFEREES. (a) The provisions of
this Agreement shall be binding upon and accrue to the benefit of the parties
hereto and their respective heirs, successors and permitted assigns. Neither
this Agreement nor any provision hereof shall be construed so as to confer any
right or benefit upon any Person other than the parties to this Agreement and
their respective successors and permitted assigns.

         (b) This Agreement shall not be assignable or otherwise transferable by
any party hereto, except that any Person acquiring shares of Common Stock who is
required by the terms of this Agreement to become a party hereto shall execute
and deliver

                                       32
<PAGE>

to the Issuer an agreement to be bound (substantially in the form of Exhibit A)
by this Agreement and shall thenceforth be a "Holder", and any Holder who ceases
to beneficially own any Shares shall cease to be bound by the terms hereof
(other than Sections 3.6, 3.7, 3.8 and 3.9 and the confidentiality obligations
set forth in Section 4.4.

         SECTION 5.8 COUNTERPARTS; EFFECTIVENESS. This Agreement may be
executed in any number of counterparts, each of which shall be an original
with the same effect as if the signatures thereto and hereto were upon the
same instrument. This Agreement shall become effective when each party hereto
shall have received a counterpart hereof signed by the other parties hereto
and the closings under both the 1996 Securities Purchase Agreement and the
Merger Agreement shall have occurred (the "Effective Date").

         SECTION 5.9 FEES AND EXPENSES. Except as otherwise set forth in the WFN
Stock Purchase Agreement, the 1996 Securities Purchase Agreement and the Merger
Agreement, all fees and expenses incurred by any party hereto in connection with
the preparation of this Agreement and the transactions contemplated hereby and
all matters related thereto shall be borne by the party incurring such fees or
expenses.

         SECTION 5.10 RECAPITALIZATION, ETC. If any capital stock or other
securities are issued in respect of, or in exchange or substitution for, any
Common Stock by reason of any reorganization, recapitalization,
reclassification, merger, consolidation, spin-off, partial or complete
liquidation, stock dividend, split-up, sale of assets, distribution to
stockholders or combination of the Common Stock or any other change in capital
structure of the Issuer, appropriate adjustments shall be made with respect to
the relevant provisions of this Agreement so as to fairly and equitably
preserve, as far as practicable, the original rights and obligations of the
parties hereto under this Agreement.

         SECTION 5.11 REMEDIES. The parties hereby acknowledge that money
damages would not be adequate compensation for the damages that a party would
suffer by reason of a failure of any other party to perform any of the
obligations under this Agreement. Therefore, each party hereto agrees that
specific performance is the only appropriate remedy under this Agreement and
hereby waives the claim or defense that any other party has an adequate remedy
at law.

         SECTION 5.12. JURISDICTION. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, any of the Transaction Documents may be brought against any of the parties
in the

                                       33
<PAGE>

United States District Court for the Southern District of New York or any
state court sitting in The City of New York, Borough of Manhattan, and each of
the parties hereby consents to the exclusive jurisdiction of such court (and of
the appropriate appellate courts) in any such suit, action or proceeding and
waives any obligation to venue laid therein. Process in any such suit, action or
proceeding may be served on any party anywhere in the world, whether within or
without the State of New York. Without limiting the foregoing, the parties agree
that service of process upon such party at the address referred to in Section
5.4, together with written notice of such service of such party, shall be deemed
effective service of process upon such party.

                                       34
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

                                   WORLD FINANCIAL NETWORK HOLDING
                                     CORPORATION

                                   By /s/ Ralph E. Spurgin
                                     --------------------------------
                                     Title:

                                   LIMITED COMMERCE CORP.

                                   By
                                     ------------------------------
                                   Title:

                                   WELSH, CARSON, ANDERSON & STOWE
                                     VII, L.P.
                                   By: WCAS VII Partners, L.P.,
                                     General Partner

                                   By
                                     ------------------------------
                                     Title: General Partner

                                   WELSH, CARSON, ANDERSON & STOWE
                                     VI, L.P.
                                   By: WCAS VI Partners, L.P.,
                                     General Partner

                                   By
                                     ------------------------------
                                     Title: General Partner

                                       35
<PAGE>

                                   WCAS INFORMATION PARTNERS, L.P.
                                   By:      WCAS INFO Partners,
                                            General Partner

                                   By
                                     ------------------------------
                                     Title: General Partner

                                   WCAS CAPITAL PARTNERS II, L.P.
                                   By:      WCAS CP II Partners,
                                            General Partner

                                   By
                                     ------------------------------
                                     Title: General Partner

                                   WCA MANAGEMENT CORPORATION

                                   By
                                     ------------------------------
                                     Title:

                                   --------------------------------
                                   Patrick J. Welsh

                                   --------------------------------
                                   Russell L. Carson

                                   --------------------------------
                                   Bruce K. Anderson

                                   --------------------------------
                                   Richard H. Stowe

                                       36
<PAGE>

                                   --------------------------------
                                   Andrew M. Paul

                                   --------------------------------
                                   Thomas E. McInerney

                                   --------------------------------
                                   Laura VanBuren

                                   --------------------------------
                                   James B. Hoover

                                   --------------------------------
                                   Robert A. Minicucci

                                   --------------------------------
                                   Anthony J. deNicola

                                   --------------------------------
                                   David Bellet

                                       37
<PAGE>

                                                                         ANNEX I

WELSH, CARSON, ANDERSON & STOWE VI, L.P.

WCAS CAPITAL PARTNERS II, L.P.

WCAS INFORMATION PARTNERS, L.P.

WCA MANAGEMENT CORPORATION

Patrick J. Welsh

Russell L. Carson

Bruce K. Anderson

Richard H. Stowe

Andrew M. Paul

Thomas E. McInerney

Laura M. VanBuren

James B. Hoover

Robert E. Minicucci

Anthony J. deNicola

David Bellet

                                       38
<PAGE>

                                                                       EXHIBIT A

                          FORM OF AGREEMENT TO BE BOUND

                                                  [DATE]

To the Parties to the
  Stockholders Agreement
  dated as of _________ __, 1996

Dear Sirs:

         Reference is made to the Amended and Restated Stockholders Agreement
dated as of _________ __, 1996 (the "Stockholders Agreement"), by and among WFN
Holdings, Inc. (the "Issuer"), Limited Commerce, Inc. ("Limited Commerce"),
Welsh, Carson, Anderson & Stowe VII, L.P. ("WCAS VII") and the several investors
named in Annex I of the Stockholders Agreement (collectively with WCAS VII, the
"WCAS Investors"). Capitalized terms not defined herein have the meanings
assigned to them in the Stockholders Agreement.

         In consideration of the covenants and agreements contained in the
Stockholders Agreement and the transfer of the common stock, par value $.01 per
share, of the Issuer (the "Common Stock") to the undersigned by [Transferor],
the undersigned hereby confirms and agrees to be bound by all of the
provisions thereof.

         [The undersigned acknowledges that it is a condition to an effective
pledge of the Common Stock under the Stockholders Agreement that the pledgee
agree, and the undersigned hereby confirms and agrees, that upon foreclosure of
such pledge, the undersigned will take the Common Stock subject to all of the
restrictions applicable to the transferor under the Stockholders Agreement.] *

----------------------
*        Include in the case of a pledge.

<PAGE>

            AMENDMENT TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT

         AMENDMENT, dated July 24, 1998, to AMENDED AND RESTATED STOCKHOLDERS
AGREEMENT, dated as of August 30, 1996 (the "Original Agreement"), among
Alliance Data Systems Corporation (known in the Original Agreement as World
Financial Network Holding Corporation) (the "Issuer"), Limited Commerce Corp.
("Limited Commerce"), Welsh, Carson, Anderson & Stowe VII, L.P. ("WCAS VII"),
Welsh, Carson, Anderson & Stowe VIII, L.P. ("WCAS VIII") and the several
investors named on Annex I hereto (collectively with WCAS VII and WCAS VIII, the
"WCAS Investors"), certain of whom were also parties to the Original Agreement
(sometimes referred to herein collectively with WCAS VII as the "Original WCAS
Investors")

         WHEREAS, the Original Agreement was entered into by the Issuer, Limited
Commerce and the Original WCAS Investors except for WCAS VIII (the "Original
Investors");

         WHEREAS, the Issuer, WCAS VII, WCAS VIII and the remaining WCAS
Investors have entered into a Common Stock Purchase Agreement dated as of the
date hereof (the "Purchase Agreement"), whereby the WCAS Investors have agreed
to purchase an aggregate 90,909,091 shares of Common Stock (the "Shares"), par
value $.01 per share, of the Issuer;

         WHEREAS, the Issuer and the Original Investors desire to amend the
Original Agreement to include the Shares in such agreement;

         WHEREAS, each of WCAS VII and WCAS VIII, pursuant to their respective
partnership agreements, has agreed to use its reasonable best efforts to conduct
its affairs and activities in such a manner so that it will qualify as a
"venture capital operating company" within the meaning of the United States
Department of Labor's "plan asset" regulations (29 C.F.R Section 2510.3-101)
and the rules and regulations of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), and in connection with said qualification,
each of WCAS VII and WCAS VIII desires to obtain directly such management
rights (which may be exercised by WCAS VII or WCAS VIII, as the case may be,
solely for its own benefit and own account) as are sufficient to permit each
of WCAS VII and WCAS VIII to qualify as a "venture capital operating company"
with respect to its investment in the Issuer; and

<PAGE>

         WHEREAS, the parties hereto desire to provide such management rights to
WCAS VII and WCAS VIII;

         NOW THEREFORE, the parties hereto agree as follows:

         SECTION 1.  DEFINITIONS. Capitalized terms used herein
without definition shall have the meanings ascribed to them in
the Original Agreement.

         SECTION 2. THE SHARES. The Shares to be purchased by WCAS VII and WCAS
VIII pursuant to the Stock Purchase Agreement shall for all purposes be deemed
"Common Stock" and "Registrable Securities" under the Original Agreement.

         SECTION 3. AMENDMENT OF SECTION 4.1 OF THE ORIGINAL AGREEMENT. Section
4.1 of the Original Agreement is hereby amended in its entirety to read as
follows:

         "SECTION 4.1 COMPOSITION OF THE BOARD. (a) The Issuer Board shall
         consist of five members. WCAS VII shall be entitled, but not required,
         to designate two members of the Issuer Board, WCAS VIII shall be
         entitled, but not required, to designate one member of the Issuer
         Board, and Limited Commerce shall be entitled, but not required, to
         designate two members of the Issuer Board. The right to designate a
         member or members of the Issuer Board shall belong solely to, and shall
         be exercised exclusively by, the respective Holder to whom such right
         has been granted herein for its own benefit and account. Each Holder
         entitled to vote for the election of directors to the Board agrees that
         it will vote all of its Voting Securities or execute consents, as the
         case may be, and take all other necessary action (including causing the
         Issuer to call a special meeting of stockholders) in order to ensure
         that the composition of the Board is as set forth in this Section
         4.1(a). Notwithstanding the foregoing, if, pursuant to the terms of the
         Issuer's 6 1/4% Redeemable Exchangeable Preferred Stock (the "Preferred
         Stock"), the holders thereof are entitled to elect one member of the
         Issuer Board, WCAS VII shall be entitled, but not required, to expand
         the size of the Issuer Board to seven members (including the member
         elected by the holders of the Preferred Stock) and designate one
         additional member of the Issuer Board. The term of the additional
         member of the Issuer Board designated by WCAS VII pursuant to the
         immediately preceding sentence shall expire simultaneously with the
         expiration of the

<PAGE>

         term of the member of the Issuer Board designated by the holders of the
         Preferred Stock, and the Issuer Board shall thereupon consist of five
         members as contemplated by the first two sentences of this Section
         4.1(a); PROVIDED that the right of WCAS VII to enlarge the Issuer Board
         and to designate one additional member shall be reinstated in
         accordance with, and subject to the provisions of this Section 4.1(a),
         at any subsequent time at which the holders of the Preferred Stock are
         entitled to elect one member of the Issuer Board.

         "(b) Each director designated pursuant to Section 4.1(a) shall have the
         right to serve as a member of any and all committees of the Issuer
         Board. The appointment and removal of a designated director shall be by
         written notice from the designating stockholder to the Issuer, and
         shall take effect upon the delivery of written notice thereof at the
         Issuer's principal office or at any meeting of the Issuer Board.

         "(c) Each of WCAS VII and WCAS VIII shall have the right to appoint a
         representative to attend as an observer (i) each and every meeting of
         the Issuer Board and each subsidiary thereof and (ii) each and every
         meeting of any committee of any such board. The appointment and removal
         of such representatives shall be by written notice from WCAS VII or
         WCAS VIII, as the case may be, to the Issuer and shall take effect upon
         the delivery of written notice thereof to the Issuer at its principal
         office or at any meeting of the Issuer Board.

         "(d) In addition to the rights et forth in Section 4.5 hereto, each of
         WCAS VII and WCAS VIII shall have the right to receive, within a
         reasonable time after its written request therefor, any information
         relating to the Issuer or any subsidiary thereof as WCAS VII or WCAS
         VIII in its respective sole discretion reasonably deems appropriate,
         including without limitation: (i) financial information and statements,
         including balance sheets and profit and loss and cash flow statements
         of the Issuer and its subsidiaries; (ii) on an annual basis or, if so
         requested, more frequently, budgets and cash flow forecasts and
         projections of the Issuer and its subsidiaries; and (iii) such
         additional financial or other information as WCAS VII or WCAS VIII may
         reasonably request. Each of WCAS VII and WCAS VIII shall be entitled,
         at all reasonable times, to have

<PAGE>

         access to the premises, books and records of the Issuer and its
         subsidiaries.

         "(e) Each of WCAS VII and WCAS VIII shall have the right to meet on a
         regular basis with the management personnel of the Issuer and its
         subsidiaries from time to time and upon reasonable notice for the
         purpose of consulting with, rendering advice, recommendations and
         assistance to, and influencing, the management of such companies or
         obtaining information regarding them or their operations, activities
         and prospects, and expressing its views thereon.

         "(f) If United States ERISA counsel for either WCAS VII or WCAS VIII
         reasonably concludes that the rights granted to WCAS VII or WCAS VIII,
         as the case may be, in this agreement should be altered in order to
         preserve the qualification of WCAS VII or WCAS VIII as a "venture
         capital operating company," or otherwise to ensure that the assets of
         WCAS VII or WCAS VIII are not considered "plan assets" for purposes of
         ERISA, the Issuer agrees (and each other party hereto likewise agrees)
         to amend this agreement to effect any such alteration, PROVIDED that no
         such alteration would have a material adverse effect on the business
         operations or prospects of the Issuer and its subsidiaries taken as a
         whole.

         "(g) The Issuer shall use all reasonable efforts to take such further
         action as may be necessary or advisable in order to give full effect to
         the rights being granted hereunder to WCAS VII and WCAS VIII.

         "(h) Each Holder and the Issuer agrees that if, at any time, it is
         entitled to vote for the removal of directors of the Issuer, it will
         not vote any of its Voting Securities in favor of the removal of any
         director who shall have been designated or nominated pursuant to
         Section 4.1(a) unless such removal shall be for Cause or the Person
         entitled to designate or nominate such director shall have consented to
         such removal in writing. Removal for "Cause" shall mean removal of a
         director because of such director's (a) willful and continued failure
         to substantially perform his or her duties with the Issuer in his or
         her established position, (b) willful conduct which is significantly
         injurious to the Issuer, monetarily or

<PAGE>

         otherwise, or (c) conviction for, or a guilty plea to, a felony.

         "(i) If, as a result of death, disability, retirement, resignation,
         removal (with or without Cause) or otherwise, there shall exist or
         occur any vacancy on the Issuer Board:

               (i) the Person entitled under Section 4.1(a) to designate or
          nominate such director whose death, disability, retirement,
          resignation or removal resulted in such vacancy may designate another
          individual (the "Nominee") to fill such capacity and serve as a
          director of the Issuer; and

               (ii) each Holder then entitled to vote for the election of the
          Nominee as a director of the Issuer agrees that it will vote all of
          its Voting Securities, or execute a written consent, as the case may
          be, in order to ensure that the Nominee be elected to the Issuer
          Board."

               SECTION 4. APPLICABLE LAW. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to conflicts of law principles.

               SECTION 5. ORIGINAL AGREEMENT. Except as amended or modified
pursuant to this Amendment, the terms of the Original Agreement shall remain in
full force and effect.

               SECTION 6. SEVERABILITY. The invalidity or unenforceability of
any provisions of this Amendment in any jurisdiction shall not affect the
validity, legality or enforceability of the remainder of this Amendment in such
jurisdiction or the validity, legality or enforceability of this Amendment,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

               SECTION 7. COUNTERPARTS; EFFECTIVENESS. This Amendment may be
executed in any number of counterparts, each of which shall be an original with
the same effect as if the signatures thereto and hereto were upon the same
instrument.

<PAGE>

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first above written.

                                     ALLIANCE DATA SYSTEMS CORPORATION

                                     By /s/ Robert A. Minicucci
                                       ------------------------------
                                     Title:
                                     WELSH, CARSON, ANDERSON & STOWE
                                       VIII, L.P.
                                     By: WCAS VIII Partners, L.P.,
                                       General Partner

                                     By /s/ Anthony J. deNicola
                                       ------------------------------
                                       Title: General Partner

                                     WELSH, CARSON, ANDERSON & STOWE
                                       VII, L.P.
                                     By: WCAS VII Partners, L.P.,
                                       General Partner

                                     By /s/ Anthony J. deNicola
                                       ------------------------------
                                       Title: General Partner

                                     WELSH, CARSON, ANDERSON & STOWE
                                       VI, L.P.
                                     By: WCAS VI Partners, L.P.,
                                       General Partner

                                     By /s/ Anthony J. deNicola
                                       -------------------------------
                                       Title: General Partner

                                     WCAS INFORMATION PARTNERS, L.P.
                                     By: WCAS INFO Partners,
                                       General Partner

                                     By /s/ [Illegible]
                                       -------------------------------
                                       Title: General Partner

<PAGE>

                                     WCAS CAPITAL PARTNERS II, L.P.
                                     By: WCAS CP II Partners,
                                       General Partner

                                     BY /s/ Anthony J. deNicola
                                       -------------------------------
                                     Title: General Partner

                                     /s/ Patrick J. Welsh
                                     ---------------------------------
                                     Patrick J. Welsh

                                     /s/ Russell L. Carson
                                     ---------------------------------
                                     Russell L. Carson

                                     /s/ Bruce K. Anderson
                                     ---------------------------------
                                     Bruce K. Anderson

                                     /s/ Richard H. Stowe
                                     ---------------------------------
                                     Richard H. Stowe

                                     /s/ Andrew M. Paul
                                     ---------------------------------
                                     Andrew M. Paul

                                     /s/ Thomas E. McInerney
                                     ---------------------------------
                                     Thomas E. McInerney

                                     /s/ Laura VanBuren
                                     ---------------------------------
                                     Laura VanBuren

                                     /s/ James B. Hoover
                                     ---------------------------------
                                     James B. Hoover

<PAGE>

                                     /s/ Robert A. Minicucci
                                     ---------------------------------
                                     Robert A. Minicucci

                                     /s/ Anthony J. deNicola
                                     ---------------------------------
                                     Anthony J. deNicola

                                     /s/ David Bellet
                                     ---------------------------------
                                     David Bellet

                                     /s/ Paul B. Queally
                                     ---------------------------------
                                     Paul B. Queally

                                     LIMITED COMMERCE CORP.

                                     By
                                       ------------------------------
                                       Title:

<PAGE>

                                     /s/ Lawrence Sorrel
                                     ----------------------------------
                                     Lawrence Sorrel

                                     /s/ Priscilla Newman
                                     ----------------------------------
                                     Priscilla Newman

                                     /s/ Rudolph Rupert
                                     ----------------------------------
                                     Rudolph Rupert

                                     /s/ D. Scott Mackesy
                                     ----------------------------------
                                     D. Scott Mackesy

<PAGE>

                               WAIVER AND CONSENT

         The undersigned, parties to that certain Amended and Restated
Stockholders Agreement, dated as of August 30, 1996 (the "Agreement"), among
Alliance Data Systems Corporation, then known as World Financial Network Holding
Corporation (the "Company"), Limited Commerce Corp. ("Limited"), Welsh, Carson,
Anderson & Stowe VII, L.P. ("WCAS VII") and the Several Other WCAS Investors
Named in Annex I Thereto, do hereby waive certain rights granted to them in
Section 2.6 of the Agreement as such rights relate to the transactions
contemplated by that certain Securities Purchase Agreement for the purchase of
(i) an aggregate of 5,900,000 shares of the Company's Common Stock and (ii) the
Company's 10% Subordinated Note in the principal amount of $52,000,000 by WCAS
Capital Partners III, L.P.

Dated: September , 1998

                                                    LIMITED COMMERCE CORP.

                                                    By: /s/ [ILLEGIBLE]
                                                       ------------------------
                                                    Title:

<PAGE>

                            AMENDMENT TO AMENDED AND
                         RESTATED STOCKHOLDERS AGREEMENT

         AMENDMENT TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated as of
August 31, 1998 (the "Amendment"), amending the Amended and Restated
Stockholders Agreement dated as of August 30, 1996, as amended (as so
amended, the "Original Agreement"), among Alliance Data Systems Corporation
(known in the Original Agreement as World Financial Network Holding
Corporation) (the "Issuer"), Limited Commerce Corp. ("Limited Commerce"),
WCAS Capital Partners II, L.P. ("WCAS CP II"), Welsh, Carson, Anderson &
Stowe VII, L.P. ("WCAS VII"), and the several other investors named as
parties thereto (collectively with Limited Commerce, WCAS CP II and WCAS VII,
the "Investors"), certain of whom were also parties to the Original Agreement.

         WHEREAS, the Issuer, Limited Commerce, WCAS CP II and WCAS VII have
entered into an Amendment to Securities Purchase Agreement dated as of the
date hereof (the "Amendment to Securities Agreement") pursuant to which,
among other things, the Issuer has agreed to issue and deliver to WCAS CP II
and Limited Commerce an aggregate 454,545 shares of Common Stock (the "Common
Shares"), par value $.01 per share, of the Issuer in consideration of the
agreement by WCAS CP II and Limited Commerce to change the maturity of the
10% Subordinated Notes due January 24, 2002 of the Company held by WCAS CP II
and Limited Commerce Corp. from January 24, 2002 to October 25, 2005; and

         WHEREAS, the Issuer and the Investors desire to amend the Original
Agreement to include the Common Shares in such agreement;

         NOW THEREFORE, the parties hereto agree as follows:

         SECTION 1. AMENDMENT TO ORIGINAL AGREEMENT. The Common Shares to be
acquired by WCAS CP II and Limited Commerce pursuant to the Amendment to
Securities Agreement shall for all purposes be deemed "Common Stock" and
"Registrable Securities" under the Original Agreement.

         SECTION 2. CONSENT. Each of the Investors hereby consents to the
issuance of the Common Shares to WCAS CP II and Limited Commerce and hereby
waives any preemptive right or other right it may have to purchase,
participate in or otherwise acquire any such shares of Common Stock.

<PAGE>

         SECTION 3. APPLICABLE LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles.

         SECTION 4. ORIGINAL AGREEMENT. Except as amended or modified
pursuant to this Amendment, the terms of the Original Agreement shall remain in
full force and effect.

         SECTION 5. SEVERABILITY. The invalidity or unenforceability of any
provisions of this Amendment in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Amendment in such
jurisdiction or the validity, legality or enforceability of this Amendment,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

         SECTION 6. COUNTERPARTS: EFFECTIVENESS. This Amendment may
be executed in any number of counterparts, each of which shall be
an original with the same effect as if the signatures thereto and
hereto were upon the same instrument.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.

                             ALLIANCE DATA SYSTEMS CORPORATION

                             By /s/ [ILLEGIBLE]
                               --------------------------------

                             LIMITED COMMERCE CORP.

                             By /s/ [ILLEGIBLE]
                               --------------------------------

                             WELSH, CARSON, ANDERSON & STOWE
                             VIII, L.P.
                             By WCAS VIII Associates LLC,
                             General Partner

                             By /s/ Laura VanBuren
                               --------------------------------
                                      General Partner

                             WELSH, CARSON, ANDERSON & STOWE
                             VII, L.P.
                             By WCAS VII Partners, L.P.,
                             General Partner

                             By /s/ Laura VanBuren
                               --------------------------------
                                      General Partner

                             WELSH, CARSON, ANDERSON & STOWE VI,
                             L.P.
                             By WCAS VI Partners, L.P.,
                             General Partner

                             By /s/ Laura VanBuren
                               --------------------------------
                                      General Partner

                                       3
<PAGE>

                             WCAS CAPITAL PARTNERS II, L.P.
                             By WCAS CP II Partners, General
                             Partner

                             By /s/ Laura VanBuren
                               --------------------------------
                                      General Partner

                             WCAS INFORMATION PARTNERS, L.P.
                             By: WCAS INFO Partners, General
                             Partner

                             By /s/ Laura VanBuren
                               --------------------------------
                                      General Partner
                                      Attorney-in-Fact

                             PATRICK J. WELSH
                             RUSSELL L. CARSON
                             BRUCE K. ANDERSON
                             RICHARD H. STOWE
                             ANDREW M. PAUL
                             THOMAS E. MCINERNEY
                             JAMES B. HOOVER

                             By /s/ Laura VanBuren
                               --------------------------------
                               Laura VanBuren, Attorney-in-Fact

                             /s/ Laura VanBuren
                             --------------------------------
                             Laura VanBuren

                             /s/ Robert A. Minicucci
                             ----------------------------------
                             Robert A. Minicucci

                                       4
<PAGE>

                             /s/ Anthony J. deNicola
                             ----------------------------------
                             Anthony J. deNicola

                             /s/ David Bellet
                             ----------------------------------
                             David Bellet

                             /s/ Paul B. Queally
                             ----------------------------------
                             Paul B. Queally

                             /s/ Lawrence Sorrel
                             ----------------------------------
                             Lawrence Sorrel

                             /s/ Priscilla Newman
                             ----------------------------------
                             Priscilla Newman

                             /s/ Rudolph Rupert
                             ----------------------------------
                             Rudolph Rupert

                             /s/ D. Scott Mackesy
                             ----------------------------------
                             D. Scott Mackesy

                                       5
<PAGE>

                            AMENDMENT TO AMENDED AND
                         RESTATED STOCKHOLDERS AGREEMENT

         AMENDMENT TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated as of
JULY 12, 1999 (this "Amendment"), amending the Amended and Restated Stockholders
Agreement, dated as of August 30, 1996 and amended as of July 24, 1998 and
further amended as of August 31, 1998 (as so amended, the "Original Agreement"),
among Alliance Data Systems Corporation (known in the Original Agreement as
World Financial Network Holding Corporation), a Delaware corporation (the
"Issuer"), Limited Commerce Corp., a Delaware corporation, WCAS Capital Partners
II, L.P., a Delaware limited partnership, Welsh, Carson, Anderson & Stowe VI,
L.P., a Delaware limited partnership, Welsh, Carson, Anderson & Stowe VII, L.P.,
a Delaware limited partnership, Welsh, Carson, Anderson & Stowe VIII, L.P., a
Delaware limited partnership ("WCAS VIII"), WCAS Information Partners, L.P., a
Delaware limited partnership ("WCAS IP"), and the several other investors party
thereto (collectively, the "Investors").

         WHEREAS, the Issuer, WCAS VIII, WCAS IP and the other purchasers named
on Schedule I thereto (together with WCAS VIII and WCAS IP, the "Purchasers")
have entered into a Preferred Stock Purchase Agreement, dated as of July 12,
1999, pursuant to which, among other things, the Issuer has agreed to issue and
deliver to the Purchasers an aggregate 120,000 shares of its Series A Cumulative
Convertible Preferred Stock, par value $.01 per share (the "Preferred Shares"),
which are initially convertible into shares of Common Stock, par value $.01 per
share, of the Issuer ("Common Stock); and

         WHEREAS, the Issuer and the Investors desire to amend the Original
Agreement to set forth certain restrictions upon the transfer of the Preferred
Shares, include the shares of Common Stock from time to time issuable upon
conversion of the Preferred Shares in such agreement and join each of the
Purchasers who are not already party to such agreement as parties thereto.

         NOW THEREFORE, the parties hereto agree as follows:

         SECTION 1. AMENDMENTS TO ORIGINAL AGREEMENT. (a) All shares of Common
Stock from time to time issued upon conversion of the Preferred Shares shall for
all purposes be deemed "Common Stock" and "Registrable Securities" under the
Original Agreement.

         (b) The definition of Permitted Transferee contained in the Original
Agreement is hereby amended to include on Annex I thereof each of the Purchasers
(to the extent not already

<PAGE>

included on said Annex).

         SECTION 2. CONSENTS. Each of the Investors hereby consents to (i) the
issuance of the Preferred Shares (and the shares of Common Stock issuable upon
conversion thereof) and hereby waives any preemptive right or other right it may
have to purchase, participate in or otherwise acquire any such shares and (ii)
the amendment and restatement of the Certificate of Incorporation of the Issuer
in the form attached hereto as Annex A.

         SECTION 3. RESTRICTIONS ON TRANSFER. (a) Each Purchaser signatory
hereto agrees to be bound, with respect to the transfer of his, her or its
Preferred Shares, by the transfer restrictions set forth in Sections 2.1(a),
2.1(b)(ii), 2.1(c)(ii), 2.1(f), 2.3, 2.5 and 2.7 of the Original Agreement (in
each case substituting the words "Series A Cumulative Convertible Preferred
Stock of the Issuer" for references to "Common Stock" appearing in said
sections).

         (b) For so long as the Preferred Shares continue to be subject to the
transfer restrictions set forth in (a) above, each certificate evidencing
Preferred Shares shall include a legend substantially in the following form:

                  "THE SHARES REPRESENTED BY THIS SECURITY HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
                  EXCEPT IN COMPLIANCE THEREWITH. THE SHARES REPRESENTED BY THIS
                  SECURITY ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS
                  SET FORTH IN THE AMENDMENT, DATED AS OF JULY 12, 1999, TO THE
                  AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF AUGUST
                  30, 1996, A COPY OF WHICH MAY BE OBTAINED FROM ALLIANCE DATA
                  SYSTEMS CORPORATION."

         SECTION 4. APPLICABLE LAW. This Amendment shall be governed
by and construed in accordance with the laws of the State of New
York, without regard to conflicts of law principles.

         SECTION 5. ORIGINAL AGREEMENT. Except as amended or modified
pursuant to this Amendment, the terms of the Original Agreement
shall remain in full force and effect.

         SECTION 6. SEVERABILITY. The invalidity or unenforceability of any
provisions of this Amendment in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Amendment in such
jurisdiction or the validity, legality or enforceability of this Amendment,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

         SECTION 7. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed
in any number of counterparts, each of which shall be an original with the same
effect as if the

<PAGE>

signatures thereto and hereto were upon the same instrument.

                            [signature pages follow]

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.

                             ALLIANCE DATA SYSTEMS CORPORATION

                             By [Illegible]
                                ------------------------------

                             LIMITED COMMERCE CORP.

                             By [Illegible]
                                ------------------------------

                             WELSH, CARSON, ANDERSON & STOWE
                             VIII, L.P.
                             By WCAS VIII Associates LLC,
                             General Partner

                             By /s/ Robert A. Minicucci
                                ------------------------------
                                       Managing Member

                             WELSH, CARSON, ANDERSON & STOWE
                             VII, L.P.
                             By WCAS VII Partners, L.P., General
                             Partner

                             By /s/ Robert A. Minicucci
                                ------------------------------
                                      General Partner

                             WELSH, CARSON, ANDERSON & STOWE VI,
                             L.P.
                             By WCAS VI Partners, L.P., General
                             Partner

                             By /s/ Robert A. Minicucci
                                ------------------------------
                                      General Partner

<PAGE>

                             WCAS CAPITAL PARTNERS III, L.P.
                             By WCAS CP III Associates, L.L.C.,
                             General Partner

                             By /s/ Robert A. Minicucci
                                ------------------------------
                                      General Partner

                             WCAS CAPITAL PARTNERS III, L.P.
                             By WCAS CP II Associates, L.L.C.,
                             General Partner

                             By /s/ Robert A. Minicucci
                                ------------------------------
                                      General Partner

                             WCAS INFORMATION PARTNERS, L.P.
                             By: WCAS INFO Partners,
                             General Partner

                             By /s/ Thomas E. McInerney
                                ------------------------------
                                      General Partner<PAGE>

                            SECURITIES PURCHASE AGREEMENT

                                        among

                           BUSINESS SERVICES HOLDINGS, INC.

                                         and

                             THE SEVERAL PURCHASERS NAMED
                         IN SCHEDULE I AND SCHEDULE II HERETO

                             Dated as of January 24, 1996

--------------------------------------------------------------------------------

<PAGE>

                                 TABLE OF CONTENTS
                                                                            Page

  I. PURCHASE AND SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . . .2

     SECTION   1.01   Issuance, Sale and Delivery of the
                        Initial Common Shares and the Initial
                        Preferred Shares and Execution,
                        Sale and Delivery of the Note   .  . . . . . . . . . .2
     SECTION   1.02   Additional Agreement . . . . . . . . . . . . . . . . . .3
     SECTION   1.03   Obligation to Purchase Additional
                        Shares . . . . . . . . . . . . . . . . . . . . . . . .3
     SECTION   1.04   Purchase and Sale of the Additional
                        Securities . . . . . . . . . . . . . . . . . . . . . .4

 II. THE CLOSING       . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

     SECTION   2.01   First Closing Date . . . . . . . . . . . . . . . . . . .4
     SECTION   2.02   Subsequent Closings. . . . . . . . . . . . . . . . . . .4

III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY  .  .  .  . . . . . . . . .5

     SECTION   3.01   Organization, Qualifications and
                        Corporate Power. . . . . . . . . . . . . . . . . . . .5
     SECTION   3.02   Authorization of Agreements, Etc.  . . . . . . . . . . .5
     SECTION   3.03   Validity . . . . . . . . . . . . . . . . . . . . . . . .6
     SECTION   3.04   Authorized Capital Stock . . . . . . . . . . . . . . . .6
     SECTION   3.05   Governmental Approvals . . . . . . . . . . . . . . . . .7
     SECTION   3.06   Offering of the Note and the
                        Shares . . . . . . . . . . . . . . . . . . . . . . . .7
     SECTION   3.07   Corporate Transactions . . . . . . . . . . . . . . . . .7
     SECTION   3.08   Events Subsequent to Date of
                        Incorporation. . . . . . . . . . . . . . . . . . . . .7
     SECTION   3.09   Accuracy of Representations and
                        Warranties in the Acquisition
                        Agreement. . . . . . . . . . . . . . . . . . . . . . .8
     SECTION   3.10   Regulations G and X. . . . . . . . . . . . . . . . . . .8

 IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS .  .  .. . . . . . . . .8

     SECTION   4.01   Authorization. . . . . . . . . . . . . . . . . . . . . .8
     SECTION   4.02   Validity   . . . . . . . . . . . . . . . . . . . . . . .9
     SECTION   4.03   Investment Representations . . . . . . . . . . . . . . .9

  V. CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . . . . . . 10

     SECTION   5.01   Conditions Precedent to the
                      Obligations of the Purchasers. . . . . . . . . . . . . 10

<PAGE>

                                                                            Page

     SECTION   5.02   Conditions Precedent to the
                      Obligations of the Company . . . . . . . . . . . . . . 12
     SECTION   5.03   Conditions Precedent to the
                        Obligations of the Purchasers With
                        Respect to Each Subsequent Closing. . . . . . . . .  13

 VI. MISCELLANEOUS     . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

     SECTION   6.01   Expenses, Etc  . . . . . . . . . . . . . . . . . . . . 13
     SECTION   6.02   Survival of Agreements . . . . . . . . . . . . . . . . 13
     SECTION   6.03   Parting in Interest. . . . . . . . . . . . . . . . . . 14
     SECTION   6.04   Notices. . . . . . . . . . . . . . . . . . . . . . . . 14
     SECTION   6.05   Entire Agreement; Modifications. . . . . . . . . . . . 14
     SECTION   6.06   Counterparts . . . . . . . . . . . . . . . . . . . . . 15
     SECTION   6.07   Governing Law. . . . . . . . . . . . . . . . . . . . . 15

TESTIMONIUM            . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

                          INDEX TO EXHIBITS AND SCHEDULES

EXHIBIT               DESCRIPTION
-------               -----------
  A                   Form of 10% Subordinated Note
  B                   Form of Registration Rights Agreement

SCHEDULE              DESCRIPTION
--------              -----------
  I                   Schedule I Purchasers and Securities
  II                  Schedule II Purchaser and Securities

                                      ii

<PAGE>

     SECURITIES PURCHASE AGREEMENT, dated as of January 24, 1996, among BUSINESS
SERVICES HOLDINGS, INC., a Delaware corporation (the "Company"), the several
purchasers named in Schedule I hereto (such purchasers being sometimes
hereinafter called individually a "Schedule I Purchaser" and collectively the
"Schedule I Purchasers") and the purchaser named in Schedule II hereto (such
purchaser being sometimes hereinafter called the "Schedule II Purchaser" and,
collectively, with the Schedule I Purchasers, the "Purchasers")

     WHEREAS pursuant to an Acquisition Agreement (the "Acquisition Agreement")
dated as of January 12, 1996 between the Company and JCP Telecom Systems, Inc.,
a Delaware corporation ("Seller"), the Company has agreed to buy, and Seller has
agreed to sell to the Company, on the terms and subject to the conditions set
forth therein, all the issued and outstanding capital stock of J.C. Penney
Business Services, Inc., a Delaware corporation, consisting of 10 shares of
Common Stock, $1.00 par value; and

     WHEREAS in order to finance the transactions contemplated by the
Acquisition Agreement, the Company wishes (i) to issue and sell on the First
Closing Date (as hereinafter defined) (x) to the Schedule I Purchasers,
severally, an aggregate 24,999,000 shares of Common Stock, $.01 par value
("Common Stock"), of the Company and an aggregate 250,000 shares of Preferred
Stock, $1.00 par value ("Preferred Stock"), of the Company, and (y) to the
Schedule II Purchaser, an aggregate 3,571,429 shares of Common Stock and
$50,000,000 aggregate principal amount of the Company's 10% Subordinated Notes
Due January 24, 2002, and (ii) to issue and sell to the Schedule I Purchasers,
severally, on one or more Subsequent Closing bates (as hereinafter defined),
subject to the terms and conditions bet forth in Sections 1.03 and 1.04 hereof,
up to an aggregate 23,270,000 shares of Common Stock and up to an aggregate
232,700 shares of Preferred Stock; and

     WHEREAS the Purchasers, severally, wish to purchase said Note and shares of
Common Stock and Preferred Stock being purchased by them hereunder, all on the
terms and subject to the conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:

<PAGE>

                                          I.

                           PURCHASE AND SALE OF SECURITIES

     SECTION 1.01 ISSUANCE, SALE AND DELIVERY OF THE INITIAL COMMON SHARES AND
THE INITIAL PREFERRED SHARES AND EXECUTION, SALE AND DELIVERY OF THE NOTE.

     (a) Subject to the terms and conditions set forth herein, on the First
Closing Date (i) the Company shall issue, sell and deliver to each Schedule I
Purchaser, and each Schedule I Purchaser shall purchase from the Company, (x)
the number of shares of Common Stock set forth opposite the name of such
Schedule I Purchaser on Schedule I hereto under the caption "Common Shares"
(such shares of Common Stock, collectively with the shares of Common Stock
referred to in paragraph (b) below, being hereinafter sometimes referred to as
the "Initial Common Shares"), and (y) the number of shares of Preferred Stock
set forth opposite the name of such Schedule I Purchaser on said Schedule I
under the caption "Preferred Shares" (the "initial Preferred Shares" and,
collectively with the Initial Common Shares, being hereinafter sometimes
referred to as the "Initial Shares").  The Company shall issue certificates in
definitive form, registered in the name of each Schedule I Purchaser, evidencing
the Initial Common Shares and the Initial Preferred Shares being purchased by
such Schedule I Purchasers hereunder.

     (b)  Subject to the terms and conditions set forth herein, on the First
Closing Date (i) the Company shall issue, sell and deliver to the Schedule II
Purchaser, and the Schedule II Purchaser shall purchase from the Company, the
number of shares of Common Stock set forth opposite the name of such Schedule II
Purchaser on Schedule II hereto under the caption "Common Shares", and (ii) the
Company shall execute, sell and deliver to the Schedule II Purchaser, and the
Schedule Il Purchaser shall purchase from the Company, a 10% senior Subordinated
Note Due January 24, 2002 of the Company, substantially in the form of Exhibit A
hereto, dated the First Closing Date, in principal amount equal to the amount
set forth opposite the name of such Schedule II Purchaser on said Schedule II
under the caption "Principal Amount of Subordinated Note" (such note, and any
note or notes issued in exchange or substitution therefor, being hereinafter
called the "Note").  The Company shall issue a certificate or Certificates in
definitive form, registered in the name of the Schedule II Purchaser, evidencing
the Initial Common Shares being purchased by it hereunder.

     (c)  As payment in full for the Initial Shares and the Note being purchased
by each Purchaser hereunder, and against delivery thereof as aforesaid, on the
First Closing Date each

                                      2

<PAGE>

Purchaser shall pay to the Company, by wire transfer of immediately available
funds to an account designated by the Company, the amounts set forth opposite
the name of such Purchaser (i) on Schedule I hereto under the captions
"Purchase Price of Common Shares" and "Purchase Price of Preferred Shares",
respectively, and (ii) on Schedule II hereto under the captions "Purchase
Price of Common Shares" and "Purchase Price of Subordinated Note",
respectively.

     SECTION 1.02 ADDITIONAL AGREEMENT.  On the First Closing Date,
simultaneously with the execution and delivery of the Initial shares and the
issuance and delivery of the Note hereunder, the Company and each Purchaser will
execute and deliver a Registration Rights Agreement in the form of Exhibit B
hereto (the "Registration Rights Agreement")

     SECTION 1.03 OBLIGATION TO PURCHASE ADDITIONAL SHARES.

     (a)  GENERAL.  In addition to the Initial Shares and the Note to be issued
and sold to the Purchasers hereunder, the Company covenants and agrees to issue,
sell and deliver to the Schedule I Purchasers, subject to the terms and
conditions set forth herein, up to an aggregate 23,270,000 shares; of Common
Stock and up to an aggregate 232,700 shares of Preferred Stock (the "Additional
Preferred Shares", and, collectively with the Additional Common Shares, the
"Additional Shares").

     (b)  OBLIGATION TO PURCHASE ADDITIONAL SHARES.  In the event that (i) an
Additional Amount (as defined in the Acquisition Agreement) is required to be
paid to Seller pursuant to Section 1.04 of the Acquisition Agreement and (ii)
the Board of Directors of the Company shall determine that amounts in excess of
funding available from other financing sources will be required to enable the
Company to pay such Additional Amount and satisfy its other capital
requirements, then the Company shall, not less than fifteen (15) days prior to
the date upon which the Additional Payment is required to be paid, (A) notify
the Purchasers that the Company is exercising its right pursuant to this Section
1.03 to require the Purchasers to purchase Additional Shares and (B) take all
action necessary to increase the number of shares of Common Stock and Preferred
Stock authorized to be issued under the Certificate of Incorporation of the
Company as may be required to permit the issuance and sale of such Additional
Shares.  Such notice (the "Put Notice") shall be in writing and shall specify
the number of Additional Shares that the Company proposes to issue to the
Schedule I Purchasers (which shall be allocated among such Purchasers in
proportion to the number of Initial Shares purchased by such Purchasers on the
First Closing Date), and (y) the Subsequent Closing Date for the purchase and
sale of such Additional Shares which date shall be not less than 10 nor more
than 15 days after the date of the Put

                                      3

<PAGE>

Notice to which it relates.  Any such Put Notice shall be effective upon
delivery thereof.

     (c) TERMINATION OF PUT RIGHTS.  On June 30, 1998 (the "Termination Date"),
any Additional Shares, if any, not yet issued, sold or delivered hereunder shall
no longer be subject to any of the provisions of this Section 1.03, and the
right to require the Purchasers to purchase such Additional Shares as described
herein shall expire and terminate.

     SECTION 1.04 PURCHASE AND SALE OF THE ADDITIONAL SHARES.  (a) In the
event that the Company shall have delivered a Put Notice pursuant to Section
1.03(b) above, then, subject to the terms and conditions set forth herein, on
the Subsequent Closing Date specified in such Put Notice, the Company shall
issue and sell to the Purchasers, and the Purchasers shall purchase from the
Company, the Additional Shares specified in the Put Notice at the same
purchase price paid by such Purchasers for the shares of Common Stock and
Preferred Stock purchased by them on the First Closing Date.

     (b)  As payment in full for the Additional Shares purchased by each
Purchaser hereunder, and against delivery thereof as aforesaid, on each
Subsequent Closing Date each Purchaser shall pay to the Company, by wire
transfer of immediately available funds to an account designated by the Company,
the aggregate purchase price for the Additional Shares being purchased by such
Purchaser as set forth in the relevant Put Notice.

                                         II.

                        THE FIRST CLOSING; SUBSEQUENT CLOSINGS

     SECTION 2.01 FIRST CLOSING DATE.  The closing of the sale and purchase of
the Initial Shares and the Note shall take place at the offices of Reboul,
MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, New York
10111, at 10 a.m., New York time, on January 24, 1996, or at such other date and
time as may be mutually agreed upon among the Purchasers and the Company (such
date and time of the closing being herein called the "First Closing Date").

     SECTION 2.02 SUBSEQUENT CLOSING DATES.  Each closing of the sale and
purchase of Additional Shares shall take place at the offices of Reboul,
MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York, New York
10111, at 10 a.m., New York time, on such date (which shall not be a day on
which banking institutions in the State of New York are authorized or required
to close) as shall be specified in the relevant Put Notice or at

                                      4

<PAGE>

such other date and time as may be mutually agreed upon among the Purchasers
and the Company (each such date and time of the closing being herein called a
"Subsequent Closing Date").

                                         III.

                   REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          The Company represents and warrants to each Purchaser as follows:

          SECTION 3.01 ORGANIZATION, QUALIFICATIONS AND CORPORATE POWER.  The
Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and is duly licensed or
qualified in each jurisdiction in which the nature of its business or the
ownership of its properties makes such licensing or qualification necessary.
The Company has the corporate power and authority to own and hold its
properties, to carry on its business as currently conducted, to execute, deliver
and perform this Agreement, the Note and the Registration Rights Agreement and
to issue and deliver the Shares.  Each Purchaser has been furnished with true
and complete copies of the Company's Certificate of Incorporation and By-laws,
reflecting all amendments thereto as of the First Closing Date.

          SECTION 3.02 AUTHORIZATION OF AGREEMENTS, ETC.

          (a) The execution and delivery by the Company of this Agreement, the
Note and the Registration Rights Agreement, the performance by the Company of
its respective obligations hereunder and thereunder, the sale of the Note and
the issuance and sale by the Company of the Shares have been duly authorized
by all requisite corporate action and will not violate any provision of law, any
order of any court or other agency of government, the Certificate or
Incorporation or By-laws or the Company, or any provision of any indenture,
agreement or other instrument to which the Company or any of its properties or
assets is bound, or conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such indenture, agreement
or other instrument, or result in the creation or imposition of any lien, charge
or encumbrance of any nature whatsoever upon any of the properties or assets of
the Company.

          (b)  The Shares have been duly authorized by the Company and, when
sold and paid for in accordance with this Agreement, will be validly issued,
fully paid and nonassessable shares of Common Stock and Preferred Stock,
respectively, The issuance, sale and delivery of the Shares to the Purchasers

                                      5

<PAGE>

hereunder is not subject to any preemptive rights of stockholders of the Company
or to any right of first refusal or other similar right in favor of any person.

          SECTION 3.03 VALIDITY.  This Agreement his been duly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in effect
affecting the enforcement of creditors' rights generally and to general equity
principles.  The Note and the Registration Rights Agreement, when executed and
delivered by the Company as provided in this Agreement, will constitute legal,
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws from time to time in effect affecting the enforcement of creditors' rights
generally and to general equity principles.

          SECTION 3.04 AUTHORIZED CAPITAL STOCK.

          (a)  The authorized capital stock of the Company consists of
34,000,000 shares of Common Stock, $.01 par value, and 250,000 shares of
Preferred Stock, $1 par value.  As of the date hereof, 1,000 shares of Common
Stock (the "Organization Shares") have been issued to Welsh, Carson, Anderson &
Stowe VII, L.P. in connection with the organization of the Company for an
aggregate purchase price of $1,000, and no other shares of Common Stock and no
shares of Preferred Stock have ever been issued. As of the Closing, 28,571,429
shares of Common Stock and 250,000 shares of Preferred Stock shall be issued and
outstanding.

          (b)  Except (i) as provided in this Agreement and the Acquisition
Agreement and (ii) with respect to employee stock options to be granted by the
Board of Directors of the Company from time to time after the date hereof, (i)
no subscription, warrant, option, convertible security or other right
(contingent or other) to purchase or acquire any shares of any class of capital
stock of the Company is authorized or outstanding and (ii) there is not any
commitment of the Company to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of the Company's capital stock,
any evidences of indebtedness or assets.  Except as provided in this Agreement
and the Acquisition Agreement, the Company has no obligation (contingent or
other) to purchase, redeem or otherwise acquire any shares of its capital stock
or any interest therein or to pay any dividend or make any other distribution in
respect thereof.

                                      6

<PAGE>

          SECTION 3.05 GOVERNMENTAL APPROVALS.  Subject to the accuracy of the
representations and warranties of the Purchasers set forth in Article IV hereof,
no registration or filing with, or consent or approval of, or other action by,
any Federal, state or other governmental agency or instrumentality is or will be
necessary for the valid execution, delivery and performance of this Agreement,
the Note and the Registration Rights Agreement, the sale of the Note or the
issuance, sale and delivery of the Shares (other than notice filings required
under Federal and state securities laws, which will be timely made).

          SECTION 3.06 OFFERING OF THE NOTE AND THE SHARES. Neither the Company
nor any person authorized or employed by the Company as agent, broker, dealer or
otherwise in connection with the offering or sale of the Note, the Shares or any
similar securities of the Company has offered any such securities for sale to,
or solicited any offers to buy any such securities from, or otherwise approached
or negotiated with respect thereto with, any person or persons, under
circumstances that involved the use of any form of general advertising or
solicitation as such terms are defined in Regulation D of the Securities Act of
1933, as amended (the "Securities Act"); and assuming the accuracy of the
representations and warranties of the Purchasers set forth in Article IV hereof,
neither the Company nor any person acting on the Company's behalf has taken or
will take any action (including, without limitation, any offer, issuance or sale
of any securities of the Company under circumstances which might require the
integration of such transactions with the sale of the Note and the Shares under
the Securities Act or the rules and regulations of the Securities and Exchange
Commission (the "Commission") thereunder) which might subject the offering,
issuance or sale of the Note and the Shares to the Purchasers to the
registration provisions of the Securities Act.

          SECTION 3.07 CORPORATE TRANSACTIONS.  The Company was incorporated on
September 27, 1995, and has not conducted any business or otherwise entered into
any transactions other than (i) the organization of the Company, including the
issuance of the Organization Shares, the adoption of By-laws and the election of
directors and officers, (ii) the authorization, execution and delivery of the
Acquisition Agreement and the agreements described therein and the authorization
of the transactions contemplated thereby and (iii) the authorization of this
Agreement, the Note, the Registration Rights Agreement and the transactions
contemplated hereby and thereby.

          SECTION 3.08 EVENTS SUBSEQUENT TO DATE OF INCORPORATION.  Other than
in connection with the issuance of the Organization Shares, the Company has not
(i) issued any stock, bonds or other corporate securities, (ii) borrowed any
amount or incurred any liabilities (absolute or contingent),

                                      7

<PAGE>

(iii) discharged or satisfied any lien or incurred or paid any obligation or
liability (absolute or contingent), other than expenses incidental to the
Company's formation, (iv) declared or made any payment or distribution to
stockholders or purchased or redeemed any shares of its capital stock or
other securities or (v) conducted any business of a material nature.

          Between the date hereof and the First Closing Date, the Company will
not do any of the things listed in clauses (i) through (v) above.

          SECTION 3.09 ACCURACY OF REPRESENTATIONS AND WARRANTIES IN THE
ACQUISITION AGREEMENT.  The representations and warranties of the Company
contained in Article V of the Acquisition Agreement are true and correct as of
the date hereof and will be true and correct as of the First Closing Date.

          SECTION 3.10 REGULATIONS G AND X.  The Company is not engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock (as defined, from time to time, in Regulation G promulgated by the Board
of Governors of the Federal Reserve System), and no part of the proceeds from
the Note or the Shares or other financing in connection with the transactions
contemplated by the Acquisition Agreement will be used to purchase or carry any
margin stock or to extend credit to others for the purpose of purchasing or
carrying any margin stock in violation of Regulations G and X.

                                         IV.

                   REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

          Each Purchaser, severally and not jointly, represents and warrants to
the Company as follows:

          SECTION 4.01 AUTHORIZATION.  The execution, delivery and performance
by such Purchaser of this Agreement and the Registration Rights Agreement and
the purchase and receipt by such Purchaser of the Note and the Shares being
purchased by such Purchaser hereunder, as the case may be, have been duly
authorized by all requisite action on the part of such Purchaser, and will not
violate any provision of law, any order of any court or other agency of
government applicable to such Purchaser, the governing instrument of such
Purchaser, or any provision of any indenture, agreement or other instrument by
which such Purchaser or any of such Purchaser's properties or assets are bound,
or conflict with, result in a breach of or constitute (with due notice or lapse
of time or both) a default under any such indenture, agreement or other
instrument, or result in the creation or imposition of any lien, charge or
encumbrance of any

                                      8
<PAGE>

nature whatsoever upon any of the properties or assets of such Purchaser.

          SECTION 4.02 VALIDITY.  This Agreement has been duly executed and
delivered by such Purchaser and constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against such Purchaser in
accordance with its terms, subject, as to enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws from time to time in effect affecting the enforcement of creditors'
rights generally and to general equity principles.  The Registration Rights
Agreement, when executed and delivered in accordance with this Agreement,
will constitute the legal, valid and binding obligation of such Purchaser,
enforceable in accordance with its terms, subject, as to enforcement of
remedies, to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws from time to time in effect affecting the enforcement of
creditors' rights generally and to general equity principles.

          SECTION 4.03 INVESTMENT REPRESENTATIONS.

          (a) Such Purchaser is acquiring the Shares and the Note
(collectively the "Securities"), being purchased by it hereunder for its own
account, for investment, and not with a view toward the resale or
distribution thereof in violation of applicable law.

          (b)  Such purchaser understands that he, she or it must bear the
economic risk of his, her or its investment for an indefinite period of time
because the Securities are not registered under the Securities Act or any
applicable state securities laws, and may not be resold unless subsequently
registered under the Securities Act and such other laws or unless an
exemption from such registration is available.  Such Purchaser also
understands that, except as provided in the Registration Rights Agreement, it
is not contemplated that any registration will be made under the Securities
Act or that the Company will take steps which will make the provisions of
Rule 144 under the Securities Act available to permit resale of the
Securities. Such Purchaser will not pledge, transfer, convey or otherwise
dispose of any of the Securities, except (i) in connection with a
distribution to its partners, if such Purchaser is a partnership or (ii) in a
transaction that is the subject of either (x) an effective registration
statement under the Securities Act and any applicable state securities laws,
or (y) an opinion of counsel to the effect that such registration is not
required (which opinion and counsel shall be reasonably satisfactory to the
Company, it being agreed that Reboul, MacMurray, Hewitt, Maynard & Kristol
shall be satisfactory, and may be relied on by the Company in making such
determination), it being intended that the agreements with respect to the
Common Shares contained in this sentence

                                       9
<PAGE>

shall be construed consistently with the provisions relating to the same
subject matter contained in the Registration Rights Agreement.

          (c)  Such Purchaser is able to fend for himself, herself and itself
in the transactions contemplated by this Agreement and that he, she or it has
the ability to bear the economic risks of his, her or its, investment in the
Securities for an indefinite period of time.  Such Purchaser has had the
opportunity to ask questions of, and receive answers from, officers of the
Company with respect to the business and financial condition of the Company
and the terms and conditions of the offering of the Securities and to obtain
additional information necessary to verify such information or can acquire it
without unreasonable effort or expense.

          (d) Such Purchaser has such knowledge and experience in financial
and business matters that he, she or it is capable of evaluating the merits
and risks of his, her or its investment in the Securities, Such Purchaser is
an "accredited investor" as such term is defined in Rule 501 of Regulation D
of the Commission under the Securities Act with respect to its purchase of
the Securities, and that if such Purchaser is a partnership, it has not been
formed solely for the purpose of purchasing the Securities it is purchasing
hereunder.

                                          V.

                                 CONDITIONS PRECEDENT

          SECTION 5.01 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASERS.  The obligations of each Purchaser hereunder are, at its option,
subject to the satisfaction, on or before the First Closing Date, of the
following conditions:

          (a)  REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT.  The
representations and warranties of the Company contained in this Agreement
shall be true and correct in all material respects on the First Closing Date,
with the same force and effect as though such representations and warranties
had been made on and as of such date, and the Company shall have certified to
such effect to the Purchasers in writing.

          (b)  PERFORMANCE.  The Company shall have performed and complied
with all agreements and conditions contained herein required to be performed
or complied with by it prior to or on the First Closing Date, and the Company
shall have certified to such effect to the Purchasers in writing.

                                       10
<PAGE>

          (c)  ALL PROCEEDINGS TO BE SATISFACTORY.  All corporate and other
proceedings to be taken by the Company and all waivers and consents to be
obtained by the Company in connection with the transactions contemplated
hereby shall have been taken or obtained by the Company and all documents
incident thereto shall be satisfactory in form and substance to the
Purchasers and their counsel.

          (d)  ACQUISITION AGREEMENT, The transactions contemplated by the
Acquisition Agreement shall have been consummated on or prior to the First
Closing Date in accordance with the Acquisition Agreement as originally
executed, without any material amendments or waivers.

          (e)  CONSUMMATION OF TRANSACTIONS.  On the First Closing Date, each
of the other Purchasers and the Company shall have consummated the
transactions contemplated hereby with respect to such parties.

          (f)  REGISTRATION RIGHTS AGREEMENT.  On the First Closing Date, the
Company shall have executed and delivered the Registration Rights Agreement.

          (g)  SUPPORTING DOCUMENTS.  On or prior to the First Closing Date,
the Purchasers and their counsel shall have received copies of the following
supporting documents:

          (i)  (1) copies of the Certificate of Incorporation of the Company,
     and all amendments thereto, certified as of a recent date by the Secretary
     of State of the State of Delaware, (2) a certificate of said Secretary
     dated as of a recent date as to the due incorporation and good standing of
     the Company and listing all documents of the Company on file with said
     Secretary and (3) a telegram or telex from said Secretary as of the close
     of business on the next business day preceding the First Closing Date as to
     the continued due incorporation and good standing of the Company and to the
     effect that no amendment to its Certificate of Incorporation has been filed
     since the date of the certificate referred to in clause (2) above;

          (ii) a certificate of the Secretary or an Assistant Secretary of the
     Company dated the First Closing Date and certifying (1) that attached
     thereto is a true and complete copy of the By-laws of the Company as in
     effect on the date of such certification; (2) that attached thereto is a
     true and complete copy of resolutions adopted by the Board of Directors of
     the Company authorizing the execution, delivery and performance of this
     Agreement, the Registration Rights Agreement, and the Note, the sale of the
     Note and the issuance, sale and delivery of the Shares, and that all such

                                       11
<PAGE>

     resolutions are still in full force and effect and are all the resolutions
     adopted in connection with the transactions contemplated by this Agreement
     and the Registration Rights Agreement; (3) that the Certificate of
     Incorporation of the Company has not been amended since the date of the
     last amendment referred to in the certificate delivered pursuant to clause
     (i) (2) above; and (4) as to the incumbency and specimen signature of each
     officer of the Company executing this Agreement, the Registration Rights
     Agreement and the Note, the stock certificates representing the Shares and
     any certificate or instrument furnished pursuant hereto, and a
     certification by another officer of the Company as to the incumbency and
     signature of the officer signing the certificate referred to in this
     paragraph (ii); and

          (iii) such additional supporting documents and other information with
     respect to the operations and affairs of the Company as the Purchasers or
     their counsel may reasonably request.

          All such documents shall be satisfactory in form and substance to
the Purchasers and their counsel.

          SECTION 5.02 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
COMPANY. The obligations of the Company hereunder are, at its option, subject
to the satisfaction, on or before the First Closing Date, of the following
Conditions:

          (a)  REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT.  The
representations and warranties of each Purchaser contained in this Agreement
shall be true and correct in all material respects on the First Closing Date,
with the same effect as though such representations and warranties had been
made on and as of such date.

          (b)  PERFORMANCE.  Each Purchaser shall have performed and complied
with all agreements and conditions contained herein required to be performed
or complied with by it prior to or on the First Closing Date,

          (c)  ALL PROCEEDINGS TO BE SATISFACTORY.  All proceedings to be
taken by any Purchaser and all waivers and consents to be obtained by any
Purchaser in connection with the transactions contemplated hereby shall have
been taken or obtained by such Purchaser and all documents incident thereto
shall be satisfactory in form and substance to the Company and its counsel.

          (d)  ACQUISITION AGREEMENT.  The transactions contemplated by the
Acquisition Agreement shall have been

                                       12
<PAGE>

consummated on or prior to the First Closing Date in accordance with the
Acquisition Agreement.

          SECTION 5.03 CONDITIONS TO THE OBLIGATIONS OF THE PURCHASERS WITH
RESPECT TO EACH SUBSEQUENT CLOSING:.  The obligations of each Purchaser to
purchase and pay for the Additional Shares to be purchased by such Purchaser
on each Subsequent Closing Date hereunder are, at its option, subject to the
satisfaction, on or before such Subsequent Closing Date, of the following
conditions:

          (a) CONSUMMATION OF FIRST CLOSING.  On the First Closing Date the
     Purchasers shall have purchased and paid for the Initial Shares and the
     Note.

          (b)  PUT NOTICE.  A Put Notice given pursuant to Section 1.03(b) above
     shall have become effective pursuant to said Section.

                                         VI.

                                   MISCELLANEOUS

          SECTION 6.01 EXPENSES, ETC.  (a) Each party hereto will pay its own
expenses in connection with the transactions contemplated by this Agreement,
whether or not such transactions shall be consummated; PROVIDED, HOWEVER,
that the Company shall pay the reasonable fees and disbursements of its
counsel, Reboul, MacMurray, Hewitt, Maynard & Kristol and each Purchaser's
counsel.  Each party hereto will indemnify and hold harmless the others
against and in respect of any claim for brokerage or other commissions
relative to this Agreement or to the transactions contemplated hereby, made
as a result of any agreements, arrangements or understandings made or claimed
to have been made by such party with any third party.

               (b)  The Company covenants and agrees that, in the event that
any Purchaser is required to make any filing under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, in connection with any
transaction to which the Company is a party, the Company will pay the
reasonable fees and expenses of such Purchaser's counsel in preparing such
filing, together with all filing fees.

          SECTION 6.02 SURVIVAL OF AGREEMENTS.  All covenants, agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the issuance, sale and delivery of the
Securities pursuant hereto and all statements contained in any certificate or
other instrument

                                       13
<PAGE>

delivered by the Company hereunder shall be deemed to constitute
representations and warranties made by the Company.

          SECTION 6.03 PARTIES IN INTEREST.  All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto
shall bind and inure to the benefit of the respective successors and assigns
of the parties hereto whether so expressed or not, except for transferees in
a Public Sale. For the purposes of this Agreement, "Public Sale" means any
sale of Shares to the public pursuant to an offering registered under the
Securities Act or to the public pursuant to the provisions of Rule 144 (or
any successor or similar rule) adopted under the Securities Act.

          SECTION 6.04 NOTICES, Any notice or other communications required
or permitted hereunder shall be deemed to be sufficient if contained in a
written instrument delivered in person or duly sent by first class certified
mail, postage prepaid, or by telecopy addressed to such party at the
address or telecopy number set forth below or such other address or telecopy
number as may hereafter be designated in writing by the addressee to the
addressor listing all parties:

          if to the Company, to:

               Business Services Holdings, Inc.
               5001 Spring Valley Road
               Dallas, Texas  75244

               with a copy to:

               Reboul, MacMurray, Hewitt, Maynard & Kristol
               45 Rockefeller Plaza
               New York, New York 10111
               Telecopy Number: (212) 841-5725
               Attention: Robert A. Schwed, Esq.

          if to any Purchaser, to the address of such Purchaser appearing on
          Schedule I or Schedule II hereto, as the case may be;

or, in any case, at such other address or addresses as shall have been
furnished in writing by such party to the other parties hereto.  All such
notices, requests, consents and other communications shall be deemed to have
been received (a) in the case of personal delivery, on the date of such
delivery, (b) in the case of mailing, on the fifth business day following the
date of such mailing and (c) in the case of telecopy, when received.

          SECTION 6.05 ENTIRE AGREEMENT; MODIFICATIONS.  This Agreement
constitutes the entire agreement of the parties with

                                       14
<PAGE>

respect to the subject matter hereof and may not be amended or modified nor
any provisions waived except in a writing signed by the Company and holders
owning an aggregate of not less than 66-2/3% of the outstanding principal
amount of each Note and not less than 66-2/3% of the outstanding shares of
Common Stock issued hereunder and not previously transferred in a Public Sale.

          SECTION 6.06 COUNTERPARTS.  This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

          SECTION 6.07 GOVERNING LAW.  This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

                                       15
<PAGE>

     IN WITNESS WHEREOF, the Company and the Purchasers have executed this
Agreement as of the day and year first above written.

                         BUSINESS SERVICES HOLDINGS, INC.

                         By /s/ Anthony J. deNicola
                           -------------------------------------
                         Title: President

                         WELSH, CARSON, ANDERSON & STOWE VII, L.P.
                         By WCAS VII Partners, L.P.,
                              General Partner

                         By /s/ Anthony J. deNicola
                           -------------------------------------
                            General Partner

                         WCAS INFORMATION PARTNERS, L.P.
                         By WCAS INFO Partners,
                              General Partner

                         By /s/ Patrick J. Welsh
                           -------------------------------------
                              General Partner

                         WCAS CAPITAL PARTNERS II, L.P.
                         By WCAS CP II Partners,
                              General Partner

                         By /s/ Anthony J. deNicola
                           -------------------------------------
                              General Partner

                            /s/ Patrick J. Welsh
                           -------------------------------------
                              Patrick J. Welsh

                            /s/ Russell L. Carson
                           -------------------------------------
                              Russell L. Carson

                                       16
<PAGE>

                            /s/ Bruce K. Anderson
                           -------------------------------------
                              Bruce K. Anderson

                            /s/ Richard H. Stowe
                           -------------------------------------
                              Richard H. Stowe

                            /s/ Andrew M. Paul
                           -------------------------------------
                              Andrew M. Paul

                            /s/ Thomas E. McInerney
                           -------------------------------------
                              Thomas E. McInerney

                            /s/ Laura VanBuren
                           -------------------------------------
                              Laura VanBuren

                            /s/ James B, Hoover
                           -------------------------------------
                              James B, Hoover

                            /s/ Robert A. Minicucci
                           -------------------------------------
                              Robert A. Minicucci

                            /s/ Anthony J. deNicola
                           -------------------------------------
                              Anthony J. deNicola

                                       17
<PAGE>

                            /s/ David Bellet
                           -------------------------------------
                              David Bellet

                                       18

<PAGE>

                            WCA MANAGEMENT CORPORATION

                            By Russell L. Carson
                              ----------------------------------

                                       19

<PAGE>

<TABLE>
<CAPTION>

                                                   SCHEDULE I

                                    Number of       Price of      Number of      Price of         TOTAL
      Name and                       Common          Common       Preferred      Preferred       PURCHASE
Address of Purchaser                 Shares          Shares         Shares        Shares          PRICE
-------------------------------   -------------   ------------   ------------   ------------   ------------
<S>                               <C>             <C>            <C>            <C>            <C>
Welsh, Carson, Anderson &            23,981,500   $ 23,981,500        239,825   $ 23,982,500   $ 47,964,000
  Stowe VII, L.P
WCAS Information Partners,              100,000   $    100,000          1,000   $    100,000   $    200,000
  L.P.
WCA Management Corporation               17,500   $     17,500            175   $     17,500   $     35,000

Patrick J. Welsh                        150,000   $    150,000          1,500   $    150,000   $    300,000
Russell L. Carson                       115,000   $    115,000          1,150   $    115,000   $    230,000
Bruce K. Anderson                       250,000   $    250,000          2,500   $    250,000   $    500,000
Richard B. Stowe                         75,000   $     75,000            750   $     75,000   $    150,000
Andrew M. Paul                           50,000   $     50,000            500   $     50,000   $    100,000
Thomas E. McInerney                      75,000   $     75,000            750   $     75,000   $    150,000
Laura VanBuren                            5,000   $      5,000             50   $      5,000   $     10,000
James B. Hoover                          10,000   $     10,000            100   $     10,000   $     20,000
Robert Minicucci                         50,000   $     50,000            500   $     50,000   $    100,000
Anthony J. deNicola                      20,000   $     20,000            200   $     20,000   $     40,000
David Bellet (DLJSC as                  100,000   $    100,000          1,000   $    100,000   $    200,000
  Custodian for the IRA FBO
  David F. Bellet)
c/o Welsh, Carson, Anderson
  & Stowe
One World Financial Center
New York, NY 10281
                                  -------------   ------------   ------------   ------------   ------------
            TOTAL:                   24,999,000   $ 24,999,000        250,000   $ 25,000,000   $ 49,999,000
                                  =============   ============   ============   ============   ============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                   SCHEDULE II

                                    Principal       Purchase
                                    Amount of       Price of                     Purchase
   Name and Address               Subordinated    Subordinated      Common       Price of
    of Purchaser                      Note            Note          Shares      Common Shares
-------------------------------   -------------   ------------   ------------   -------------
<S>                               <C>             <C>            <C>            <C>
WCAS Capital Partners             $ 50,000,000    $ 46,428,571   3,571,429      $ 3,571,429
  II, L.P.
One World Financial Center
New York, NY 10281
</TABLE>

<PAGE>

                      AMENDMENT TO SECURITIES PURCHASE AGREEMENT

     AMENDMENT TO SECURITIES PURCHASE AGREEMENT, dated as of August 31, 1998
(the "Amendment"), among ALLIANCE DATA SYSTEMS CORPORATION (the "Company"), a
Delaware corporation and the surviving corporation of a merger with Business
Services Holdings, Inc., a Delaware corporation ("BSH"), WCAS CAPITAL PARTNERS
II, L.P., a Delaware limited partnership ("WCAS CP II"), WELSH, CARSON, ANDERSON
& STOWE VII, L.P., a Delaware limited partnership ("WCAS VII"), and LIMITED
COMMERCE CORP., a Delaware corporation ("Limited Commerce"), amending the
Securities Purchase Agreement dated as of January 24, 1996 (the "Original
Agreement") among BSH, WCAS CP II, WCAS VII, Limited Commerce and the other
several purchasers named in Schedule I thereto. Capitalized terms used herein
and not otherwise defined shall have the respective meanings ascribed to them in
the Original Agreement as amended by this Amendment.

     WHEREAS, pursuant to the terms of the Original Agreement, BSH sold to WCAS
CP II an aggregate $50,000,000 principal amount of the 10% Subordinated Notes
Due January 24, 2002 of BSH substantially in the form attached to the Original
Agreement as Exhibit A (the "Original Notes"); and

     WHEREAS, pursuant to an Agreement and Plan of Merger dated as of August 30,
1996 BSH was merged with and into the Company, and all of the debts, liabilities
and duties of BSH, including, without limitation, the indebtedness evidenced by
the Original Notes and the obligations of BSH under the Original Agreement,
attached to the Company; and

     WHEREAS pursuant to a Securities Purchase Agreement dated as of August 30,
1996 among the Company, Limited Commerce, WCAS CP II, WCAS VII and the other
securityholders named in Schedule I thereto, Limited Commerce purchased from
WCAS CP 11 $20,000,000 principal amount of the Original Notes; and

     WHEREAS the Company and Loyalty Management Group Canada Inc. entered into a
Credit Agreement dated as of July 24, 1998 (such agreement, as supplemented,
amended, restated and/or otherwise modified from time to time, being hereinafter
referred to as the "Credit Agreement") with Morgan Guaranty Trust Company of New
York, as Administrative Agent (the "Agent"), and the Banks and Guarantors named
as parties thereto (as defined in the Credit Agreement), pursuant to which
certain loans and financial accommodations are being extended to the Company and
the borrowers named in the Credit Agreement; and

     WHEREAS in connection with the execution and delivery of the Credit
Agreement, the Agent and the Banks have requested that the Company, WCAS CP II
and Limited

<PAGE>

Commerce agree to amend the Original Notes to change the maturity of the
Original Notes from January 24, 2002 to October 25, 2005; and

     WHEREAS in consideration of WCAS CP II and Limited Commerce agreeing to
extend the maturity of the Original Notes as aforesaid, the Company is willing
to issue and deliver to WCAS CP II and Limited Commerce an aggregate 454,545
shares (the "Common Shares") of Common Stock $.01 par value ("Common Stock"), of
the Company; and

     WHEREAS WCAS CP II and Limited Commerce are willing to extend the maturity
of the Original Notes from January 24, 2002 to October 25, 2005 on the terms and
subject to the conditions set forth herein;

     NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby covenant and
agree as follows:

     SECTION 1. AMENDMENT AND RESTATEMENT OF ORIGINAL NOTE. (a) The Securities
Purchase Agreement and the Original Notes are hereby amended to change the
maturity date of the Original Notes from January 24, 2002 to October 25, 2005
and, in connection with such change, the form of the Original Note as set forth
as Exhibit A to the Original Agreement is hereby amended and restated in its
entirety to read as set forth in Exhibit A attached hereto (as so amended and
restated, the "Notes").

     (b) The Company shall execute and deliver to each of WCAS CP II and Limited
Commerce, in exchange and substitution for the Original Note held by such party,
and against receipt thereof, a new Note in the form set forth in Exhibit A
attached hereto in the same principal amount and dated as of the date of
original issue of the Original Note held by such party. Original Notes received
by the Company in exchange for the new Notes as aforesaid shall be canceled.

     SECTION 2. ISSUANCE OF SHARES OF COMMON STOCK; AMENDMENT OF STOCKHOLDERS
AGREEMENT. (a) In consideration of the agreement by WCAS CP II and Limited
Commerce to extend the maturity of the Original Notes as aforesaid, the Company
shall issue and deliver to each of WCAS CP II and Limited Commerce the number of
shares of Common Stock set forth opposite its name below:

<TABLE>

     NOTEHOLDER                       NO. OF COMMON SHARES
     ----------                       --------------------
     <S>                              <C>
     WCAS CP II                               272,727
     Limited Commerce                         181,818
                                              -------
                       Total:                 454,545
                                              =======
</TABLE>

     (b) In connection with the execution and delivery of this Amendment and the
Notes and the issuance of the Common Shares as described above, the Company and
the parties to the Amended and Restated Stockholders Agreement, dated as of
August 30, 1996, as amended (the "Stockholders Agreement"), among the Company,
Limited Commerce and the other

                                      2

<PAGE>

stockholders named as parties thereto shall enter into an Amendment to
Amended and Restated Stockholders Agreement in the form attached hereto as
Exhibit B (the "Stockholders Agreement Amendment"), amending the Stockholders
Agreement to provide that the Common Shares being issued to WCAS CP II and
Limited Commerce under this Amendment be treated as "Common Stock" and
"Registrable Securities" under the Stockholders Agreement.

     SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. (a) The Company
is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware and is duly licensed or qualified in each
jurisdiction in which the nature of its business or the ownership of its
properties makes such licensing or qualification necessary. The Company has the
corporate power and authority to own and hold its properties, to carry on its
business as currently conducted, to execute, deliver and perform this Amendment,
the Notes and the Stockholders Agreement Amendment and to issue and deliver the
Common Shares.

     (b) The execution and delivery by the Company of this Amendment, the Notes
and the Stockholders Agreement Amendment, the performance by the Company of its
respective obligations hereunder and thereunder, the execution and delivery of
the Notes and the issuance and sale by the Company of the Common Shares have
been duly authorized by all requisite corporate action and will not violate any
provision of law, any order of any court or other agency of government, the
Certificate of Incorporation, as amended, or By-laws of the Company, or any
provision of any indenture, agreement or other instrument to which the Company
or any of its properties or assets is bound, or conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any such indenture, agreement or other instrument, or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company.

     (c) The Common Shares have been duly authorized by the Company and, when
issued and sold in accordance with this Amendment, will be validly issued, fully
paid and nonassessable shares of Common Stock free and clear of all liens,
claims, charges or encumbrances created by the Company. Except as provided in
the Stockholders Agreement (which rights as to the Common Shares to be issued
hereunder have been effectively waived prior to or on the date hereof), the
issuance, sale and delivery of the Common Shares to WCAS CP II and Limited
Commerce hereunder is not subject to any preemptive rights of stockholders of
the Company or to any right of first refusal or other similar right in favor of
any person.

     (d) This Amendment, the Notes and the Stockholders Agreement Amendment have
been duly executed and delivered by the Company and constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject, as to enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws from time to time in effect affecting the enforcement of creditors' rights
generally and to general equity principles.

     SECTION 4. REPRESENTATIONS AND WARRANTIES OF WCAS CP II AND LIMITED
COMMERCE. (a) Each of WCAS CP II and Limited Commerce severally and not jointly,

                                      3
<PAGE>

represents and warrants to the Company that it is acquiring the Common Shares
being acquired by it hereunder for its own account for the purpose of
investment and not with a view to or for sale in connection with any
distribution thereof. Each of WCAS CP II and Limited Commerce further
represents that it understands that (i) the Common Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities
Act"), by reason of their issuance in a transaction exempt from the
registration requirements of the Securities Act pursuant to Section 4(2)
thereof, (ii) the Common Shares must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration, (iii) the Common Shares will bear a legend to such effect,
and (iv) the Company will make a notation on its transfer books to such
effect. Each of WCAS CP II and Limited Commerce further understands the
exemption from registration afforded by Rule 144 under the Securities Act
depends on the satisfaction of various conditions and that, if applicable,
Rule 144 affords the basis of sales of the Common Shares only in limited
amounts under certain conditions.

     (b) Each of WCAS CP II and Limited Commerce further represents and
warrants to the Company that it has had full opportunity to have access to
and to examine the facilities, personnel and records of the Company, that it
is capable of evaluating independently the prospects of the Company and has
made such an evaluation in connection with its investment in the Common
Shares being purchased by it and had adequate financial means to bear the
risk of its investment in the Company.

     SECTION 5. EFFECT OF AMENDMENT. Except as expressly provided in this
Amendment, nothing herein shall affect or be deemed to affect any provisions
of the Original Agreement, and except only to the extent that they may be
varied hereby, all of the terms of the Original Agreement shall remain
unchanged and in full force and effect.

     SECTION 6. LAW GOVERNING. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.

     SECTION 7. ENTIRE AGREEMENT. This Amendment, the Original Agreement (as
amended by this Amendment), the Notes, the Stockholders Agreement, the
Stockholders Agreement Amendment, and the documents and agreements described
therein, constitute the entire agreement of the parties with respect to the
subject matter hereof and may not be modified or amended except in the manner
provided in Section 6.05 of the Original Agreement.

     SECTION 8. COUNTERPARTS. This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.

                                       4
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.

                              ALLIANCE DATA SYSTEMS CORPORATION

                              By
                                 --------------------------------------

                              WELSH, CARSON, ANDERSON & STOWE VII, L.P.
                              By WCAS VII Partners, L.P., General Partner

                              By
                                 --------------------------------------
                                   General Partner

                              WCAS CAPITAL PARTNERS II, L.P.
                              By WCAS CP II Partners, General Partner

                              By
                                 --------------------------------------
                                   General Partner

                              LIMITED COMMERCE CORP.

                              By
                                 --------------------------------------

                                       5
<PAGE>

                                                                    EXHIBIT A

               THIS NOTE IS ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID")
               AS DEFINED BY SECTION 1273(a)(1) OF THE INTERNAL REVENUE
                CODE OF 1986, AS AMENDED. THE FOLLOWING INFORMATION IS
             PROVIDED PURSUANT TO THE INFORMATION REPORTING REQUIREMENTS
                 SET FORTH IN PROPOSED TREASURY REGULATION 1.1275-3.

                 THE ISSUE PRICE OF THIS DEBT INSTRUMENT IS $
                THE AMOUNT OF OID ON THIS DEBT INSTRUMENT IS $
             THE ISSUE DATE OF THIS DEBT INSTRUMENT IS JANUARY 24, 1996
              THE YIELD TO MATURITY OF THIS DEBT INSTRUMENT IS       %

                THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
              ACT OF 1933 AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
               DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER THAT ACT
                   OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.

                          ALLIANCE DATA SYSTEMS CORPORATION

                               10% Subordinated Note
                                Due October 25, 2005

Registered                                                 New York, New York
R-                                                           January 24, 1996
$

          ALLIANCE DATA SYSTEMS CORPORATION, a Delaware corporation (hereinafter
called the "Company"), for value received, hereby promises to pay to
                  , or registered assigns, the principal sum of
        AND NO/100 Dollars ($           ), on October 25, 2005, and to pay
interest (computed on the basis of a 360-day year consisting of twelve 30-day
months) from the date hereof on the unpaid principal amount hereof at the rate
of 10% per annum, payable semi-annually in arrears on the first day of July and
January of each year (each said day being an "Interest Payment Date"),
commencing on July 1, 1996, until the principal amount hereof shall have become
due and payable, whether at maturity or by acceleration or otherwise, and
thereafter

<PAGE>

at the rate of 12% per annum on any overdue principal amount and (to the
extent permitted by applicable law) on any overdue interest until paid.

          All payments of principal and interest on this Note shall be in
such coin or currency of the United States of America as at the time of
payment shall be legal tender for payment of public and private debts.

          For purposes of this Note, "Business Day" shall mean any day other
than a Saturday, Sunday or a legal holiday under the laws of the State of New
York.

          1.   NOTES. This Note is one of a duly authorized issue of
Subordinated Notes (herein called the "Notes") made or to be made by the
Company in the aggregate principal amount of $50,000,000, maturing on October
25, 2005 and bearing interest payable at the same rate and on the same dates
as the interest on the principal amount of this Note.

          2.   TRANSFER, ETC. OF NOTES. The Company shall keep at its office
or agency maintained as provided in paragraph (a) of Section 10 a register in
which the Company shall provide for the registration of Notes and for the
registration of transfer and exchange of Notes. The holder of this Note may,
at its option, and either in person or by duly authorized attorney, surrender
the same for registration of transfer or exchange at the office or agency of
the Company maintained as provided in paragraph (a) of Section 10, and,
without expense to such holder (except for taxes or governmental charges
imposed in connection therewith), receive in exchange therefor a Note or
Notes each in such denomination or denominations as such holder may request,
dated as of the date to which interest has been paid on the Note or Notes so
surrendered for transfer or exchange, for the same aggregate principal amount
as the then unpaid principal amount of the Note or Notes so surrendered for
transfer or exchange, and registered in the name of such person or persons as
may be designated by such holder. Every Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed, or shall be
accompanied by a written instrument of transfer, satisfactory in form to the
Company, duly executed by the holder of such Note or his attorney duly
authorized in writing. Every Note so made and delivered in exchange for this
Note shall in all other respects be in the same form and have the same terms
as this Note. No transfer or exchange of any Note shall be valid unless made
in the foregoing manner at such office or agency.

          3.   LOSS, THEFT, DESTRUCTION OR MUTILATION OF NOTE. Upon receipt
of evidence satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of any such loss, theft or
destruction, upon receipt of an affidavit of loss and indemnity from the
holder hereof reasonably satisfactory to the Company, or, in the case of any
such mutilation, upon surrender and cancellation of this Note, the Company
will make and deliver, in lieu of this Note, a new Note of like tenor and
unpaid principal amount and dated as of the date to which interest has been
paid on this Note.

                                       2
<PAGE>

     4.   PERSONS DEEMED OWNERS; HOLDERS. The Company may deem and treat the
person in whose name any Note is registered as the owner and holder of such Note
for the purpose of receiving payment of principal of and interest on such Note
and for all other purposes whatsoever, whether or not such Note shall be
overdue. With respect to any Note at any time outstanding, the term "holder", as
used herein, shall be deemed to mean the person in whose name such Note is
registered as aforesaid at such time.

     5.   PREPAYMENTS.

          (a)  OPTIONAL PREPAYMENT. Upon notice given as provided in Section 6
     the Company may, at its option, prepay the Notes, as a whole at any time or
     in part from time to time, in amounts which shall be integral multiples of
     $100,000, at the unpaid principal amount thereof so to be prepaid, together
     with interest accrued thereon to the date fixed for such prepayment. All
     prepayments shall be applied to installments of principal hereof in inverse
     order of maturity.

          (b)  [INTENTIONALLY OMITTED]

          (c)  MANDATORY PREPAYMENT UPON PUBLIC OFFERING. If at any time
     while any of the Notes shall be outstanding the Company shall consummate
     a public offering of equity securities of the Company pursuant to an
     effective registration statement under the Securities Act, then upon the
     consummation of each such offering the Company shall apply to prepayment
     of the Notes, without penalty or premium (up to the amount required to
     prepay all the Notes including accrued interest thereon) an amount that,
     including principal to be prepaid and accrued interest thereon, is equal
     to the sum of (x) one-sixth of the proceeds of such offering to the
     Corporation (net of underwriting discounts and commissions), plus (y)
     the amount (if any) by which one-sixth of such net proceeds exceeds the
     amount (if any) which shall have been applied to redemption of the
     Company's Preferred Stock, $1 par value, pursuant to the Certificate of
     Incorporation of the Company by reason of the consummation of such
     offering, it being intended that up to an aggregate one-third of such
     proceeds shall be available to prepay the Notes and redeem such
     Preferred Stock.

          6.   NOTICE OF PREPAYMENT AND OTHER NOTICES. The Company shall give
written notice of any prepayment of this Note or any portion hereof pursuant to
Section 5 not less than 10 nor more than 60 days prior to the date fixed for
such prepayment. Such notice of prepayment and all other notices to be given to
any holder of this Note shall be given by registered or certified mail to the
person in whose name this Note is registered at its address designated on the
register maintained by the Company on the date of mailing such notice of
prepayment or other notice. Upon notice of prepayment being given as aforesaid,
the Company covenants and agrees that it will prepay, on the date therein fixed
for prepayment, this Note or the portion hereof, as the case may be, so called
for prepayment, at the principal amount thereof so

                                       3
<PAGE>

called for prepayment together with interest accrued thereon to the date
fixed for such prepayment.

          7.   ALLOCATION OF PREPAYMENT. In the event of any prepayment,
purchase, redemption or retirement of less than all of the outstanding Notes,
the Company will allocate the principal amount so to be prepaid, purchased,
redeemed or retired (but only in units of $100,000) to each Note in
proportion, as nearly as may be, to the aggregate principal amount of all
Notes then outstanding.

          8.   INTEREST AFTER DATE FIXED FOR PREPAYMENT. If this Note or a
portion hereof is called for prepayment as herein provided, this Note or such
portion shall cease to bear interest on and after the date fixed for such
prepayment unless, upon presentation for the purpose, the Company shall fail to
pay this Note or such portion, as the case may be, in which event this Note or
such portion, as the case may be, and, so far as may be lawful, any overdue
installment of interest, shall bear interest on and after the date fixed for
such prepayment and until paid at the rate PER ANNUM provided herein for overdue
principal.

          9.   SURRENDER OF NOTES; NOTATION THEREON. Upon any prepayment of a
portion of the principal amount of this Note, the holder hereof, at its
option, may require the Company to execute and deliver at the expense of the
Company (except for taxes or governmental charges imposed in connection
therewith), upon surrender of this Note, a new Note registered in the name of
such person or persons as may be designated by such holder for the principal
amount of this Note then remaining unpaid, dated as of the date to which
interest has been paid on the principal amount of this Note then remaining
unpaid, or may present this Note to the Company for notation hereon of the
payment of the portion of the principal amount of this Note so prepaid.

          10.  COVENANTS. The Company covenants and agrees that, so long as
any Note shall be outstanding:

          (a)  MAINTENANCE OF OFFICE. The Company will maintain an office or
     agency in such place in the United States of America as the Company may
     designate in writing to the registered holder hereof; where the Notes may
     be presented for registration of transfer and for exchange as herein
     provided, where notices and demands to or upon the Company in respect of
     the Notes may be served and where, at the option of the holders thereof,
     the Notes may be presented for payment.

          (b)  PAYMENT OF TAXES. The Company will promptly pay and discharge or
     cause to be paid and discharged, before the same shall become in default,
     all lawful taxes and assessments imposed upon the Company or any subsidiary
     or upon the income and profits of the Company or any subsidiary, or upon
     any property, real, personal or mixed, belonging to the Company or any
     subsidiary, or upon any part thereof by the United States or any State
     thereof; as well as all lawful claims for labor, materials and supplies
     which, if

                                       4
<PAGE>

     unpaid, would become a lien or charge upon such property or any part
     thereof; PROVIDED, HOWEVER, that neither the Company nor any subsidiary
     shall be required to pay and discharge or to cause to be paid and
     discharged any such tax, assessment, charge, levy or claim so long as
     both (x) the Company has set aside adequate reserves for such tax,
     assessment, charge, levy or claim and (y)(i) the Company or a subsidiary
     shall be contesting the validity thereof in good faith by appropriate
     proceedings or (ii) the Company shall, in its good faith judgment, deem
     the validity thereof to be questionable and the party to whom such tax,
     assessment, charge, levy or claim is allegedly owed shall not have made
     written demand for the payment thereof

          (c)  CORPORATE EXISTENCE. The Company will do or cause to be done all
     things necessary and lawful to preserve and keep in full force and effect
     its corporate existence, rights and franchises and the corporate existence,
     rights and franchises of each of its subsidiaries; PROVIDED, HOWEVER, that
     nothing in this paragraph (c) shall prevent the abandonment or termination
     of any rights or franchises of the Company, or the liquidation or
     dissolution of, or a sale, transfer or disposition (whether through merger,
     consolidation, sale or otherwise) of all or any substantial part of the
     property and assets of, any subsidiary or the abandonment or termination of
     the corporate existence, rights and franchises of any subsidiary if such
     abandonment, termination, liquidation, dissolution, sale, transfer or
     disposition is, in the good faith business judgment of the Company, in the
     best interests of the Company and is not disadvantageous in any material
     respect to the holders of the Notes.

          (d)  MAINTENANCE OF PROPERTY. The Company will at all times maintain
     and keep, or cause to be maintained and kept, in good repair, working order
     and condition all significant properties of the Company and its
     subsidiaries used in the conduct of the business of the Company and its
     subsidiaries, and will from time to time make or cause to be made all
     needful and proper repairs, renewals, replacements, betterments and
     improvements thereto, so that the business carried on in connection
     therewith may be properly and advantageously conducted at all times;
     PROVIDED, HOWEVER, that nothing in this paragraph (d) shall require (i) the
     making of any repair or renewal or (ii) the continuance of the operation
     and maintenance of any property or (iii) the retention of any assets if
     such action (or inaction) is, in the good faith business judgment of the
     Company, in the best interests of the Company (and the best interests of
     any subsidiary concerned or affected thereby) and is not disadvantageous in
     any material respect to the holders of the Notes.

          (e)  INSURANCE. The Company will, and will cause each of its
     subsidiaries to, (i) keep adequately insured, by financially sound and
     reputable insurers, all property of a character usually insured by
     corporations engaged in the same or a similar business similarly situated
     against loss or damage of the kinds customarily insured against by such
     corporations and (ii) carry, with financially sound and reputable insurers,
     such other insurance (including, without limitation, liability insurance)
     in such amounts as are available at

                                       5
<PAGE>

     reasonable expense and to the extent believed necessary in the good faith
     business judgment of the Company.

          (f)  KEEPING OF BOOKS. The Company will at all times keep, and cause
     each of its subsidiaries to keep, proper books of record and account in
     which proper entries will be made of its transactions in accordance with
     generally accepted accounting principles consistently applied.

          (g)  TRANSACTIONS WITH AFFILIATES. The Company will enter into any
     transaction with any director, officer, stockholder, employee or affiliate
     of the Company only upon fair and reasonable terms.

          (h)  NOTICE OF DEFAULT. If any one or more events which constitute, or
     which with notice or lapse of time or both would constitute, an Event of
     Default under Section 13 shall occur, or if the holder of any Note shall
     demand payment or take any other action permitted upon the occurrence of
     any such Event of Default, the Company shall, immediately after it becomes
     aware that any such event has occurred or that such demand has been made
     or that any such action has been taken, give notice to all holders of the
     Notes, specifying the nature of such event or of such demand or action, as
     the case may be; PROVIDED, HOWEVER, that if such event, in the good faith
     judgment of the Company, will be cured within ten days after the Company
     has knowledge that such event would, with or without notice or lapse of
     time or both, constitute such an Event of Default, no such notice need be
     given if such Event of Default shall be cured within such ten-day period.

          11.  MODIFICATION BY HOLDERS; WAIVER. The Company may, with the
written consent of the holders of not less than 66 2/3% in principal amount of
the Notes then outstanding, modify the terms and provisions of the Notes or the
rights of the holders of the Notes or the obligations of the Company thereunder,
and the observance by the Company of any term or provision of the Notes may be
waived with the written consent of the holders of not less than 66 2/3% in
principal amount of the Notes then outstanding; PROVIDED, HOWEVER, that no such
modification or waiver shall:

          (a)  change the maturity of any Note or reduce the principal amount
     thereof or reduce the rate or extend the time of payment of interest
     thereon without the consent of the holder of each Note so affected; or

          (b)  give any Note any preference over any other Note;

          (c)  reduce the percentage of Notes, the consent of the holders of
      which is required for any such modification; or

                                       6
<PAGE>

          (d)  amend the provisions of Section 16 hereof without the consent of
     the holders of Senior Indebtedness (as hereinafter defined).

          Any such modification or waiver shall apply equally to all the holders
of the Notes and shall be binding upon them, upon each future holder of any Note
and upon the Company, whether or not such Note shall have been marked to
indicate such modification or waiver, but any Note issued thereafter shall bear
a notation referring to any such modification or waiver. Promptly after
obtaining the written consent of the holders as herein provided, the Company
shall transmit a copy of such modification or waiver to all the holders of the
Notes at the time outstanding.

          12.  EVENTS OF DEFAULT. If any one or more of the following events,
herein called Events of Default, shall occur, for any reason whatsoever, and
whether such occurrence shall, on the part of the Company or any subsidiary, be
voluntary or involuntary or come about or be effected by operation of law or
pursuant to or in compliance with any judgment, decree or order of a court of
competent jurisdiction or any order, rule or regulation of any administrative or
other governmental authority and such Event of Default shall be continuing:

          (a)  default shall be made in the payment of the principal of any Note
     when and as the same shall become due and payable, whether at maturity or
     at a date fixed for prepayment or by acceleration or otherwise; or

          (b)  default shall be made in the payment of any installment of
     interest on any Note according to its terms when and as the same shall
     become due and payable and such default shall continue for a period of five
     days; or

          (c)  default shall be made in the due observance or performance of any
     other covenant, condition or agreement on the part of the Company to be
     observed or performed pursuant to the terms hereof or of the Securities
     Purchase Agreement dated as of January 24, 1996 among the Company and the
     several Purchasers named therein (the "Purchase Agreement"), and such
     default shall continue for 30 days after written notice thereof, specifying
     such default and requesting that the same be remedied, shall have been
     given to the Company by the holder or holders of at least 25% of the
     principal amount of the Notes then outstanding (the Company to give
     forthwith to all other holders of Notes at the time outstanding written
     notice of the receipt of such notice specifying the default referred to
     therein); or

          (d)  any representation or warranty made by the Company in the
     Purchase Agreement shall prove to have been false or incorrect in any
     material respect on the date on or as of which made; or

          (e)  the entry of a decree or order for relief by a court having
     jurisdiction in the premises in respect of the Company or any subsidiary in
     an involuntary case under the

                                       7
<PAGE>

     federal bankruptcy laws, as now constituted or hereafter amended, or any
     other applicable federal or state bankruptcy, insolvency or other
     similar laws, or appointing a receiver, liquidator, assignee, custodian,
     trustee, sequestrator (or similar official) of the Company or any
     subsidiary or for any substantial part of any of their property, or
     ordering the winding-up or liquidation of any of their affairs and the
     continuance of any such decree or order unstayed and in effect for a
     period of 60 consecutive days; or

          (f)  the commencement by the Company or any subsidiary of a voluntary
     case under the federal bankruptcy laws, as now constituted or hereafter
     amended, or any other applicable federal or state bankruptcy, insolvency or
     other similar laws, or the consent by any of them to the appointment of or
     taking possession by a receiver, liquidator, assignee, trustee, custodian,
     sequestrator (or other similar official) of the Company or any subsidiary
     or for any substantial part of their property, or the making by any of them
     of any assignment for the benefit of creditors, or the failure of the
     Company or any subsidiary generally to pay its debts as such debts become
     due; or

          (g)  default as defined in any instrument evidencing or under which
     the Company or any subsidiary has outstanding at the time any indebtedness
     for money borrowed in excess of $50,000 in aggregate principal amount shall
     occur and as a result thereof the maturity of any such indebtedness shall
     have been accelerated so that the same shall have become due and payable
     prior to the date on which the same would otherwise have become due and
     payable and such acceleration shall not have been rescinded or annulled
     within 30 days; or

          (h)  final judgment for the payment of money in excess of $50,000
     shall be rendered against the Company or a subsidiary and the same shall
     remain undischarged for a period of 30 days during which execution shall
     not be effectively stayed;

then, the holder or holders of a least 25% in aggregate principal amount of
the Notes at the time outstanding may, at its or their option, by notice to
the Company, declare all the Notes to be, and all the Notes shall thereupon
be and become, forthwith due and payable together with interest accrued
thereon without presentment, demand, protest or further notice of any kind,
all of which are expressly waived to the extent permitted by law.

          At any time after any declaration of acceleration as to all of the
Notes has been made as provided in this Section 12, the holders of at least
66 2/3% in principal amount of the Notes then outstanding may, by notice to
the Company, rescind such declaration and its consequences, if (i) the
Company has paid all overdue installments of interest on the Notes and all
principal that has become due otherwise than by such declaration of
acceleration and (ii) all other defaults and Events of Default (other than
nonpayments of principal and interest that have become due solely by reason
of acceleration) shall have been remedied or cured or shall have been waived
pursuant to this paragraph, PROVIDED, HOWEVER, that no such rescission shall
extend to or affect any subsequent default or Event of Default or impair any
right consequent thereon.

                                       8

<PAGE>

          13.  SUITS FOR ENFORCEMENT. In case any one or more of the Events of
Default specified in Section 12 of this Note shall occur and be continuing, the
holder of this Note may proceed to protect and enforce its rights by suit in
equity, action at law and/or by other appropriate proceeding, whether for the
specific performance of any covenant or agreement contained in this Note or in
aid of the exercise of any power granted in this Note, or may proceed to enforce
the payment of this Note or to enforce any other legal or equitable right of the
holder of this Note.

          In case of any default under any Note, the Company will pay to the
holder thereof such amounts as shall be sufficient to cover the costs and
expenses of such holder due to said default, including, without limitation,
collection costs and reasonable attorneys' fees, to the extent actually
incurred.

          14.  REMEDIES CUMULATIVE. No remedy herein conferred upon the holder
of this Note is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.

          15.  REMEDIES NOT WAIVED. No course of dealing between the Company and
the holders of this Note or any delay on the part of the holder hereof in
exercising any rights hereunder shall operate as a waiver of any right of any
holder of this Note.

          16.  SUBORDINATION. (a) SUBORDINATION. Anything in this Note to the
     contrary notwithstanding, the obligation of the Company to pay the
     principal of and interest on, this Note, and to discharge all its other
     obligations hereunder, shall be subordinate and junior in right of payment
     to the extent set forth in the following paragraphs (A), (B) and (C),
     inclusive, to (i) all obligations of the Company to banks or other
     financial institutions for borrowed money, and (ii) all obligations of the
     Company to banks or other financial institutions under guarantees by the
     Company of obligations of wholly owned subsidiaries of the Company to banks
     or other financial institutions for borrowed money, in each case, whether
     such obligations are outstanding at the date of this Note or created or
     incurred after the date of this Note but prior to the maturity of this
     Note. The obligations of the Company to which this Note is subordinate and
     junior in right of payment are sometimes herein referred to as "Senior
     Indebtedness".

               (A)  In the event of any insolvency, bankruptcy, liquidation,
          reorganization or other similar proceedings, or any receivership
          proceedings in connection therewith, relative to the Company or its
          creditors or its property, and in the event of any proceedings for
          voluntary liquidation, dissolution or other winding up of the Company,
          whether or not involving insolvency or bankruptcy proceedings, then
          all Senior Indebtedness shall first be paid in full, before any
          payment on account of principal or interest is made upon this Note.

                                     9

<PAGE>

               (B)  In any of the proceedings referred to in paragraph (A)
          above, any payment or distribution of any kind or character, whether
          in cash, property, stock or obligations which may be payable or
          deliverable in respect of this Note shall be paid or delivered
          directly to the holders of Senior Indebtedness for application in
          payment thereof; unless and until all Senior Indebtedness shall have
          been paid in full.

               (C)  In the event the Company shall default under any Senior
          Indebtedness obligation held by any bank or other financial
          institution, which default shall continue without cure or waiver, and
          the effect of such default is to accelerate the maturity of such
          obligation or the holder thereof shall cause such obligation to become
          due prior to the stated maturity thereof or the Company shall not pay
          such obligation at maturity, the Company will not make, directly or
          indirectly, to the holder of this Note any payment of any kind of or
          on account of all or any part of this Note, and the holder of this
          Note will not accept from the Company any payment of any kind of or on
          account of all or any part of this Note, unless and until all such
          Senior Indebtedness shall have been paid in full; and if; with respect
          to any such default, the holder of such Senior Indebtedness obligation
          shall have made a demand for payment and commenced an action, suit or
          other proceeding against the Company, then the holder of this Note may
          not take, demand, receive, sue for, accelerate or commence any
          remedial proceedings with respect to any amount payable under this
          Note during the pendency of such action, suit or other proceeding.
          Notwithstanding the provisions of the immediately preceding sentence,
          if any such default shall have continued for 180 days or more, the
          Company may make and the holder of this Note may accept from the
          Company all past due and current payments of any kind of or on account
          of this Note, and such holder may demand, receive, retain, sue for or
          otherwise seek enforcement or collection of all amounts payable on
          account of principal of or interest on this Note.

Upon request of any holder of Senior Indebtedness, the holder of this Note will
affirm its obligations under this Section 16.

          (b)  SUBROGATION. Subject to the payment in full of all Senior
Indebtedness as aforesaid, the holder of this Note shall be subrogated to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of any kind or character, whether in cash, property, stock or
obligations, which may be payable or deliverable to the holders of Senior
Indebtedness, until the principal of, and interest on, this Note shall be paid
in full, and, as between the Company, its creditors other than the holders of
Senior Indebtedness, and the holder of this Note, no such payment or
distribution made to the holders of Senior Indebtedness by virtue of this
Section 16 which otherwise would have been made to the holder of this Note shall
be deemed a payment by the Company on account of the Senior Indebtedness, it
being understood that the provisions of this Section 16 are and are intended
solely for the purposes of defining the relative rights of the holder of this
Note,

                                      10

<PAGE>

on the one hand, and the holder of the Senior Indebtedness, on the other
hand. Subject to the rights, if any, under this Section 16 of holders of
Senior Indebtedness to receive cash, property, stock or obligations otherwise
payable or deliverable to the holder of this Note, nothing herein shall
either impair, as between the Company and the holder of this Note, the
obligation of the Company, which is unconditional and absolute, to pay to the
holder hereof the principal hereof and interest hereon in accordance with its
terms and the provisions of this Note or prevent the holder of this Note from
exercising all remedies otherwise permitted by applicable law or upon default
hereunder.

          17.  COVENANTS BIND SUCCESSORS AND ASSIGNS. All the covenants,
stipulations, promises and agreements in this Note contained by or on behalf of
the Company shall bind its successors and assigns, whether so expressed or not.

          18.  GOVERNING LAW. THIS NOTE SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

          19.  HEADINGS. The headings of the Sections and paragraphs of this
Note are inserted for convenience only and do not constitute a part of this
Note.

                                     11

<PAGE>

     IN WITNESS WHEREOF, ALLIANCE DATA SYSTEMS CORPORATION has caused this Note
to be signed in its corporate name by one of its officers thereunto duly
authorized and to be dated as of the day and year first above written.

                              ALLIANCE DATA SYSTEMS CORPORATION

                                   By_________________________________

                                     12

<PAGE>

                                                                       EXHIBIT B

                               AMENDMENT TO AMENDED AND
                           RESTATED STOCKHOLDERS AGREEMENT

     AMENDMENT TO AMENDED AND RESTATED STOCKHOLDERS AGREEMENT dated as of August
31, 1998 (the "Amendment"), amending the Amended and Restated Stockholders
Agreement dated as of August 30, 1996, as amended (as so amended, the "Original
Agreement"), among Alliance Data Systems Corporation (known in the Original
Agreement as World Financial Network Holding Corporation) (the "Issuer"),
Limited Commerce Corp. ("Limited Commerce"), WCAS Capital Partners II, L.P.
("WCAS CP II"), Welsh, Carson, Anderson & Stowe VII, L.P. ("WCAS VII"), and the
several other investors named as parties thereto (collectively with Limited
Commerce, WCAS CP II and WCAS VII, the "Investors"), certain of whom were also
parties to the Original Agreement.

     WHEREAS, the Issuer, Limited Commerce, WCAS CP II and WCAS VII have entered
into an Amendment to Securities Purchase Agreement dated as of the date hereof
(the "Amendment to Securities Agreement") pursuant to which, among other things,
the Issuer has agreed to issue and deliver to WCAS CP II and Limited Commerce an
aggregate 454,545 shares of Common Stock (the "Common Shares"), par value $.01
per share, of the Issuer in consideration of the agreement by WCAS CP II and
Limited Commerce to change the maturity of the 10% Subordinated Notes due
January 24, 2002 of the Company held by WCAS CP II and Limited Commerce Corp.
from January 24, 2002 to October 25, 2005; and

     WHEREAS, the Issuer and the Investors desire to amend the Original
Agreement to include the Common Shares in such agreement;

     NOW THEREFORE, the parties hereto agree as follows:

     SECTION 1. AMENDMENT TO ORIGINAL AGREEMENT. The Common Shares to be
acquired by WCAS CP II and Limited Commerce pursuant to the Amendment to
Securities Agreement shall for all purposes be deemed "Common Stock" and
"Registrable Securities" under the Original Agreement.

     SECTION 2. CONSENT. Each of the Investors hereby consents to the issuance
of the Common Shares to WCAS CP II and Limited Commerce and hereby waives any
preemptive right or other right it may have to purchase, participate in or
otherwise acquire any such shares of Common Stock.

<PAGE>

     SECTION 3. APPLICABLE LAW. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of law principles.

     SECTION 4. ORIGINAL AGREEMENT. Except as amended or modified pursuant to
this Amendment, the terms of the Original Agreement shall remain in full force
and effect.

     SECTION 5. SEVERABILITY. The invalidity or unenforceability of any
provisions of this Amendment in any jurisdiction shall not affect the validity,
legality or enforceability of the remainder of this Amendment in such
jurisdiction or the validity, legality or enforceability of this Amendment,
including any such provision, in any other jurisdiction, it being intended that
all rights and obligations of the parties hereunder shall be enforceable to the
fullest extent permitted by law.

     SECTION 6. COUNTERPARTS: EFFECTIVENESS. This Amendment may be executed in
any number of counterparts, each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same instrument.

<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first above written.

                              ALLIANCE DATA SYSTEMS CORPORATION

                              By________________________________

                              LIMITED COMMERCE CORP.

                              By________________________________

                              WELSH, CARSON, ANDERSON & STOWE VIII, L.P.
                              By WCAS VIII Associates LLC, General Partner

                              By________________________________
                                   General Partner

                              WELSH, CARSON, ANDERSON & STOWE VII, L.P.
                              By WCAS VII Partners, L.P., General Partner

                              By________________________________
                                   General Partner

                              WELSH, CARSON, ANDERSON & STOWE VI L.P.
                              By WCAS VI Partners, L.P., General Partner

                              By________________________________
                                   General Partner

                                      3

<PAGE>

                              WCAS CAPITAL PARTNERS II, L.P.
                              By WCAS CP II Partners, General Partner

                              By________________________________
                                   General Partner

                              WCAS INFORMATION PARTNERS, L.P.
                              By:  WCAS INFO Partners, General Partner

                              By_________________________________
                                   General Partner

                              PATRICK J. WELSH
                              RUSSELL L. CARSON
                              BRUCE K. ANDERSON
                              RICHARD H. STOWE
                              ANDREW M. PAUL
                              THOMAS E. MCINERNEY
                              JAMES B. HOOVER

                              By________________________________
                              Laura VanBuren, Attorney-in-Fact

                              __________________________________
                                   Laura VanBuren

                              __________________________________
                                   Robert A. Minicucci

                                      4

<PAGE>

                              __________________________________
                                   Anthony J. deNicola

                              __________________________________
                                   David Bellet

                              __________________________________
                                   Paul B. Queally

                              __________________________________
                                   Lawrence Sorrel

                              __________________________________
                                   Priscilla Newman

                              __________________________________
                                   Rudolph Rupert

                              __________________________________
                                   D. Scott Mackesy

                                      5

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