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                                                                 Exhibit 10.28

                                                                     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 1.1279-3.

          THE ISSUE PRICE OF THIS DEBT INSTRUMENT IS $45,510,000.
          THE AMOUNT OF OID ON THIS DEBT INSTRUMENT IS $6,490,000.
        THE ISSUE DATE OF THIS DEBT INSTRUMENT IS SEPTEMBER 15, 1998
          THE YIELD TO MATURITY OF THIS DEBT INSTRUMENT IS 14.46%

          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

                          104 Subordinated Note
                          Due September 15, 2008

Registered                                                  New York, New York
R-001                                                       September 15, 1998
$52,000,000

     ALLIANCE DATA SYSTEMS CORPORATION, a Delaware corporation (hereinafter
called the "Company"), for value received, hereby promises to pay to WCAS
CAPITAL PARTNERS III, L.P., a Delaware limited partnership, or registered
assigns, the principal sum of FIFTY-TWO MILLION AND NO/100 Dollars
($52,000,000), in two equal installments on September 15, 2007 and September
15, 2008, 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 fifteenth day of March and September of each year (each
said day being an "Interest Payment Date"), commencing on March 15, 1999,
until the principal amount hereof shall have become due and payable, whether
at maturity or by acceleration or otherwise, and thereafter 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.

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     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 $52,000,000, maturing on September 15, 2008 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 11 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 11, 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
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 this 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


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tenor and unpaid principal amount and dated as of the date to which interest
has been paid on this Note.

     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.  PAYMENT IN KIND. On March 15 and September 15 of each year during
the term of this Note (each an "Eligible Interest Payment Date"), the Company
may elect to satisfy its obligation to pay interest on this Note by issuing
to the holder hereof a deferred interest note or notes in substantially the
form hereof (which note or notes shall hereinafter be called the "Deferred
Interest Notes") in a principal amount equal to the interest that would have
been payable to such holder on such Eligible Interest Payment Date. If the
Company shall so elect, it shall deliver to the holder a certificate of an
officer of the Company, not less than five Business Days prior to the
Eligible Interest Payment Date, stating that the Company will pay such
interest in the form of Deferred Interest Notes, together with a resolution
of the Board of Directors of the Company authorizing the issuance of Deferred
Interest Notes in the appropriate principal amount, and a representation that
such Deferred Interest Notes will be binding obligations of the Company,
enforceable in accordance with their terms.

     6.  PREPAYMENTS.

         (a) OPTIONAL PREPAYMENT. Upon notice given as provided in Section 7
     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) 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 (to the extent permitted under

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     the Company's Credit Agreement, dated as of July 24, 1998 (as amended,
     the "Credit Agreement") with Morgan Guaranty Trust Company of New York,
     as Agent), without penalty of 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 one-third of the proceeds of such offering to the Company (net of
     underwriting discounts and commissions).

         (c) MANDATORY OID PREPAYMENT. To the extent permitted by the Credit
     Agreement, on any interest payment date on or after September 15, 2003,
     the Company must pay an amount of accrued original issue discount on
     this Note as shall be necessary to ensure that this Note shall not be
     considered an "applicable high yield discount obligation" within the
     meaning of Section 163(i) of the Internal Revenue Code of 1986, as
     amended, or any successor provision. The amount of interest payable on
     this Note at maturity shall be reduced by the amount of any accrued
     original issue discount that is paid under this Section 5(c).

     7.  NOTICE OF PREPAYMENT AND OTHER NOTICES. The Company shall give
written notice of prepayment of this Note or any portion hereof pursuant to
Section 6 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 to the date
fixed for such prepayment.

     8.  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.

     9.  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

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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.

     10.  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 or 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.

     11. 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 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,

                                      5

<PAGE>


     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
     affect 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 reasonable
     expense and to the extent believed

                                      6

<PAGE>


     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 12 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.

     12. MODIFICATION OF 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

                                      7

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        (d) amend the provisions of Section 17 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.

     13.  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 September 15, 1998 among the Company and
     the Purchaser (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

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        (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 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 26% 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,

                                       9

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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 13, 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 (1) 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
effect any subsequent default or Event of Default or impair any right
consequent thereon.

     14.  SUITS FOR ENFORCEMENT. In case any one or more of the Events of
Default specified in Section 13 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.

     15.  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.

     16.  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.

     17.  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

                                       10

<PAGE>

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
(including under the Credit Agreement), 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.

          (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

                                       11

<PAGE>

     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 17.

          (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 17 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 17 are
and are intended solely for the purposes of defining the relative rights of
the holder of this Note, on the one hand, and the holder of the Senior
Indebtedness, on the other hand. Subject to the rights, if any, under this
Section 17 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

                                      12

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     Note from exercising all remedies otherwise permitted by applicable law
     or upon default hereunder.

     18.  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.

     19.  GOVERNING LAW. This Note shall be governed and construed in
accordance with the laws of the state of New York.

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<PAGE>

     20.  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.

          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 /s/ Edward K. Mims
                                            --------------------------
                                            Title: EVP & CFO


                                       14