EX-10.2






SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS




This Separation Agreement and General Release of Claims (hereinafter “Agreement”) is entered
into by and between John Scullion of        (hereinafter “Executive”) and LoyaltyOne, Inc., a
Canadian corporation with its principal place of business at 438 University Ave. Suite 600,
Toronto, Ontario M5G 2L1 Canada (individually “LoyaltyOne Canada”), Alliance Data Systems
Corporation, a United States corporation with its principal place of business at 17655 Waterview
Parkway, Dallas, Texas, and parent company to LoyaltyOne Canada (individually “ADSC”) together with
their parents, affiliates and subsidiaries (hereinafter collectively “LoyaltyOne”).



WHEREAS, Executive has been continuously employed by LoyaltyOne Canada since 1993 in various
capacities and under various corporate names; and



WHEREAS, included in the various capacities Executive has served is an expatriate assignment
with ADSC (“Expatriate Assignment”) pursuant to a Secondment Agreement between LoyaltyOne Canada
and ADSC, which assignment ended on February 25, 2009; and



WHEREAS, Executive received notice of his termination as required under Canadian law, and
effective May 1, 2009 (“Termination Date”), Executive’s employment terminated, and all of
Executive’s duties will cease; and



WHEREAS, Executive agrees to include ADSC in this Agreement to ensure all aspects of his
relationship with ADSC arising from the Expatriate Assignment are addressed and resolved; and



WHEREAS, Executive and LoyaltyOne desire to compromise, settle and forever resolve and dispose
of all differences and potential claims and controversies between them and to insure that certain
post-employment Protective Covenants (defined below) are honored; and



WHEREAS, this Agreement shall become effective following the expiration of the Revocation
Period (as defined below) (the “Effective Date”).



NOW, THEREFORE, in consideration of the foregoing promises and other good and sufficient
consideration contained hereinafter, the parties agree as follows:



I. SEVERANCE PAYMENTS




Executive shall be paid an amount in severance that, in conjunction with the other benefits
described in this Agreement, is intended to satisfy applicable statutory requirements as well as
provide consideration for this Agreement. The Severance Payments described below collectively
supersede any and all other entitlements under law or that may be described in any and all other
agreements executed prior to this date between Executive and LoyaltyOne as it relates to an amount
due and owing upon termination, including but not limited to statutory or common law notice and
severance and any amount associated with post-termination restrictions.



A. Release Payment. Twenty (20) weeks of Executive’s current base salary in CDN
dollars (less applicable taxes and withholdings) paid to Executive upon the later of the expiration
of the Revocation Period referred to in Article III (F) or the Termination Date in consideration of
the release and waiver of claims provided for in Article III and Executive’s agreement not to
contest the Protective Covenants in Article IV (the “Release Payment”) and inclusive of statutory
severance. Such payment will be payable in ten (10) bi-weekly installment payments on regular
payroll dates commencing on the first payroll date after the expiration of the later of the
Revocation Period or the Termination Date;



B. Protective Covenants Payment. Eighty-four (84) weeks of Executive’s current base
salary in CDN dollars (less applicable taxes and withholdings) paid in consideration of the
agreements and promises made by Executive in Article IV (the “Protective Covenants Payment”). Such
payments will be payable in forty-two (42) bi-weekly installment payments on regular payroll dates
commencing on the first payroll date after the Release Payment has been paid in full.



Collectively, the one hundred and four (104) week period comprised of the twenty (20) week
period during which the Release Payment is made and the eighty-four (84) week period during which
the Protective Covenants Payment is made are referred to herein as the “Severance Period”.



C. Additional Incentive Compensation. In further consideration for Executive entering
into this Agreement, LoyaltyOne agrees to pay to Executive two (2) times Executive’s target
incentive compensation equal to 125% of his 2008 base salary (the “Additional IC”). The Additional
IC shall be paid bi-weekly in forty-two (42) bi-weekly installment payments on regular payroll
dates commencing on the first payroll cycle after the Release Payment has been paid in full.



Executive agrees that if Executive is rehired in an officer role by LoyaltyOne prior to the
expiration of the Severance Period or prior to the payment of any payment under Article I (B) and
(C) hereunder being made to Executive, all payments scheduled to be paid to Executive under this
Agreement under Article I (B) and (C) shall cease as of the rehire date. The Release Payments
shall continue to be made regardless of the date of rehire, unless rehire occurs prior to the
expiration of the Revocation Period.



II. BENEFITS




A. Payment of Wages and Paid Time Off. LoyaltyOne represents, and Executive agrees
that as of the Effective Date, LoyaltyOne has paid to Executive in full all wages or other
compensation, all accrued and unused vacation and all un-reimbursed business expenses for the
period through and including the Termination Date. LoyaltyOne and Executive further agree that as
of the Termination Date, Executive will not accrue any further vacation time or pay or other
benefits for which Executive was eligible or previously entitled, except for those benefits
expressly continued as set forth in this Agreement.



B. Continuation of Benefits. Commencing on the Termination Date, LoyaltyOne agrees to
further continue Executive’s health insurance benefits through the end of the Severance Period or
until he is re-employed in a full-time capacity with benefits comparable to those in which
Executive participates as of the date hereof (“Health Insurance Benefit Continuation”). LoyaltyOne
and Executive shall pay their respective share of the premiums for the health insurance coverage
selected by, and in effect for, Executive as of February 25, 2009 during the Health Insurance
Benefit Continuation period. After the expiration of the Health Insurance Benefit Continuation
period, LoyaltyOne will no longer provide health insurance benefits, including executive benefits
for Executive.



C. Taxes. Due to Executive’s Expatriate Assignment, for such tax years for which
Executive is required to equalize tax responsibility between the United States and Canada arising
from the Expatriate Assignment, ADSC and LoyaltyOne Canada agree to continue providing tax
equalization services to Executive as previously agreed under the Secondment Agreement and the
terms of Executive’s Expatriate Assignment with ADSC. Such services include providing tax
preparation services with an accounting firm of ADSC’s choice for the purpose of equalizing
Executive’s tax responsibility between the United States and Canada. Executive agrees to continue
to abide by the tax equalization policy and procedure previously provided to him during his
Expatriate Assignment. Executive agrees that any amount in tax that may be due to be paid by him
as a result of the equalization process will be paid promptly to LoyaltyOne Canada, and that any
delay in reimbursement of more than 30 days will allow LoyaltyOne Canada to deduct the amounts owed
under the tax equalization policy from the next regular severance payment that is due to be paid to
Executive, until such obligation is satisfied. Additionally, Executive agrees that all foreign tax
credits that arise from the Expatriate Assignment and as a result of the tax equalization exercise
will belong to ADSC for its use in addressing the United States portion of the tax requirement.



D. Equity.



1. Stock Options.



a. Vested. Executive acknowledges and agrees that Executive’s options to acquire
shares of ADSC common stock (“Options”) which are or shall become vested on or prior to the
Termination Date shall be exercisable until October 31, 2010.



b. Unvested. Executive acknowledges that any Options which have not vested as of the
Termination Date but which will vest between the Termination Date and October 31, 2010 shall vest
on the date such unvested Option is scheduled to vest during such period and be exercisable until
October 31, 2010.



2. Time-Based Restricted Stock (“TBRS”) and Time-Based Restricted Stock Units
(“TBRSU”). Executive acknowledges and agrees that the TBRS and TBRSU identified by Fidelity as
RSU053YGC2 granted on 2/21/2007 and TBRSUCA08 granted on 4/28/2008 which are unvested as of the
Termination Date shall continue to vest during the Severance Period.



3. Performance-Based Restricted Stock Units. Executive acknowledges and agrees that
any performance-based restricted stock units for which performance restrictions have not been met
as of the Termination Date shall be forfeited.



E. Special Retention Award. Alliance Data agrees that the 6,698 restricted stock
units of the Special Retention Award identified by Fidelity as RSU07PBSA granted on 2/21/07 and
outstanding as of the Termination Date will vest on February 21, 2010. However, Executive
acknowledges and agrees that the cash portion of the Special Retention Award in the amount of
$431,250.00 scheduled to be paid on February 13, 2010, shall be forfeited.



F. Stock Transactions. Executive acknowledges and agrees that because of his status
as a Section 16 officer of ADSC, he is required for a period of six (6) months after he was no
longer deemed to be a Section 16 officer to file Securities and Exchange Commission (“SEC”) Forms 4
and 5 to report stock transactions related to ADSC, including, but not limited to, sales and
purchases of ADSC common stock and derivative securities, and the exercise of employee stock
options (“Stock Transactions”). Therefore, to enable timely filing of these forms with the SEC,
which ADSC does on Executive’s behalf, and also to enable ADSC to prepare and make other
disclosures to the SEC related to Executive’s Stock Transactions, for a period of fourteen (14)
months from March 1, 2009, which is the date Executive was no longer deemed to be a Section 16
officer, Executive agrees to report any such Stock Transaction made by him to Alan M. Utay, ADSC’s
General Counsel, as soon as possible, but no later than 12:00 Noon Central Time on the day
following the day such Stock Transaction is executed, or provide a legal opinion that such Stock
Transaction is not a reportable event requiring the filing of a Form 4 or 5 or other disclosure.
Executive agrees to execute and forward to ADSC the No Filing Due Statement attached hereto as
Exhibit B, or to provide to ADSC all necessary details to file a Form 5, for receipt no later than
January 11, 2010.



G. Termination of Other Agreements. The parties agree that as of the Termination
Date, the Change in Control Severance Protection Agreement entered into by and between ADS Alliance
Data Systems, Inc. (“Alliance Data”) and Executive on September 25, 2003, as amended by the Joint
Amendment to Agreements Providing for Compensation or Benefits upon Involuntary Severance from
Employment (as amended, the “Change in Control Agreement”) and the Offer Letter Dated September 7,
1993 as amended by the Joint Amendment to Agreements Providing for Compensation or Benefits upon
Involuntary Severance from Employment, shall terminate and be of no further force and effect
(together with the Change in Control Agreement, the “Executive Agreements”).



III. COVENANT NOT TO SUE AND RELEASE OF CLAIMS




A. Covenant Not to Sue. Executive agrees not to file any charges, claims, suits, or
complaints against LoyaltyOne with any federal, state, provincial or local governmental agency, or
in any court of law, with respect to any aspect of his Expatriate Assignment with ADSC, and his
employment with, or separation of employment from, LoyaltyOne, with respect to any matters
whatsoever, which occurred prior to or on the Termination Date, whether known or unknown to
Executive at the time of execution of this Agreement, with the exceptions of: (a) any claims the
law precludes him from waiving by agreement, including an action challenging the validity of
Executive’s release of claims under the Age Discrimination in Employment Act, 29 U.S.C. §621, et
seq. (“ADEA”); (b) any claim that LoyaltyOne breached its commitments under this Agreement; (c) any
claims with respect to any vested right Executive may have under any employee pension or welfare
benefit plan of LoyaltyOne, or (d) any rights Executive has to indemnification under the bylaws or
articles of LoyaltyOne existing as of the Effective Date or by contract. Items (b), (c), and (d)
immediately above shall be excepted from the release in Article III (B) below.



B. Release of Claims. Executive acquits, releases and forever discharges ADSC,
LoyaltyOne Canada, and its predecessors, successors, parent entities, subsidiaries, affiliates, or
related companies, its and their attorneys, officers, directors, employees, former employees,
agents, insurers, and assigns (collectively the “Released Parties”), jointly and severally, from
all, and in all manner of, actions and causes of action, suits, debts, claims and demands
whatsoever, in law or in equity, which he ever had, may now have or may hereafter have with respect
to any aspect of his Expatriate Assignment with ADSC, and his employment with, or separation of
employment from, LoyaltyOne Canada, and with respect to any other matter whatsoever. This release
includes, but is not limited to, claims relating to or arising out of the Sarbanes-Oxley Act; any
claims alleging retaliation and/or whistleblower claims; any and all claims relative to agreements
to sponsor for immigrant or non-immigrant positions; any claims for unpaid or withheld wages, the
Executive Agreements, severance pay, benefits, incentive compensation, stock options, restricted
stock units, restricted stock awards, special awards, commissions and/or other compensation of any
kind; or any other claim, regardless of the forum in which it might be brought, if any, which
Executive has, might have, or might claim to have against the Released Parties, or any of them
individually, for any and all injuries, harm, damages, penalties, costs, losses, expenses,
attorneys’ fees, and/or liability or other detriment, if any, whenever incurred, or suffered by
Executive as a result of any and all acts, omissions, or events by the Released Parties,
collectively or individually, through the date Executive executes this Agreement. It is expressly
agreed and understood by Executive that this Agreement and General Release includes, without
limitation, any and all claims, actions, demands, and causes of action, if any, arising from or in
any way connected with the Expatriate Assignment with ADSC, and the employment relationship between
Executive and LoyaltyOne Canada and the termination thereof, including any claim of discrimination,
retaliation, harassment, failure to accommodate, wrongful termination, breach of contract,
negligence, libel, slander, wrongful discharge, promissory estoppel, tortious conduct, bonus claims
of any nature and kind whatsoever, any vacation pay entitlement claims, and demands for damages,
including any disability claims, loss of benefit claims, indemnity, costs, interest, loss or injury
of every nature and kind whatsoever and howsoever arising, and/or any claims that this Agreement
was procured by fraud or signed under duress or coercion so as to make the Agreement not binding,
including all claims that were or could have been brought by Executive. Furthermore, Executive
asserts that he has been paid all wages as required by law; he does not have a workplace injury or
workers compensation claim pending and has not suffered any injury that could be the basis for such
claim; and he has been given the required amount of notice under Ontario law prior to his being
terminated.



C. Laws Included in Release. Executive agrees that, subject to the exceptions set
forth in Article III (A) of this Agreement, his covenants and releases, as set forth in this
Agreement, include a waiver of any and all rights or remedies which he ever had, may now have, or
may hereafter have against LoyaltyOne, in tort or in contract, or under any present or future
federal, province, local or other statute or law, including, but not limited to, the following
Canadian laws: the statutory and common law of Ontario, Canada; the Ontario Employment Standards
Act; Human Rights Code; Labor Relations Act; and any successor legislation. The Executive further
confirms that he has considered whether he has any possible claim against LoyaltyOne in respect of
the Ontario Human Rights Code, and confirms that he either has no such claim or that this Agreement
expressly compensates him for any such claim and that he will seek no further right or remedy in
respect of any possible claim. In addition, Executive agrees that, subject to the exceptions set
forth in Article III (A) of this Agreement, his covenants and releases, as set forth in this
Agreement, include a waiver of any and all rights or remedies which he ever had, may now have, or
may hereafter have against LoyaltyOne, in tort or in contract, or under any present or future
federal, state, local or other statute or law, including, but not limited to, the following United
States and State of Texas laws: statutory or common laws of the State of Texas, or any political
subdivision of the State of Texas; the Texas and United States Constitutions; the Texas Payday Law;
the Texas Commission on Human Rights Act; the National Labor Relations Act, 29 U.S.C. §151, et
seq.; Title VII of the 1964 Civil Rights Act, 42 U.S.C. §2000e, et seq.; the 1866 Civil Rights Act,
42 U.S.C. §1981; the Civil Rights Act of 1991, P.L. 102-166; the Americans With Disabilities Act,
42 U.S.C. §12101, et seq.; the Occupational Safety & Health Act of 1970, 29 U.S.C. §553, et seq.;
the Fair Labor Standards Act of 1938, 29 U.S.C. §201, et seq.; the Family & Medical Leave Act of
1993, 29 U.S.C. §2601, et seq.; the ADEA and the Older Workers Benefit Protection Act, 29 U.S.C.
§621, et seq., 29 U.S.C. §621, et seq.; the Equal Pay Act, 29 U.S.C. §206(d); the Employee
Retirement Income Security Act of 1974, 29 U.S.C., §1001, et seq.; Texas’s Workers’ Compensation
Law; the Immigration Reform Control Act; the Occupational Safety and Health Act; the Worker
Adjustment and Retraining Notification Act; the Consolidated Omnibus Budget Reconciliation Act of
1986, 29 U.S.C. §1161, et seq.; any and all Texas common law claims, including, but not limited to,
any violation of Texas public policy, invasion of privacy, breach of contract and promissory
estoppel.



D. Waiver of Unknown Claims. Executive intends that this Agreement shall bar each and
every claim, demand and cause of action hereinabove specified, whether known or unknown to him at
the time of execution of this Agreement. As a result, Executive acknowledges that he might, in the
future, discover claims or facts in addition to or different from those which he now knows or
believes to exist with respect to the subject matters of this Agreement and which, if known or
suspected at the time of executing this Agreement, may have materially affected the terms of this
Agreement. Nevertheless, Executive hereby waives any right, claim, or cause of action that might
arise as a result of such different or additional claims or facts.



E. Adequacy of Consideration. The parties individually and collectively agree that
the covenants and promises made in Article III of this Agreement are in consideration of the
Release Payment and other promises made hereunder by all parties, and that, but for the execution
of this Agreement, no party would be entitled to the amounts and promises provided for herein.



F. ADEA Release. Executive hereby acknowledges that Executive is knowingly and
voluntarily entering into this Agreement with the purpose of waiving and releasing any claims under
the ADEA (a law which prohibits discrimination on the basis of age) as applicable to his Expatriate
Assignment relationship with ADSC, and as such, Executive acknowledges and agrees that:




	 	(1)	 	this Agreement is worded in an understandable way and he has read and fully
understands its terms;






	 	(2)	 	any rights or claims arising under the ADEA are waived;






	 	(3)	 	claims under the ADEA that may arise after this Agreement is executed are not
waived;






	 	(4)	 	the rights and claims waived in this Agreement are in exchange for additional
consideration over and above anything to which Executive was already undisputedly
entitled;






	 	(5)	 	Executive has been advised in writing by LoyaltyOne to consult with an
attorney prior to executing this Agreement;






	 	(6)	 	Executive acknowledges that he has been given a twenty-one-day (21-day)
period of time from the date of receipt of this Agreement to consider all of the
provisions of this Agreement, and he does knowingly and voluntarily waive said given
21-day period;






	 	(7)	 	Any changes made to this Agreement, whether material or immaterial, will not
restart the running of this twenty-one-day (21-day) period;






	 	(8)	 	Executive may revoke this waiver and release of any ADEA (age discrimination)
claims covered by this Agreement within seven days from the date this Agreement is
executed (such seven-day period, the “Revocation Period”)






	 	(9)	 	This Agreement shall not become effective until the Revocation Period has
passed and Executive shall not have revoked his waiver and release of any ADEA claim
during the Revocation Period. If Executive revokes this Agreement, Executive will be
deemed not to have accepted the terms of this Agreement and LoyaltyOne will have no
obligations hereunder; and






	 	(10)	 	Nothing in this Agreement shall be construed as a limitation on the right of
Executive to participate in any investigation by the Equal Employment Opportunity
Commission into any charge that ADEA has been violated, including a charge filed by
Executive.





IV. PROTECTIVE COVENANTS




A. Restrictive Covenants. Notwithstanding any other provision contained in this
Agreement, Executive acknowledges and agrees that he shall continue to be bound by the
post-employment restrictions in the Employee Confidentiality and Non-Competition Agreement
(“Confidentiality Agreement”) which are incorporated herein by reference, with the understanding
that Executive’s termination of employment will, for purposes of the Confidentiality Agreement, be
considered the type of termination event that maximizes the applicable length of time for each
restriction such that the applicable restrictions shall be as follows:



1. Non-Compete. For a period of twenty-four (24) calendar months from the Termination
Date, the Executive shall not, within the United States, Canada and the Province(s) in which the
Executive carries on or has carried on employment duties to LoyaltyOne, directly or indirectly,
either alone or in conjunction with another person, in any manner, own, manage, operate, control,
be employed by, perform services for, consult with, solicit business for, participate in, do
business with or otherwise be connected with the ownership, management, operation or control of any
business that is materially similar to or competitive with those businesses as defined as
"Company’s Business” in the Confidentiality Agreement; and




2. Non-Solicitation. For a period of twenty-four (24) calendar months following the
Termination Date, Executive shall not, directly or indirectly, alone or in conjunction with
another person in any manner:




a. solicit or encourage any officer or employee of LoyaltyOne to leave the employment
of LoyaltyOne or to otherwise interfere with a subsisting relationship with or commitment
to LoyaltyOne;




b. hire any officer or employee who has left the employment of LoyaltyOne within six
(6) months of the termination of such officer’s or associate’s employment with LoyaltyOne;




c. solicit or encourage any independent contractors, suppliers or referral sources
performing services for LoyaltyOne to cease or modify such performances or to otherwise
harm their relationship with or commitment to LoyaltyOne; or




d. solicit, induce or attempt to induce any past, current or prospective customer,
collector, sponsor or supplier of LoyaltyOne to cease doing business in whole or in part
with LoyaltyOne or do business with any other person, firm, partnership, corporation or
other entity which performs or may perform services materially similar to or competitive
with those provided by LoyaltyOne.



B. Non-Disparagement. Executive agrees that from and after the Effective Date,
Executive will not make or publish any statement, written or oral, disparaging the reputation of
LoyaltyOne, any of its present or future employees, officers, shareholders, subsidiaries or
affiliates, or any of LoyaltyOne’s respective businesses or products. Executive further agrees not
to initiate or respond to press inquiries about Executive’s separation from LoyaltyOne without the
prior agreement of LoyaltyOne.



C. Protection of Confidential Information and Intellectual Property. Executive agrees
to fully comply with the obligations of the Confidentiality Agreement (Paragraphs 1-4).



D. Cooperation. Executive agrees that from and after the date hereof he will make
himself available to assist LoyaltyOne as reasonably requested, taking into account Executive’s
other professional obligations, regarding prior business arrangements or pending litigation or
litigation which may arise in the future concerning matters about which he has or had personal
knowledge or which were within the purview of his responsibilities.  Executive agrees to assist in
the prosecution or defense of such claims involving LoyaltyOne, or any of its subsidiaries or
affiliates, or any of their officers, directors, employees, or agents, whether or not such claims
involve litigation.  This assistance may include but is not limited to participation in interviews,
development of factual matters and the giving of documentation and/or testimony, whether by oral
testimony, affidavit, at trial or otherwise.



E. No Contest. In consideration for the Release Payment, Executive waives and
releases any claim that the covenants in Article IV(A), (B), (C), and (D) (the "Protective
Covenants") are unenforceable as written and agrees not to sue, cause or permit another person to
sue for his benefit, or otherwise pursue a claim that the Protective Covenants are not enforceable
as written. The post-employment restrictions in the Confidentiality Agreement and the Long Term
Incentive Plans (“LTI Plans”) applicable to Executive shall survive any revocation of this
Agreement by Executive. Notwithstanding anything herein to the contrary, this Agreement shall be
read so as to supplement the Confidentiality Agreement and LTI Plans and not to replace or
eliminate them.



F. Injunctive Relief. Executive agrees that a violation of the Protective Covenants
would cause irreparable harm to LoyaltyOne that cannot be fully and effectively remedied through
monetary damages or compensation. Therefore, Executive agrees that in addition to, and not in lieu
of, any damages which LoyaltyOne may be entitled to as a legal remedy, LoyaltyOne shall also be
entitled to such injunctive relief (temporary, preliminary, permanent or otherwise) as is needed to
prevent further violations of this Agreement and to return the parties to the status quo prior to
such violation where possible, and LoyaltyOne shall be entitled to specific enforcement of this
Agreement. Executive further agrees that LoyaltyOne’s recoverable remedies for a violation of
Article IV of this Agreement shall include attorneys’ fees, court costs and expenses incurred by
LoyaltyOne in the enforcement of this Article.



G. Cessation of Payments. In the event that Executive materially breaches one or more
of the covenants set forth in Article IV, as reasonably determined by LoyaltyOne, then LoyaltyOne
shall have the right to cease making the Protective Covenants Payments provided for herein and
shall have no further obligations to Executive under this Agreement. Cessation of payments
pursuant to this provision shall not cause any of Executive’s obligations under this Agreement, the
LTIP Plans or the Confidentiality Agreement to end.



H. Return of Payments. Executive’s agreement to comply with all of the Protective
Covenants and agreement to waive any contest to the enforceability of the Protective Covenants as
written, and LoyaltyOne’s agreement to make Protective Covenant Payments to Executive are mutually
dependent obligations. Accordingly, in the event that any portion of the Protective Covenants
deemed material by LoyaltyOne is challenged by Executive and found to be unenforceable, then
Executive shall, at the election of LoyaltyOne, be required to immediately return all of the
Protective Covenant Payments to LoyaltyOne (less any taxes paid thereon by Executive).



V. MISCELLANEOUS




A. No Assignment. Executive hereby represents and warrants that Executive has not
assigned or otherwise transferred to any other person or entity any interest in any claim, demand,
action and/or cause of action Executive has, or may have, or may claim to have against any Released
Party. Executive agrees to indemnify and hold harmless all of the Released Parties from any and
all injuries, harm, damages, costs, losses, expenses and/or liability, including reasonable
attorneys’ fees and court costs, incurred as a result of any claims or demands which may hereafter
be asserted against any such Released Parties by, through, or by virtue of an assignment or other
transfer by Executive.



B. No Right to Re-Employment. Executive acknowledges and agrees that by signing this
Agreement, Executive is hereby releasing and forever waiving any right to re-employment or
reinstatement with LoyaltyOne in any capacity; although nothing herein shall prevent LoyaltyOne
from re-employing Executive should LoyaltyOne, in its own discretion, decide to re-employ
Executive.



C. No Admission of Liability. This Agreement, the offer of this Agreement and
compliance with this Agreement shall not constitute or be construed as an admission by the Released
Parties, or any of them individually, of any wrongdoing or liability of any kind or an admission by
any party (Executive or Released Parties). This Agreement shall not be admissible in any judicial,
administrative or other proceeding or cause of action as an admission of liability or for any
purpose other than to enforce the terms of this Agreement.



D. Terms of Agreement Confidential. Except as provided below, unless otherwise
authorized in writing by LoyaltyOne, Executive may not disclose the fact that the parties have
entered into this Agreement or any of the information contained herein. Notwithstanding the
foregoing, Executive may make such disclosure to Executive’s spouse, attorneys and tax advisors
(the “Authorized Parties”), provided that Executive advises the Authorized Parties of the
restrictions of this section and obtains the agreement of the Authorized Parties to the terms of
same. This Agreement is not intended to prohibit or interfere with Executive’s ability to respond
to or cooperate with any governmental agency request or subpoena or court order. However, in the
event Executive receives such a subpoena or order, Executive agrees to provide such notice of the
subpoena or order within five (5) days of Executive’s receipt of such subpoena or order to the
attention of General Counsel, LoyaltyOne at 438 University Ave. Suite 600, Toronto, Ontario M5G 2L1
Canada. In addition, during the Severance Period, prior to accepting any new position of
employment or agreeing to perform services for a person or entity that competes with LoyaltyOne,
Executive shall provide the prospective employer with a copy of the Confidentiality Agreement and
Article IV of this Agreement.



E. Contractual Agreement; Governing Law. The parties agree that the terms of this
Agreement are contractual in nature and not merely recitals and shall be governed and construed in
accordance with the laws The parties agree that the terms of this Agreement are contractual in
nature and not merely recitals and shall be governed and construed, as applicable, in accordance
with the laws of the Province of Ontario, Canada. The parties further agree that should any part
of this Agreement be declared or determined by a court of competent jurisdiction to be illegal,
invalid or unenforceable, the parties intend the legality, validity and enforceability of the
remaining parts shall not be affected thereby, and the said illegal, invalid or unenforceable part
shall be deemed not to be part of this Agreement. The venue to decide any disputes arising under
this Agreement shall be in the Province of Ontario, Canada, and Executive waives any and all
objections to the exercise of jurisdiction over him by such courts.



F. Successors. This Agreement shall be binding upon and the benefits shall inure to
Executive and Executive’s heirs, and to LoyaltyOne, Alliance Data, ADSC, and their respective
successors and assigns.



G. Waivers. No waiver of any of the terms of this Agreement shall be valid unless in
writing and signed by the party to this Agreement against whom such waiver is sought to be
enforced. The waiver by any party hereto of any provision of this Agreement shall not operate or
be construed as a waiver of any subsequent breach by any party, nor shall any waiver operate or be
construed as a rescission of this Agreement.



H. Notices. All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on the date personally
delivered or on the date deposited in a receptacle maintained by the United States Postal Service
for such purpose, postage prepaid, by certified mail, return receipt requested, and addressed as
follows:




If to LoyaltyOne:


LoyaltyOne, Inc.


438 University Ave. Suite 600


Toronto, Ontario M5G 2L1


Canada


Attn: General Counsel



If to ADSC:




Alliance Data Systems Corporation


17655 Waterview Parkway


Dallas, Texas 75252


Attn: Legal Department, HR Counsel




If to Executive: at the address set forth below Executive’s signature on the signature
page hereto, with a copy to:



Either party hereto may designate a different address by providing written notice of such new
address to the other party hereto.



I. Entire Agreement. Executive agrees that in executing this Agreement, Executive
does not rely and has not relied on any document, representation or statement, whether written or
oral, other than those specifically set forth in this Agreement and in any applicable LoyaltyOne
benefit plans. Except where otherwise expressly provided for herein and in such benefit plans, the
parties agree that this Agreement and any attachments, schedules, or exhibits hereto constitute the
entire agreement between Executive and LoyaltyOne, supersede any and all prior agreements or
understandings, written or oral, pertaining to the subject matter of this Agreement, and contain
all the covenants and agreements in any manner whatsoever between the parties with respect to such
matters. No oral understandings, statements, promises or inducements contrary to the terms of this
Agreement exist. This Agreement cannot be changed or terminated orally, but may be changed only
through written addendum executed by both parties.



J. Mutual Drafting. The wording in this Agreement was reviewed and accepted by both
parties after reasonable time to review with legal counsel, and neither party shall be entitled to
have any wording of this Agreement construed against the other party as the drafter of the
Agreement in the event of any dispute in connection with this Agreement.



K. Return of LoyaltyOne Property. Executive represents and agrees that on or before
the Termination Date, Executive will return to LoyaltyOne all LoyaltyOne property within
Executive’s possession or control, including, but not limited to, beepers, cellular telephones,
keys, access cards, computers and peripheral equipment, software, automobiles, equipment, customer
lists, forms, plans, documents, and other written and computer material, and copies of the same,
belonging to LoyaltyOne, or any of their customers, and Executive will not at any time copy or
reproduce the same.



L. Understanding of Agreement. Executive declares that the terms of this Agreement
have been completely read, are fully understood, and are voluntarily accepted, after complete
consideration of all facts and Executive’s legal rights, of which Executive has been fully advised
by Executive’s attorneys for the purpose of making a full and final compromise, adjustment and
settlement of any and all claims, disputed or otherwise, that Executive may have against the
Released Parties.



M. Taxes. Subject to Article II(C), Executive shall be responsible for the payment of
any and all required federal, state, provincial, local and foreign taxes incurred, or to be
incurred, in connection with any amounts payable, or benefits provided, to Executive under this
Agreement. Notwithstanding any other provision herein contained, LoyaltyOne may withhold from
amounts payable under this Agreement all federal, state, provincial, local and foreign taxes that
are required to be withheld by applicable laws and regulations with respect to any amounts payable,
or benefits provided to, Executive under this Agreement and report on any applicable federal,
state, provincial, local or foreign tax reporting form any income to Executive determined by
LoyaltyOne as resulting from such amounts payable or benefits provided hereunder.



N. Counterparts. This Agreement may be executed in multiple counterparts each of
which shall be deemed to be one and the same instrument. Each party hereto confirms that any
facsimile copy of such party’s executed counterpart of this Agreement shall be deemed to be an
executed original thereof.



O. Outplacement Reimbursement. LoyaltyOne agrees that, no later than thirty (30) days
following LoyaltyOne’s receipt of documentation thereof, LoyaltyOne will reimburse Executive an
amount not to exceed $25,000.00 for procuring outplacement assistance, if any.



THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK





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IN WITNESS WHEREOF, the parties have executed this Agreement as of March 24, 2009, as follows:



John Scullion



/s/ John Scullion

Executive Signature




Address



City, State, Zip



Date: March 24, 2009



LoyaltyOne, Inc.



By: /s/ Bryan A. Pearson

Its: Executive Vice President and

President, Loyalty Services




Alliance Data Systems Corporation



By: /s/ Dwayne H. Tucker


Its: Executive Vice President, Human Resources



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EXHIBIT A




[ATTACH COPY OF EMPLOYEE CONFIDENTIALITY AND NON-COMPETITION AGREEMENT] 





3






EMPLOYEE CONFIDENTIALITY and NON-COMPETITION AGREEMENT




THIS AGREEMENT is made and entered into as of this 18th day of September, 2000




BETWEEN:



LOYALTY MANAGEMENT GROUP CANADA INC.

Suite 200, 4110 Yonge Street

Toronto, Ontario MSR 1S9

(“LMGC”)




AND




JOHN SCULLION




(“Employee”)




WHEREAS LMGC carries on the business of developing, marketing, implementing and maintaining the AIR
MILES® Reward Program which rewards the consumers for the purchase, lease, trial and/or continued
use of the goods and services of participating sponsors by arranging for consumers to obtain AIR
MILES reward miles and to redeem reward miles for air travel, merchandise and services; providing
customer relationship management programs, employee motivation programs and frequent buyer reward
programs; providing database marketing services and electronic marketing services used by online
and offline advertisers to promote their products and services; providing travel services; and the
sale online and offline to consumers and businesses of travel services, books, floral products and
other merchandise and services (collectively the “Company’s Business”); and



WHEREAS LMGC possesses certain confidential and/or proprietary information relating to the
Company’s Business; and



WHEREAS Employee is employed by LMGC in the Company’s Business and has and will become aware of
certain confidential and/or proprietary information relating to the Company’s Business in the
course of such employment; and;



WHEREAS in connection with the employment of Employee by LMGC and in consideration of the grant
pursuant to an agreement of even date herewith to Employee of incentive stock options to purchase
shares of common stock of Alliance Data Systems Corporation pursuant to the Amended and Restated
Alliance Data Systems Corporation and its Subsidiaries Stock Option and Restricted Stock Plan, LMGC
has requested Employee to preserve certain confidential and/or proprietary information relating to
the Company’s Business, to refrain from soliciting employees of LMGC and its Affiliates and not to
compete with LMGC or its Affiliates for the periods of time specified herein;



NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, LMGC
and Employee hereby agree as follows:



1. Interpretation.



In this agreement, the phrase “Confidential Information” means all information, and all
documents and other tangible items which record information, whether on paper or in electronic or
other storage form, in computer readable format or otherwise, relating to the Company’s Business
and/or to the business of any of its Affiliates, including, but without limitation, all data of any
kind whatsoever; know-how; experience; expertise; business plans; ways of doing business; business
results or prospects; financial books, data and plans; pricing; supplier information and
agreements; investor or lender data and information; business processes (whether or not the subject
of a patent), computer software and specifications therefore; leases; and any and all agreements
entered into by LMGC or its Affiliates and any information contained therein; database mining and
marketing; customer relationship management programs; any technical, operating, design, economic,
client, customer, consultant, consumer or collector related data and information, marketing
strategies or initiatives and plans which at the time or times concerned is either capable of
protection as a trade secret or is considered by LMGC or its Affiliates to be of a confidential
nature and is supplied to or obtained by Employee whether in the form of specifications, written or
electronic data, drawings, or disclosed orally. “Affiliate(s)” of LMGC means any entity
that directly or indirectly controls, is controlled by, or is under direct or indirect common
control with, LMGC.



2. Employee’s Obligations.



Employee shall:



(a) hold in confidence all Confidential Information and not reveal any Confidential Information to
any person without the prior written approval of a senior officer of LMGC;



(b) use the Confidential Information only in connection with the Company’s Business and not for any
other purposes;



(c) keep all Confidential Information secret and confidential and to that end, without limiting the
generality of the foregoing, diligently protect all Confidential Information against loss, and
prevent unauthorized use or reproduction thereof; and



(d) if requested by LMGC, destroy or return to LMGC all Confidential Information, all copies
(including backup copies), reproductions, reprints and translations thereof, whether written,
electronic or otherwise, in the possession of, or under the control of, the Employee.



3. Exceptions.



The provisions of Section 2 shall not apply to:



(a) Confidential Information which is or becomes generally available to the public other than as a
result of a disclosure by Employee; or



(b) Confidential Information which was available to Employee on a non-confidential basis prior to
the date hereof from a person other than LMGC or its Affiliates who was not, to the knowledge of
Employee, otherwise bound by confidentiality obligations to LMGC and was not otherwise prohibited
from transmitting the information to Employee; or



(c) Confidential Information which becomes available to Employee on a non-confidential basis from a
person other than LMGC or its Affiliates who is not, to the knowledge of Employee, otherwise bound
by confidentiality obligations to LMGC and is not otherwise prohibited from transmitting the
information to Employee; or



(d) Confidential Information which the Employee is required by law to disclose, in which case,
Employee will provide LMGC with notice of such obligation immediately to allow LMGC to seek such
intervention as it may deem appropriate to prevent such disclosure including and not limited to
initiating injunctions or similar proceedings.



4. Inventions/Intellectual Property.



(a) Employee acknowledges and agrees that LMGC and/or its Affiliates are the sole owner of the
Confidential Information and all patents, trademarks, service marks and copyrights and any and all
intellectual property rights based in any way upon the Confidential Information. Employee
acknowledges that nothing herein is intended to give Employee any rights to, ownership interest in,
or license with respect to, any of the Confidential Information or any patent or trademark related
to the Confidential Information.



(b) Employee hereby assigns to LMGC, for no additional consideration and free from any obligation
of LMGC to Employee, all right, title and interest, including copyright, Employee may have as a
result of any work Employee performs during the term of Employee’s employment with LMGC. Employee
waives any moral rights which Employee may have in and to such work.



5. Non-Competition.



(a) During the term of Employee’s employment with LMGC and for a period of 24 consecutive months
immediately following the effective date of termination of the Employee’s employment with LMGC, or
if 24 months is found by a court of competent jurisdiction not to be reasonable, then 12
consecutive months, regardless of the circumstances in which the employment has ended, Employee
shall not, directly or indirectly, either alone or in conjunction with another person, in any
manner, own, manage, operate, control, be employed by, perform services for, consult with, solicit
business for, participate in, do business with or otherwise be connected with the ownership,
management, operation or control of any business within (i) Canada and (ii) the Province(s) in
which the Employee carries on employment duties to LMGC, that is materially similar to or
competitive with the AIR MILES® Reward Program (including, without limitation, the following
frequency and award redemption programs: Club Z, Petro Points, Canadian Tire Options, Royal Classic
II, Royal Avion, Aeroplan, Loblaw’s, Esso Extra, Equity Club, Shopper’s Optimum, ClickRewards,
MyPoints, and WebMiles), provided that the geographic scope of the aforesaid covenant shall be that
provided for in subparagraph (i) above unless a court of competent jurisdiction determines that the
aforesaid covenant given such scope and time is unenforceable, in which case the scope shall be
that set forth in subparagraph (ii) above.



(b) Employee and LMGC recognize the possibility that there might be some limited ways, which the
parties do not now contemplate, through which Employee might be able to participate in a
competitor, and which shall pose no risk of harm to the interests of LMGC or its Affiliates. If,
prior to beginning any such relationship with a competitor, Employee makes a full disclosure to
LMGC of the nature of Employee’s proposed participation, LMGC agrees to evaluate whether it will
suffer any risk of harm to its interests, and will notify Employee if it has any objections to
Employee’s proposed participation. LMGC’s determination in this regard shall be final and not
subject to review. If Employee fails to make such prior disclosure, it shall be conclusively
presumed that Employee’s participation in a competitor will cause harm to the interests of LMGC.



6. Actions Contrary to Interests of LMGC.



During the term of Employee’s employment with LMGC and for a period of one year immediately
following the effective date of termination of the Employee’s employment with LMGC, regardless of
the circumstances in which the employment has ended, Employee shall not, directly or indirectly,
alone or in conjunction with another person in any manner:



(a) solicit or encourage any officer or employee of LMGC or its Affiliates to leave the
employment of LMGC or its Affiliates or otherwise interfere with a subsisting relationship with or
commitment to LMGC or its Affiliates, as the case may be;



(b) hire any officer or employee who has left the employment of LMGC or its Affiliates
within six months of the termination of such officer’s or employee’s employment with LMGC or its
Affiliates, as the case may be;



(c) solicit or encourage any independent contractors, suppliers or referral sources
performing services for LMGC or its Affiliates to cease or modify such performances or to otherwise
harm their relationships with or commitment to LMGC or its Affiliates, as the case may be; or



(d) solicit, induce or attempt to induce any past, current or prospective customer,
Collector, sponsor or supplier of LMGC or its Affiliates (i) to cease doing business in whole or in
part with LMGC or its Affiliates, as the case may be; or (ii) to do business with any other person,
firm, partnership, corporation or other entity which performs or may perform services materially
similar to or competitive with those provided by LMGC or its Affiliates.



7. Incentive Stock Options.



Employee acknowledges the grant pursuant to an agreement of even date herewith to Employee of
incentive stock options to purchase shares of common stock of Alliance Data Systems Corporation
pursuant to the Amended and Restated Alliance Data Systems Corporation and its Subsidiaries Stock
Option and Restricted Stock Plan.



8. LMGC Property.


(a) All memoranda, notes, lists, records, e-mails and other documents (and all copies and
translations thereof) made or compiled by the Employee or made available to the Employee
concerning the Company’s Business, LMGC or any of its Affiliates shall be the property of LMGC and
shall be delivered to LMGC at any time upon request. All such property and all Confidential
information in written or other recorded form which is in the Employee’s possession or control
shall be delivered to LMGC immediately upon the cessation of the Employee’s employment.



(b) Employee agrees to return to LMGC all documents, materials, computer hardware and
software, supplies, calling or credit cards, keys, passes, and any other property or data that is
the property of LMGC or was used in the course of Employee’s employment with LMGC at any time upon
request by LMGC. The return of such items shall be made at or before the time of termination or,
if that is not possible, as soon thereafter as is possible.



9. Injunctive Relief.



Each party acknowledges that the provisions of this Agreement are only such as are reasonably
necessary for the protection of LMGC’s rights in respect of the Confidential Information. Employee
agrees that damages alone would not be an adequate remedy for the irreparable harm to LMGC and the
Company’s Business that would result from violation of any of the provisions hereof, that LMGC
shall be entitled to specific performance and/or similar equitable remedy in respect of by any such
violation or any threatened violation of such provisions (and Employee hereby consent to the
granting of such relief to enforce the provisions hereof) and that LMGC may enforce its rights
under this Agreement by bringing suit for injunctive relief or specific performance without payment
of bond or security in connection therewith.



10. General.



(a) Independent Legal Advice. Employee acknowledges that Employee has had an opportunity
to obtain independent legal advice with respect to this Agreement.



(b) Entire Agreement. This is the entire agreement between the parties with respect to the
use of the Confidential Information and the subject matter hereof, and this Agreement supercedes
all previous written and oral agreements, representations and warranties. This Agreement may not
be amended except by the written agreement of the parties hereto. Any failure by any party to
exercise its rights or remedies hereunder or any delay by such party in the exercise of any of its
rights and remedies hereunder shall not, to the extent permitted by law, operate as a waiver or
variation of such or any other right or remedy hereunder. The recitals on the first page of this
Agreement are acknowledged by the parties to form an integral part hereof.



(c) Severability. Each covenant by Employee contained herein shall be independent and
severable from the others, and in the event that any provision of in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected thereby.



(d) Assignment. Employee may not assign this Agreement or any of Employee’s rights or
obligations hereunder.



(e) Enurement. This Agreement shall enure to the benefit of and shall be binding upon the
parties hereto and their respective successors, permitted assigns, heirs, and personal
representatives.



(f) Governing Law. This Agreement shall be governed by and construed in accordance with
the laws of the province of Ontario and the parties attorn to the non-exclusive jurisdiction of the
courts of the province of Ontario to resolve any dispute which may arise between them concerning
this Agreement and the subject matter hereof, without prejudice to LMGC’s right to commence any
action against Employee in any other applicable jurisdiction.



(g) Language of Agreement. The parties acknowledge having consented that the present
Agreement and all documents, notices and judicial proceedings entered into, given or instituted
pursuant hereto, or relating directly or indirectly pursuant hereto, be in the English language.
Les parties reconnaissent avoir convenue que la présente convention ainsi que tous documents, avis
et procédures judiciaires qui pourront être exécutés, donnés ou intentées à la suite des présentes
ou ayant un rapport, direct ou indirect, avec la présente convention soient rédigée en anglais.



IN WITNESS WHEREOF, LMGC and Employee have executed this agreement as of the date first above
written.



LOYALTY MANAGEMENT GROUP CANADA INC.



By: /s/ Gordon MacDonald

Name: Gordon MacDonald

Title: Senior Director, Human Resources













/s/ John Scullion



Signed, sealed and delivered


in the presence of:



/s/ Teena Falcao 


Name of Witness to Employee’s Signature



Street Address



City, Province and Postal Code



4



EXHIBIT B




“No Filing Due” Statement




CERTIFICATE




I am aware that, as a former executive officer of LoyaltyOne Systems Corporation (the
“Company”) during the fiscal year ended December 31, 200      , I must file a Form 5 with the Securities
and Exchange Commission within 45 days after the end of the fiscal year, unless I have previously
reported all transactions and holdings otherwise reportable on Form 5.



After reviewing my records, I hereby certify to the Company that I am not required to file a Form 5
for the above fiscal year.



Date:       



By:       



John Scullion




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