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EXHIBIT 10.2




SUBSIDIARY GUARANTY




               THIS GUARANTY (this “Guaranty”) dated as of May 1, 2006 is made by each of the undersigned
(each being a “Guarantor”), in favor of the holders from time to time of the Notes hereinafter
referred to and their respective successors and assigns (collectively, the “Holders” and each
individually, a “Holder”).



               W I T N E S S E T H:



               WHEREAS, ALLIANCE DATA SYSTEMS CORPORATION, a Delaware corporation (the “Company”), and the
initial Holders have entered into a Note Purchase Agreement dated as of May 1, 2006 (the Note
Purchase Agreement as amended, supplemented, restated or otherwise modified from time to time in
accordance with its terms and in effect, the “Note Purchase Agreement”);



               WHEREAS, the Note Purchase Agreement provides for the issuance by the Company of $500,000,000
aggregate principal amount of Notes (as defined in the Note Purchase Agreement);



               WHEREAS, the Company directly or indirectly owns all of the issued and outstanding capital
stock of each Guarantor and, by virtue of such ownership and otherwise, such Guarantor has derived
or will derive substantial benefits from the purchase by the Holders of the Company’s Notes;



               WHEREAS, it is a requirement of the Note Purchase Agreement that each Guarantor execute and
deliver this Guaranty to the Holders; and



               WHEREAS, each Guarantor desires to execute and deliver this Guaranty to satisfy the
requirement described in the preceding paragraph;



               NOW, THEREFORE, in consideration of the premises and other benefits to each Guarantor, and of
the purchase of the Company’s Notes by the Holders, and for other good and valuable consideration,
the receipt and sufficiency of which are acknowledged, each Guarantor makes this Guaranty as
follows:



     SECTION 1 Definitions. Any capitalized terms not otherwise herein defined shall have
the meanings attributed to them in the Note Purchase Agreement.



     SECTION 2 Guaranty. Each Guarantor, jointly and severally with each other Guarantor,
unconditionally and irrevocably guarantees to the Holders the due, prompt and complete payment by
the Company of the principal of, Make-Whole Amount, if any, and interest on, and each other amount
due under, the Notes or the Note Purchase Agreement, when and as the same shall become due and
payable (whether at stated maturity or by required or optional prepayment or by declaration or
otherwise) in accordance with the terms of the Notes and the Note Purchase Agreement (the Notes and



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the Note Purchase Agreement being sometimes hereinafter collectively referred to as the “Note
Documents” and the amounts payable by the Company under the Note Documents (including any
attorneys’ fees and expenses), being sometimes collectively hereinafter referred to as the
“Obligations”). This Guaranty is a guaranty of payment and not just of collectibility and is in no
way conditioned or contingent upon any attempt to collect from the Company or upon any other event,
contingency or circumstance whatsoever. If for any reason whatsoever the Company shall fail or be
unable duly, punctually and fully to pay such amounts as and when the same shall become due and
payable, each Guarantor, without demand, presentment, notice of acceleration, notice of intent to
accelerate, protest or notice of any kind, will forthwith pay or cause to be paid such amounts to
the Holders under the terms of such Note Documents, in lawful money of the United States, at the
place specified in the Note Purchase Agreement, or perform or comply with the same or cause the
same to be performed or complied with, together with interest (to the extent provided for under
such Note Documents) on any amount due and owing from the Company. Each Guarantor, promptly after
demand, will pay to the Holders the reasonable costs and expenses of collecting such amounts or
otherwise enforcing this Guaranty, including, without limitation, the reasonable fees and expenses
of counsel. Notwithstanding the foregoing, the right of recovery against each Guarantor under this
Guaranty is limited to the extent it is judicially determined with respect to any Guarantor that
entering into this Guaranty would violate Section 548 of the United States Bankruptcy Code or any
comparable provisions of any state law, in which case such Guarantor shall be liable under this
Guaranty only for amounts aggregating up to the largest amount that would not render such
Guarantor’s obligations hereunder subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provisions of any state law.



     SECTION 3. Guarantor’s Obligations Unconditional. The obligations of each Guarantor
under this Guaranty shall be primary, absolute and unconditional obligations of each Guarantor,
shall not be subject to any counterclaim, set-off, deduction, diminution, abatement, recoupment,
suspension, deferment, reduction or defense based upon any claim each Guarantor or any other Person
may have against the Company or any other Person, and to the full extent permitted by applicable
law shall remain in full force and effect without regard to, and except as provided in Section
9.7(b) of the Note Purchase Agreement, shall not be released, discharged or in any way affected by,
any circumstance or condition whatsoever (whether or not each Guarantor or the Company shall have
any knowledge or notice thereof), including:




     (a) any termination, amendment or modification of or deletion from or addition or
supplement to or other change in any of the Note Documents or any other instrument or
agreement applicable to any of the parties to any of the Note Documents;




     (b) any furnishing or acceptance of any security, or any release of any security, for
the Obligations, or the failure of any security or the failure of any Person to perfect any
interest in any collateral;



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     (c) any failure, omission or delay on the part of the Company to conform or comply
with any term of any of the Note Documents or any other instrument or agreement referred to
in paragraph (a) above, including, without limitation, failure to give notice to any
Guarantor of the occurrence of a “Default” or an “Event of Default” under any Note
Document;




     (d) any waiver of the payment, performance or observance of any of the obligations,
conditions, covenants or agreements contained in any Note Document, or any other waiver,
consent, extension, indulgence, compromise, settlement, release or other action or inaction
under or in respect of any of the Note Documents or any other instrument or agreement
referred to in paragraph (a) above or any obligation or liability of the Company, or any
exercise or non-exercise of any right, remedy, power or privilege under or in respect of
any such instrument or agreement or any such obligation or liability;




     (e) any failure, omission or delay on the part of any of the Holders to enforce,
assert or exercise any right, power or remedy conferred on such Holder in this Guaranty, or
any such failure, omission or delay on the part of such Holder in connection with any Note
Document, or any other action on the part of such Holder;




     (f) any voluntary or involuntary bankruptcy, insolvency, reorganization, arrangement,
readjustment, assignment for the benefit of creditors, composition, receivership,
conservatorship, custodianship, liquidation, marshaling of assets and liabilities or
similar proceedings with respect to the Company, any Guarantor or to any other Person or
any of their respective properties or creditors, or any action taken by any trustee or
receiver or by any court in any such proceeding;




     (g) any discharge, termination, cancellation, frustration, irregularity, invalidity or
unenforceability, in whole or in part, of any of the Note Documents or any other agreement
or instrument referred to in paragraph (a) above or any term hereof;




     (h) any merger or consolidation of the Company or any Guarantor into or with any other
corporation, or any sale, lease or transfer of any of the assets of the Company or any
Guarantor to any other Person;




     (i) any change in the ownership of any shares of capital stock of the Company or any
change in the corporate relationship between the Company and any Guarantor, or any
termination of such relationship;




     (j) any release or discharge, by operation of law, of any Guarantor from the
performance or observance of any obligation, covenant or agreement contained in this
Guaranty; or



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     (k) any other occurrence, circumstance, happening or event whatsoever, whether similar
or dissimilar to the foregoing, whether foreseen or unforeseen, and any other circumstance
which might otherwise constitute a legal or equitable defense or discharge of the
liabilities of a guarantor or surety or which might otherwise limit recourse against any
Guarantor.



     SECTION 4. Full Recourse Obligations. The obligations of each Guarantor set forth
herein constitute the full recourse obligations of such Guarantor enforceable against it to the
full extent of all its assets and properties.



     SECTION 5. Waiver. Each Guarantor unconditionally waives, to the extent permitted by
applicable law, (a) notice of any of the matters referred to in Section 3, (b) notice to such
Guarantor of the incurrence of any of the Obligations, notice to such Guarantor or the Company of
any breach or default by such Company with respect to any of the Obligations or any other notice
that may be required, by statute, rule of law or otherwise, to preserve any rights of the Holders
against such Guarantor, (c) presentment to, notice of acceleration of, notice of intent to
accelerate or demand of payment from the Company or the Guarantor with respect to any amount due
under any Note Document or protest for nonpayment or dishonor, (d) any right to the enforcement,
assertion or exercise by any of the Holders of any right, power, privilege or remedy conferred in
the Note Purchase Agreement or any other Note Document or otherwise, (e) any requirement of
diligence on the part of any of the Holders, (f) any requirement to exhaust any remedies or to
mitigate the damages resulting from any default under any Note Document, (g) any notice of any
sale, transfer or other disposition by any of the Holders of any right, title to or interest in the
Note Purchase Agreement or in any other Note Document and (h) any other circumstance whatsoever
which might otherwise constitute a legal or equitable discharge, release or defense of a guarantor
or surety or which might otherwise limit recourse against such Guarantor.



     SECTION 6. Subrogation, Contribution, Reimbursement or Indemnity. Until one year and
one day after all Obligations have been indefeasibly paid in full, each Guarantor agrees not to
take any action pursuant to any rights which may have arisen in connection with this Guaranty to be
subrogated to any of the rights (whether contractual, under the United States Bankruptcy Code, as
amended, including Section 509 thereof, under common law or otherwise) of any of the Holders
against the Company or against any collateral security or guaranty or right of offset held by the
Holders for the payment of the Obligations. Until one year and one day after all Obligations have
been indefeasibly paid in full, each Guarantor agrees not to take any action pursuant to any
contractual, common law, statutory or other rights of reimbursement, contribution, exoneration or
indemnity (or any similar right) from or against the Company which may have arisen in connection
with this Guaranty. So long as the Obligations remain, if any amount shall be paid by or on behalf
of the Company to any Guarantor on account of any of the rights waived in this paragraph, such
amount shall be held by such Guarantor in trust, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the Holders (duly endorsed by
such Guarantor to the



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Holders, if required), to be applied against the Obligations, whether matured or unmatured, in
such order as the Holders may determine. The provisions of this paragraph shall survive the term
of this Guaranty and the payment in full of the Obligations.



     SECTION 7. Effect of Bankruptcy Proceedings, etc. This Guaranty shall continue to be
effective or be automatically reinstated, as the case may be, if at any time payment, in whole or
in part, of any of the sums due to any of the Holders pursuant to the terms of the Note Purchase
Agreement or any other Note Document is rescinded or must otherwise be restored or returned by such
Holder upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Company
or any other Person, or upon or as a result of the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to the Company or other person or any substantial
part of its property, or otherwise, all as though such payment had not been made. If an event
permitting the acceleration of the maturity of the principal amount of the Notes shall at any time
have occurred and be continuing and one or more Holders shall have attempted to accelerate the
maturity of the principal amount of the Notes pursuant to and in compliance with Section 12.1 of
the Note Purchase Agreement, or an event shall have occurred that pursuant to Section 12.1 of the
Note Purchase Agreement purportedly results in the automatic acceleration of the maturity of the
principal amount of the Notes, and in either such case such acceleration shall at such time be
prevented by reason of the pendency against the Company or any other Person of a case or proceeding
under a bankruptcy or insolvency law, each Guarantor agrees that, for purposes of this Guaranty and
its obligations hereunder, the maturity of the principal amount of the Notes and all other
Obligations shall be deemed to have been accelerated with the same effect as if any Holder had
accelerated the same in accordance with the terms of the Note Purchase Agreement or other
applicable Note Document, and such Guarantor shall forthwith pay such principal amount, Make-Whole
Amount, if any, and interest thereon and any other amounts guaranteed hereunder without further
notice or demand.



     SECTION 8. Term of Agreement. Subject to Section 9.7(b) of the Note Purchase
Agreement, this Guaranty and all guaranties, covenants and agreements of each Guarantor contained
herein shall continue in full force and effect and shall not be discharged until such time as all
of the Obligations shall be irrevocably paid and performed in full in cash and all of the
agreements of such Guarantor hereunder shall be irrevocably duly paid and performed in full in
cash.



     SECTION 9. Representations and Warranties. Each Guarantor represents and warrants to
each Holder that:




     (a) such Guarantor is a corporation or other legal entity validly existing and in good
standing or equivalent status under the laws of its jurisdiction of organization and has
the corporate or other power and authority to own and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is currently
engaged;



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     (b) such Guarantor has the corporate or other power and authority and the legal right
to execute and deliver, and to perform its obligations under, this Guaranty, and has taken
all necessary corporate or other action to authorize its execution, delivery and
performance of this Guaranty;




     (c) this Guaranty constitutes a legal, valid and binding obligation of such Guarantor
enforceable in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors’ rights generally and by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or at law);




     (d) the execution, delivery and performance of this Guaranty will not violate any
provision of any requirement of law or material contractual obligation of such Guarantor
and, except as provided in the Note Purchase Agreement, will not result in or require the
creation or imposition of any Lien on any of the properties, revenues or assets of the
Guarantor pursuant to the provisions of any material contractual obligation of such
Guarantor or any requirement of law;




     (e) except as provided in the Note Purchase Agreement, no consent or authorization of,
filing with, or other act by or in respect of, any arbitrator or governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Guaranty;




     (f) no litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of such Guarantor, threatened by or
against such Guarantor or any of its properties or revenues (i) with respect to this
Guaranty or any of the transactions contemplated hereby or (ii) which could reasonably be
expected to have a material adverse effect upon the business, operations or financial
condition of such Guarantor and its Subsidiaries taken as a whole;




     (g) the execution, delivery and performance of this Guaranty will not violate any
provision of any order, judgment, writ, award or decree of any court, arbitrator or
Governmental Authority, domestic or foreign, or of the charter or by-laws of such Guarantor
or of any securities issued by such Guarantor; and




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



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     SECTION 10. Notices. All notices under the terms and provisions hereof shall be in
writing, and shall be delivered or sent by telex or telecopy or mailed by first-class mail, postage
prepaid, or otherwise as provided in Section 18 of the Note Purchase Agreement, addressed (a) if to
the Company or any Holder at the address set forth in, the Note Purchase Agreement or (b) if to a
Guarantor, in care of the Company at the Company’s address set forth in the Note Purchase
Agreement, or in each case at such other address as the Company, any Holder or such Guarantor shall
from time to time designate in writing to the other parties. Any notice so addressed shall be
deemed to be given when actually received.



     SECTION 11. Jurisdiction and Process; Waiver of Jury Trial.




     (a) Each Guarantor irrevocably submits to the non-exclusive jurisdiction of any New
York state or federal court sitting in the Borough of Manhattan, The City of New York, over
any suit, action or proceeding arising out of or relating to this Guaranty, the Agreement
or the Notes. To the fullest extent permitted by applicable law, each Guarantor
irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise,
any claim that it is not subject to the jurisdiction of any such court, any objection that
it may now or hereafter have to the laying of the venue of any such suit, action or
proceeding brought in any such court and any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.




     (b) Each Guarantor agrees, to the fullest extent permitted by applicable law, that a
final judgment in any suit, action or proceeding of the nature referred to in Section 11(a)
brought in any such court shall be conclusive and binding upon it subject to rights of
appeal, as the case may be, and may be enforced in the courts of the United States of
America (or any other courts to the jurisdiction of which it or any of its assets is or may
be subject) by a suit upon such judgment.




     (c) The Company consents to process being served in any suit, action or proceeding
solely of the nature referred to in Section 11(a) by mailing a copy thereof by registered
or certified or priority mail, postage prepaid, return receipt requested, or delivering a
copy thereof in the manner for delivery of notices specified in Section 10, to it. Each
Guarantor agrees that such service upon receipt (i) shall be deemed in every respect
effective service of process upon it in any such suit, action or proceeding and (ii) shall,
to the fullest extent permitted by applicable law, be taken and held to be valid personal
service upon and personal delivery to it. Notices hereunder shall be conclusively presumed
received as evidenced by a delivery receipt furnished by the United States Postal Service
or any reputable commercial delivery service.




     (d) Nothing in this Section 11 shall affect the right of any holder of a Note to serve
process in any manner permitted by law, or limit any right that the holders of any of the
Notes may have to bring proceedings against the Company



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in the courts of any appropriate jurisdiction or to enforce in any lawful manner a
judgment obtained in one jurisdiction in any other jurisdiction.




     (e) EACH GUARANTOR WAIVES TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO
THIS AGREEMENT, THE NOTES OR ANY OTHER DOCUMENT EXECUTED IN CONNECTION HEREWITH OR
THEREWITH.



     SECTION 12. Miscellaneous. Any provision of this Guaranty which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law,
each Guarantor hereby waives any provision of law that renders any provisions hereof prohibited or
unenforceable in any respect. The terms of this Guaranty shall be binding upon, and inure to the
benefit of, each Guarantor and the Holders and their respective successors and assigns. It is
agreed and understood that any Subsidiary of the Company or of any Guarantor may become a Guarantor
hereunder by executing a Joinder substantially in the form of Exhibit A attached hereto and
delivering the same to the Holders. Any such Person shall thereafter be a “Guarantor” for all
purposes under this Guaranty. No term or provision of this Guaranty may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by each Guarantor and
the Holders; provided, however, that a Guarantor may be fully released and discharged from this
Guaranty pursuant to the terms of Section 9.7(b) of the Note Purchase Agreement. The section and
paragraph headings in this Guaranty and the table of contents are for convenience of reference only
and shall not modify, define, expand or limit any of the terms or provisions hereof, and all
references herein to numbered sections, unless otherwise indicated, are to sections in this
Guaranty. This Guaranty shall in all respects be governed by, and construed in accordance with,
the laws of the state of New York, including all matters of construction, validity and performance.



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     IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly executed as of the day
and year first above written.



	 	 	 	 	 	 	 
	 	ADS Alliance Data Systems, Inc.
	 	 	 	 	 	 	 
	 	By:	 	/s/ Michael D. Kubic
 
	 	 	 	 
	 	Name:	 	Michael D. Kubic
 

	 	 	 
	 	Title: 	 	Senior Vice President, Corporate

Controller and Chief Accounting Officer 

	 	 	 







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