exv10w23



 






Exhibit 10.23









ALLIANCE DATA SYSTEMS

CORPORATION



	 	 	 	 	 
	 
	 	EXECUTIVE DEFERRED
 COMPENSATION PLAN
	 	 







(Effective January 1, 2005)




 








 





ALLIANCE DATA SYSTEMS CORPORATION

EXECUTIVE DEFERRED COMPENSATION PLAN




TABLE OF CONTENTS




	 	 	 	 	 
	ARTICLE I — PREAMBLE

	 	 	1	 
	ARTICLE II — DEFINITIONS

	 	 	1	 
	ARTICLE III — ELIGIBILITY

	 	 	3	 
	ARTICLE IV — CONTRIBUTIONS

	 	 	4	 
	ARTICLE V — LEAVE OF ABSENCE

	 	 	5	 
	ARTICLE VI — VESTING

	 	 	5	 
	ARTICLE VII — FUNDING AND INVESTMENT

	 	 	5	 
	ARTICLE VIII — DISTRIBUTION OF BENEFITS

	 	 	6	 
	ARTICLE IX — AMENDMENT AND TERMINATION

	 	 	7	 
	ARTICLE X — ADMINISTRATION

	 	 	7	 
	ARTICLE XI — MISCELLANEOUS

	 	 	8	 






-i-




 








 





ARTICLE I — PREAMBLE



The Alliance Data Systems Corporation Supplemental Executive Retirement Plan (the “SERP”) was
established, effective May 1, 1999, to provide an opportunity for a select group of management and
highly compensated employees to defer a portion of their regular compensation and bonuses payable
for services rendered to Alliance Data Systems Corporation (“ADSC”) and its participating
affiliates and to receive certain employer contributions. On December 8, 2004, due to changes in
the law, the Compensation Committee of the Board of Directors of ADSC took action to freeze the
SERP, effective December 31, 2004. Effective January 1, 2005, contributions shall be made to the
Alliance Data Systems Corporation Executive Deferred Compensation Plan (the “Plan”), which is
simply the SERP amended, restated, and renamed. The provisions of the SERP, as in effect on
December 31, 2004, shall govern any compensation or employer contribution that is “deferred,”
within the meaning of Code Section 409A, prior to January 1, 2005. Compensation and employer
contributions deferred on or after such date shall be governed by the provisions of the Plan. The
purpose of the Plan continues to be to assist in attracting and retaining qualified individuals to
serve as officers and key managers. The Plan is unfunded for tax purposes and for purposes of
Title I of ERISA.




ARTICLE II — DEFINITIONS



2.1 Account means the account maintained on the books of an Employer for the purpose of accounting
for Associate Contributions and Company Contributions, if any, allocated to a Participant. Each
Account shall be a bookkeeping entry only and shall be used solely as a device for the measurement
and determination of the amounts to be paid to a Participant, or his or her designated beneficiary,
pursuant to the Plan.



2.2 ADSC means Alliance Data Systems Corporation.



2.3 Alliance or ADSI means ADS Alliance Data Systems, Inc.



2.4 Associate means any person receiving compensation for personal services rendered in the
employment of an Employer.



2.5 Associate Contributions means both Elective Contributions and Section 415 Contributions.



2.6 Change in Control means one of the following events: (i) the merger, consolidation or other
reorganization of ADSC in which its outstanding common stock, $0.01 par value, is converted into or
exchanged for a different class of securities of ADSC, a class of securities of any other issuer
(except a direct or indirect wholly owned subsidiary of ADSC), cash, or other property, (ii) the
sale, lease or exchange of all or substantially all of the assets of ADSC to any other corporation
or entity (except a direct or indirect wholly owned subsidiary of ADSC), (iii) the adoption by the
stockholders of ADSC of a plan of liquidation and dissolution, (iv) the acquisition (other than any
acquisition pursuant to any other clause of this definition) by any person or entity other than (x)
Welsh Carson Anderson & Stowe partnerships and partners or (y) Limited Brands, Inc. and its
affiliates, including without limitation a “group” as contemplated by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (whether or not such Act is then applicable to ADSC),
of beneficial ownership, as contemplated by such Section, of more




 








 




than twenty percent (20%) (based on voting power) of ADSC’s outstanding capital stock and such
person, entity or group either has, or either publicly or by written notice to ADSC states an
intention to seek, a representative member on the Board, (v) the acquisition (other than any
acquisition pursuant to any other clause of this definition) by any person, entity or group other
than (x) Welsh Carson Anderson & Stowe partnerships and partners or (y) Limited Brands, Inc. and
its affiliates, of beneficial ownership of more than thirty percent (30%) (based on voting power)
of ADSC’s outstanding capital stock, or (vi) as a result of or in connection with a contested
election of directors, the persons who were the directors of ADSC before such election shall cease
to constitute a majority of the Board.



2.7 Code means the Internal Revenue Code of 1986, as amended.



2.8 Code Section 401(a)(4) Limit means the limit on the amount of the Retirement Contribution or
the Discretionary Profit Sharing Contribution a Participant may receive under the Qualified Plan on
account of the nondiscrimination requirements imposed under Code Section 401(a)(4), as determined
by the Benefits Administration Committee of the Qualified Plan in its discretion.



2.9 Code Section 401(a)(17) Limit means the limit imposed under Code section 401(a)(17) on the
amount of a Participant’s compensation that may be taken into account under the Qualified Plan.
This limit is subject to adjustment each year.



2.10 Code Section 415 Limit means the limit imposed under Code section 415 on the amount that may
be contributed with respect to a Participant under the Qualified Plan. This limit is subject to
adjustment each year.



2.11 Committee means the committee appointed pursuant to Section 10.1 to administer the Plan.



2.12 Company Contribution means a contribution made by an Employer to the Plan pursuant to Section
4.3 or Section 4.4.



2.13 Discretionary Profit Sharing Contribution means the non-matching contribution made by an
Employer to the Qualified Plan pursuant to its section 4.8 in effect as of January 1, 2004.



2.14 Eligible Compensation means base salary or wages, performance based cash incentives, and
commissions paid annually to an Associate, increased by the amount of any pre-tax contributions to
the Qualified Plan or other benefit plans under section 125 of the Code and by the amount of any
Elective Contributions. Excluded from Eligible Compensation are Company Contributions, Section 415
Contributions, severance payments, disability payments, workers compensation payments, stock option
earnings, restricted stock or other equity-based compensation, referral or sign-on bonuses,
service-related cash awards, and gross-up of wages for contest or other earnings. Eligible
Compensation in excess of $1 million annually shall not be taken into account under the Plan.



2.15 Elective Contributions means contributions directed by a Participant to the Plan pursuant to
Section 4.1.




-2-








 




2.16 Employer means Alliance and any other entity affiliated with ADSC that has adopted the Plan
with the approval of the Committee.



2.17 ERISA means the Employee Retirement Income Security Act of 1974, as amended.



2.18 Incentive Compensation means that portion of a Participant’s Eligible Compensation that is
paid as an incentive bonus based on performance, including, but not limited to commissions, spot
bonuses, and annual incentive compensation payments.



2.19 Participant means an Associate who is eligible to participate in the Plan.



2.20 Plan means this Alliance Data Systems Corporation Executive Deferred Compensation Plan.



2.21 Qualified Plan means the Alliance Data Systems 401(k) and Retirement Savings Plan.



2.22 Regular Compensation means a Participant’s base salary or wages.



2.23 Retirement Contribution means the non-matching contribution made to the Qualified Plan
pursuant to its Section 4.5 in effect as of January 1, 2004.



2.24 Section 415 Contributions means contributions made pursuant to Section 4.2.



2.25 Specified Participant means a Participant who is a key employee (within the meaning of Code
Section 416(i) without regard to paragraph (5) thereof) of an Employer.




ARTICLE III — ELIGIBILITY



3.1 Eligibility. All full time Associates who are on the United States payroll of an Employer are
eligible to participate in the Plan provided (i) the Associate’s Regular Compensation is at least
$150,000 on an annual basis, or the Associate’s Eligible Compensation was at least $170,000 as of
December 31st, 2003, and has not fallen below that amount in any subsequent year, and
(ii) the Associate is a participant in the Qualified Plan.



3.2 Enrollment Procedure. Each Participant shall be eligible for a Company Contribution and a
Section 415 Contribution without application. To be eligible to make Elective Contributions, a
Participant must complete and file the Enrollment Form approved by the Committee prior to the
beginning of the calendar year in which the Participant performs the services for which the
election is to be effective or, in the first calendar year in which an Associate becomes eligible
to participate in the Plan, no later than thirty (30) days after the first day of such eligibility
and effective for services to be performed subsequent to the election. For this purpose, the first
day of eligibility shall be the first day of the month that next follows the date that an Associate
first satisfies the criteria of Section 3.1.



3.3 Modification. A Participant may terminate an election to make Elective Contributions at any
time, but may not decrease or increase the election until the next calendar year. If a Participant
elects to stop during the calendar year, he or she may not resume making Elective Contributions
until the next January 1st.




-3-








 




3.4 Ineligible Participant. Notwithstanding any other provisions of this Plan, if the Committee
believes that any Participant may not qualify as a member of a group of “management or highly
compensated employees,” as determined in accordance with sections 201(2), 301(a)(3), and 401(a)(l)
of ERISA, the Committee in its sole discretion may direct that such Participant shall cease to be
eligible to participate in this Plan.




ARTICLE IV — CONTRIBUTIONS



4.1 Elective Contributions. At the time of enrollment, a Participant may direct an Employer to
withhold a percentage of the Regular Compensation and also, provided the enrollment is effective no
later than April 1st of the applicable year, the Incentive Compensation earned for
services performed in the year for which the enrollment is effective and allocate it to his or her
Account. The percentage selected for each type of Compensation may be any whole number percentage
up to fifty (50).



4.2 Section 415 Contributions. Whether or not a Participant elects to make Elective Contributions,
the Employer shall allocate to each Participant any contributions to the Qualified Plan that would
otherwise have been returned to the Participant on account of the Code Section 415 Limit, except
that any such amount shall be returned to the Participant in cash if it (i) is attributable to
after-tax contributions, or (ii) does not exceed $200.00 and the Participant does not have an
Account.



4.3 Make-Up Retirement Contributions. Whether or not a Participant elects to make Elective
Contributions, the Employer shall allocate to each Participant an amount equal to the amount of the
Retirement Contribution, if any, that the Employer could not make to such Participant under the
Qualified Plan because of either (i) the Code Section 401(a)(4) Limit, or (ii) the Code Section
401(a)(17) Limit, reduced, if necessary, to take into account the $1 million limit on Eligible
Compensation, provided, however, that if the Participant does not already have an Account, such
allocation shall be made only if the amount to be so allocated exceeds $200.00. If the amount to
be allocated does not exceed $200.00, it will be paid in cash.



4.4 Make-Up Discretionary Profit Sharing Contributions. Whether or not a Participant elects to
make Elective Contributions, the Employer shall allocate to each Participant an amount equal to the
amount of the Discretionary Profit Sharing Contribution, if any, that the Employer could not make
to such Participant under the Qualified Plan because of either (i) the Code Section 401(a)(4)
Limit, or (ii) the Code Section 401(a)(17) Limit, reduced, if necessary, to take into account the
$1 million limit on Eligible Compensation, provided, however, if the Participant does not already
have an Account, such allocation shall be made only if the amount to be so allocated exceeds
$200.00. If the amount to be allocated does not exceed $200.00, it will be paid in cash.



4.5 Crediting Contributions. The amount of Eligible Compensation that a Participant elects to
defer pursuant to Section 4.1 shall be credited to the Participant’s Account as of the date such
Compensation would otherwise become payable to the Participant. Section 415 Contributions shall be
credited as of the date distributed from the Qualified Plan. Company Contributions shall be
credited as of the date such contributions would otherwise have been made under the Qualified Plan.




-4-








 





ARTICLE V — LEAVE OF ABSENCE



5.1 Paid Leave of Absence. If a Participant is authorized by an Employer for any reason to take a
paid leave of absence, the Participant shall continue to be considered employed by the Employer.
Associate Contributions shall continue during such paid leave of absence, and the Participant shall
remain eligible for a Company Contribution.



5.2 Unpaid Leave of Absence. If a Participant is authorized by the Employer for any reason to take
an unpaid leave of absence, the Participant shall continue to be considered employed by the
Employer, but may not make Elective Contributions until the earlier of the date the leave of
absence expires or the Participant returns to a paid employment status. Upon such expiration or
return, Elective Contributions shall resume. The Participant shall remain eligible for Company
Contributions and Section 415 Contributions.




ARTICLE VI — VESTING



6.1 Vesting. Participants are always 100% vested in their Associate Contributions and the earnings
on these contributions. Participants shall be 100% vested in their Company Contributions and the
earnings thereon, after being credited with five (5) Years of Vesting Service under the Qualified
Plan, and until then shall be totally unvested. If a Participant separates from service and
receives a payout of his vested Account at a time when the Account is not fully vested, the
Participant will forfeit the nonvested portion of the Account; and the forfeiture shall not be
restored for any reason, including a subsequent reemployment. Forfeitures shall be used to offset
future Company Contributions. Upon termination of the Plan, unallocated forfeitures shall be
returned to the Employer.



6.2 Change of Control. In the event of a Change of Control, all Participants shall be 100% vested
in their Company Contributions, notwithstanding Section 6.1.




ARTICLE VII — FUNDING AND INVESTMENT



7.1 Unfunded Plan. Neither Associate Contributions nor Company Contributions shall be set aside in
a trust or otherwise funded. Any assets of an Employer available to pay Plan benefits shall be
subject to the claims of the Employer’s general unsecured creditors and may be used by the Employer
in its sole discretion for any purpose. Any payments made to Participants under the Plan will be
made from the general assets of the Employer.



7.2 Change of Control. In the event of a Change of Control, ADSC will establish the type of trust
known as a “rabbi trust,” to which will be contributed sufficient assets to fully fund all
Accounts. All assets in the rabbi trust will remain subject to the claims of the Employer’s
creditors, and a Participant will continue to have the status of an unsecured creditor with respect
to the Employer’s obligation to make benefit payments.



7.3 Investment of Accounts. Associate and Company Contributions shall be credited with interest at
a rate established by, and adjusted periodically at the sole discretion of, the Committee. The
Committee may, in its sole discretion, direct that the Employer invest the amount credited to an
Account, in whole or in part, in such property (real, personal, tangible or intangible), as the
Committee may select (collectively the “Investments”), or may direct that the




-5-








 




Employer retain the amount credited as cash to be added to its general assets. The Employer shall
be the sole owner and beneficiary of all Investments, and all contracts and other evidences of the
Investments shall be registered in the name of the Employer.




ARTICLE VIII — DISTRIBUTION OF BENEFITS



8.1 In-Service Distributions. A Participant who is actively employed by an Employer generally may
not withdraw or otherwise access any amounts credited to an Account. However, at the time a
Participant elects to make Elective Contributions, a Participant may elect to have all
contributions made pursuant to that election for that year distributed as of January 1 of any
subsequent year, subject however, to any restriction imposed under Code Section 409A. The
distribution shall be made within 60 days of the specified date or, if earlier, the date required
under Section 8.2 Furthermore, amounts may be withdrawn in the event of an “unforeseeable
emergency,” within the meaning of Code Section 409A(a)(2)(B)(ii). Any such early withdrawal must
be approved by the Committee and may not exceed the amount necessary to meet the emergency, taking
into account other assets available to the Participant, as well as any taxes incurred as a result
of the distribution. If the Committee or its delegate approves a distribution on this basis, the
distribution shall be made as soon as practicable thereafter; and the Participant’s right to make
Elective Contributions shall be suspended until the first day of the following year



8.2 Other Distributions. If a Participant has a “separation from service,” within the meaning of
Code section 409A(a)(2)(A)(i) or becomes “disabled,” within the meaning of Code Section
409A(a)(2)(C), the value of the Participant’s Associate Contributions, the vested portion of the
Company Contributions, and any accrued interest thereon will be distributed. For this purpose an
individual who is receiving severance payments from an Employer as part of a separation agreement
shall be considered to have separated from the service of the Employer. Payments will be made
within sixty (60) days after the end of the quarter in which the Participant becomes eligible for
the distribution, but, in the case of a Specified Participant, such distribution date must be at
least six months after the date of the separation, unless the Specified Participant dies before
then. All benefits will be paid in one (1) lump-sum payment, subject to applicable withholding.



8.3 Death Benefits. Any vested, undistributed amount credited to a Participant’s Account on the
date he or she dies shall be distributed in one lump sum to the Participant’s designated
beneficiary. If the Committee determines there is no valid beneficiary designation on file, or
cannot locate the designated beneficiary, benefits will be paid to the Participant’s estate.



8.4 Withholding. If the Employer believes it is required to withhold and pay over any taxes or
other amounts from a Participant’s Eligible Compensation pursuant to any state, federal, or local
law, such amounts shall, to the extent possible, be withheld from the Participant’s Eligible
Compensation before such amounts are credited under the Plan. Any additional withholding amount
required shall be paid by the Participant to the Employer as a condition to the crediting of any
contributions to the Participant’s Account. The Employer shall withhold any required state,
federal, or local taxes or other amounts from any benefits payable to a Participant or beneficiary.




-6-








 





ARTICLE IX — AMENDMENT AND TERMINATION



9.1 Amendment. ADSC may at any time amend, suspend, or reinstate any or all of the provisions of
the Plan, except that no such amendment, suspension, or reinstatement may adversely affect the
vested portion of any Participant’s Account as it existed as of the effective date of such
amendment, suspension, or reinstatement, without such Participant’s prior written consent, unless
the Committee determines, in its sole discretion, that the amendment is needed to preserve
favorable tax treatment. Written notice of any amendment or other action with respect to the Plan
shall be given to each Participant.



9.2 Termination. ADSC, in its sole discretion, may terminate this Plan at any time and for any
reason whatsoever. Upon termination of the Plan, the Committee shall cause to be distributed to
each Participant the entire value of the vested portion of his or her Account as soon as the
distribution may be made without adverse tax consequences. The Committee shall take such actions
as it deems appropriate, in its sole discretion, to administer any Accounts existing prior to such
termination distributions.




ARTICLE X — ADMINISTRATION



10.1 Committee. The Committee shall administer the Plan. The members of the Committee shall be
Associates who are appointed by, and serve at the pleasure of, the ADSC Board. The Committee has
complete and absolute authority to interpret any provision of the Plan and, in its sole discretion,
decide all questions and issues arising under the Plan including, without limitation, questions of
fact, eligibility to participate in the Plan, and the amount of benefits, if any, due under the
Plan. Decisions of the Committee are final and binding upon all parties. Additional information
about the Plan is available by contacting:



Executive Deferred Compensation Plan Committee

c/o Senior Director, Compensation

Alliance Data Systems

17655 Waterview Parkway

Dallas, TX 75252


10.2 Claims Procedure. In the event a Participant or beneficiary has a dispute concerning his or
her benefit, the claim for the benefit shall first be submitted in writing to the Senior Director,
Compensation, of Alliance. In the event that the Senior Director, Compensation, does not provide a
response satisfactory to the Participant within ninety (90) days after receipt of the claim, the
Participant or named beneficiary may submit the claim in writing, within sixty (60) days thereafter
to the Committee, whose decision regarding the claim shall be final and binding on each Participant
or person claiming under the Plan. The claimant shall be notified of the Committee’s decision
within sixty (60) days, unless special circumstances require an extension of time for processing,
in which case a decision shall be rendered within a reasonable period of time, but not later than
one hundred twenty (120) days after receipt of a request for review.



10.3 Participant Statements. A summary of the status of each Participant’s Account, reflecting
Associate Contributions, the vested and unvested Company Contributions, and accrued interest, will
be prepared and distributed annually.




-7-








 





ARTICLE XI — MISCELLANEOUS



11.1 Not a Contract of Employment. This Plan shall not be deemed to constitute a contract between
an Employer and any Associate or other person, whether or not in the employ of an Employer.
Nothing herein contained shall be deemed to give any Associate or other person, whether or not in
the employ of an Employer any right to be retained in the employ of an Employer, nor to interfere
with the right of an Employer to discharge any Associate at any time or to treat the Associate
without any regard to the effect which such treatment might have upon said Associate as a
participant of the Plan.



11.2 Non-Assignability. Except as may otherwise be required by law, no distribution or payment
under the Plan to any Participant, named beneficiary, heirs and successors shall be subject in any
manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge,
whether voluntary or involuntary; and any attempt to so anticipate, alienate, sell, transfer,
assign, pledge, encumber, or charge the same shall be void. Nor shall any such distribution or
payment be in any way subject to the debts, contracts, liabilities, engagements, or torts of any
person entitled to such distribution or payment. If any Participant, named beneficiary, heir, or
successor is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign,
pledge, encumber, or charge any such distribution or payment, voluntarily or involuntarily, the
Committee, in its discretion, may cancel such distribution or payment or may hold or cause to be
held or applied such distribution or payment, or any part thereof, to or for the benefit of such
Participant, named beneficiary, heir or successor in such manner as the Committee shall direct.



11.3 Savings Clause. If any provision of this instrument is finally held by a court of competent
jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall continue to be
fully effective.



11.4 Governing Law. The provisions of the Plan shall be construed, administered and governed under
applicable Federal law and the laws of the State of Delaware.



This Plan is hereby adopted this       day of                     , 2005, but effective as of January 1, 2005.




	 	 	 	 	 
	

	 	ALLIANCE DATA SYSTEMS CORPORATION	 	 
	 
	 	 	 	 
	

	 	 	 	 
	

	 	 	 	 
	

	 	By:	 	 
	

	 	Title:	 	 







-8-