Document:

<PAGE>

                        ALLIANCE DATA SYSTEMS CORPORATION
                      LOYALTY MANAGEMENT GROUP CANADA INC.

            SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT

         This Second Amendment to Amended and Restated Credit Agreement (herein,
the "AMENDMENT") is entered into as of September 29, 2000, between Alliance Data
Systems Corporation, a Delaware corporation (the "US BORROWER"), Loyalty
Management Group Canada Inc., an Ontario corporation (the "CANADIAN BORROWER";
the US Borrower and the Canadian Borrower being referred to herein individually
as "BORROWER" and collectively as the "BORROWERS"), Banks party to the Credit
Agreement (as such term is defined below), Morgan Guaranty Trust Company of New
York, as a Bank and in its capacity as outgoing Administrative Agent, Pledgee
and Collateral Agent (in such capacity, the "DEPARTING AGENT") and Harris Trust
and Savings Bank, as a Bank and in its capacity as the new Administrative Agent,
Pledgee and Collateral Agent under the Credit Agreement (the "NEW AGENT" or the
"ADMINISTRATIVE AGENT").

                             PRELIMINARY STATEMENTS

         A. The Borrowers, the Departing Agent and the Banks entered into a
certain Amended and Restated Credit Agreement, dated as of July 24, 1998 and
amended and restated as of October 22, 1998 (as amended, restated, modified and
supplemented from time to time, the "CREDIT AGREEMENT"). All capitalized terms
used herein without definition shall have the same meanings herein as such terms
have in the Credit Agreement.

         B. The Borrowers have requested that (i) the Departing Agent be
substituted with the New Agent as Administrative Agent, Swing Lender, Pledgee
and Collateral Agent under the relevant Credit Documents and (ii) the Banks
amend certain covenants and make certain other amendments to the Credit
Agreement, and the New Agent, the Departing Agent and the Banks party hereto are
willing to do so under the terms and conditions set forth in this Amendment.

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

SECTION 1.  RESIGNATION OF MORGAN GUARANTY TRUST COMPANY OF NEW YORK AS
            ADMINISTRATIVE AGENT, PLEDGEE AND COLLATERAL AGENT AND
            REPLACEMENT BY HARRIS TRUST AND SAVINGS BANK.

         Upon satisfaction of the conditions precedent set forth in Section 4
hereof, the Departing Agent shall cease to be the Administrative Agent under the
Credit Agreement and the other relevant Credit Documents, shall cease to be the
Pledgee under the Pledge Agreements and shall cease to be the Collateral Agent
under the other Security Documents and Credit Documents and, except as set forth
below, the Departing Agent shall have no further obligations as Administrative
Agent, Pledgee and Collateral Agent thereunder. In replacement of the Departing
Agent, the New Agent shall assume the role of the Administrative Agent under the
Credit Agreement and the other relevant Credit Documents, the Pledgee under the
Pledge Agreements and Collateral Agent under the other Security Documents and
Credit Documents and shall have all the rights and, from and after the date this
Amendment becomes effective, obligations as

<PAGE>

Administrative Agent, Pledgee and Collateral Agent previously held by the
Departing Agent thereunder, PROVIDED that it is expressly acknowledged and
agreed that (x) the New Agent shall not be liable for any acts or omissions
of the Departing Agent and (y) the provisions of Article 8 of the Credit
Agreement (including without limitation the indemnity provisions of Sections
8.5 and 8.6 of the Credit Agreement) shall inure to the benefit of (1) the
Departing Agent as to any actions taken or omitted to be taken by it while it
was Administrative Agent, Pledgee and Collateral Agent under the relevant
Credit Documents including without limitation all actions taken or to be
taken in furtherance of the transfer of agency to the New Agent, regardless
of whether such action is taken before or after the effectiveness thereof and
(2) the New Agent who shall be entitled to all of the rights of, and vested
with the same powers as, the Departing Agent (including without limitation
all the powers of the Administrative Agent, Pledgee and Collateral Agent)
under the Credit Documents prior to the date hereof. The parties hereto (i)
consent to the resignation of the Departing Agent as Administrative Agent
under the Credit Agreement and the other relevant Credit Documents, the
Pledgee under the Pledge Agreements and the Collateral Agent under the other
Security Documents and Credit Documents, (ii) consent to the New Agent as the
successor Administrative Agent under the Credit Agreement and the other
relevant Credit Documents, the successor Pledgee under the Pledge Agreements
and the successor Collateral Agent under the other Security Documents and
Credit Documents and (iii) agree that all references in the Credit Agreement,
each other Credit Document and any other instrument or document related or
supplementary thereto to the Administrative Agent, Pledgee or the Collateral
Agent shall, upon the effectiveness hereof, be deemed references to the New
Agent. Furthermore and without limiting the generality of the foregoing, by
its execution hereto, the Departing Agent hereby assigns the security
interests and liens previously granted to it pursuant to the Security
Documents and its duties thereunder to the New Agent, as agent for the Banks,
including Morgan Guaranty Trust Company of New York in its capacity as a Bank.

SECTION 2.  REDUCTION OF TERM LOANS AND REVOLVING LOAN COMMITMENT.

         Upon the application of the proceeds of the Eligible IPO to the
repayment in full of the US Term Loans required under Sections 2.11(A)(g) and
2.11(B)(c) of the Credit Agreement (as modified hereby), the amount of each
Bank's outstanding US Term Loans shall be reduced to zero.

SECTION 3.  AMENDMENTS.

         Upon the satisfaction of the conditions precedent set forth in
Section 5 hereof, the Credit Agreement shall be and hereby is amended as
follows:

         3.1   All references in Section 1.1 and Section 8 of the Credit
Agreement to "Morgan Guaranty Trust Company of New York" shall be deleted and
"Harris Trust and Savings Bank" shall be substituted in lieu thereof.

         3.2   The definitions of "Domestic Business Day" and "Prime Rate"
appearing in Section 1.1 of the Credit Agreement shall be amended by
inserting "and Chicago, Illinois" immediately after the references to "New
York City" appearing therein.

                                       2

<PAGE>

         3.3   The definition of "Obligations" appearing in Section 1.1 of
the Credit Agreement shall be amended and restated in its entirety to read as
follows:

                        "Obligations" means all (i) amounts owing to the
               Administrative Agent, the Collateral Agent or any Bank
               pursuant to the terms of this Agreement or any other Credit
               Document and (ii) Derivatives Obligations of each "Assignor"
               (as such term is defined in the Security Agreement) from time
               to time owed to a Bank or an Affiliate of a Bank.

         3.4   All references in the Credit Agreement to "New York City time"
and "New York time" shall be deleted and "Chicago, Illinois time" shall be
substituted in lieu thereof.

         3.5   Section 1.1 of the Credit Agreement shall be amended by adding
the following new definitions thereto:

               "Eligible IPO" means any public or private offering of certain
               capital stock of the US Borrower to be consummated by no later
               than June 30, 2001 and to result in gross cash proceeds raised
               by the US Borrower of not less than $250,000,000.

               "Senior Secured Leverage Ratio" of any Person means, at any
               time, the ratio of (x) all amounts owing by such person to the
               Administrative Agent, the Collateral Agent or any Bank
               pursuant to the terms of this Agreement or any other Credit
               Document to (y) Consolidated EBITDA of such person for the
               four fiscal quarters then most recently ended.

         3.6   Section 2.3(b) and Section 2.12 of the Credit Agreement shall
each be amended by deleting the references to "funds immediately available in
New York City" appearing therein and inserting "funds immediately available
in Chicago, Illinois" in lieu thereof.

         3.7   The first sentence of Section 2.11(B)(c) of the Credit
Agreement shall be amended by (i) adding "(1)" immediately before the
reference to "in no event" appearing therein, (ii) adding ", except as set
forth in the immediately succeeding subparagraph (2)," immediately after the
reference to "in no event" appearing therein and (iii) adding "and (2) all
proceeds of the Eligible IPO shall be applied (i) first to the aggregate
outstanding principal amount of the Subordinated Note and the WCAS
Subordinated Note until such Notes are paid in full and (ii) thereafter to
repay the aggregate outstanding principal amount of the US Term Loans until
such Loans are repaid in full" immediately before the period at the end
thereof.

         3.8   Section 6.10 of the Credit Agreement shall be amended and
restated in its entirety to read as follows:

               "Section 6.10. END OF FISCAL YEARS AND FISCAL QUARTERS. The US
               Borrower shall cause its fiscal year, and shall cause each of
               its Subsidiaries' fiscal years, to end on December 31 and
               shall cause

                                       3

<PAGE>

               its and each of its Subsidiaries' fiscal quarters to coincide
               with calendar quarters."

         3.9   Sections 6.11, 6.12 and 6.13 of the Credit Agreement shall
each be amended and restated in their entirety to read as follows:

               "Section 6.11. MINIMUM CONSOLIDATED EBITDA. The US Borrower
               will not permit its Consolidated EBITDA for any period of four
               consecutive fiscal quarters of the US Borrower, as determined
               for such four-quarter period ending on the last day of any
               fiscal quarter below, to be less than the respective amount
               set forth opposite such fiscal quarter below:

<TABLE>
<CAPTION>
               Fiscal Quarter Ended                       Minimum Consolidated EBITDA
               --------------------                       ---------------------------
               <S>                                        <C>

               June 30, 2000                               $90,000,000
               September 30, 2000                          $105,000,000
               December 31, 2000                           $105,000,000
               March 31, 2001                              $115,000,000
               June 30, 2001                               $115,000,000
               Each fiscal quarter, thereafter             $125,000,000

</TABLE>

               Section 6.12.  LEVERAGE RATIOS. (a) LEVERAGE RATIO. The US
               Borrower shall not permit its Leverage Ratio at any time
               during any fiscal quarter of the US Borrower to exceed
               4.0:1.0.

               (b) SENIOR SECURED LEVERAGE RATIO. The US Borrower shall not
               permit its Senior Secured Leverage Ratio at any time to exceed
               the ratio set forth below opposite such fiscal quarter below:

<TABLE>
<CAPTION>
                                                          Maximum Senior Secured
               Fiscal Quarter Ended                            Leverage Ratio
               --------------------                            --------------
               <S>                                        <C>

               December 31, 2000                                     3.00:1.0
               March 31, 2001                                        3.00:1.0
               June 30, 2001                                         2.00:1.0
               September 30, 2001                                    2.00:1.0
               December 31, 2001                                     1.75:1.0
               March 31, 2002                                        1.75:1.0
               June 30, 2002                                         1.75:1.0
               Each fiscal quarter, thereafter                       1.50:1.0

</TABLE>

               Section 6.13.  ADJUSTED CONSOLIDATED NET WORTH. Prior to the
               Increase Date, the US Borrower will not permit its Adjusted
               Consolidated Net Worth at any time to be less than the sum of
               (i) $250,000,000, plus (ii) an amount equal to 50% of the
               amount by which the US Borrower's quarterly Consolidated Net
               Income (determined at the end of each fiscal quarter,
               commencing with the

                                       4

<PAGE>

               fiscal quarter ending on or about September 30, 1998) exceeds
               zero, plus (iii) 100% of any proceeds from equity issuances of
               capital stock of the US Borrower (other than in connection
               with exercises of stock options of the officers, directors and
               employees of the US Borrower in the ordinary course of
               business). On and after the Increase Date, the US Borrower
               will not permit its Adjusted Consolidated Net Worth to be less
               than the sum of (i) $600,000,000, plus (ii) an amount equal to
               50% of the amount by which the US Borrower's quarterly
               Consolidated Net Income (determined at the end of each fiscal
               quarter, commencing with the second fiscal quarter ending
               after the Increase Date) exceeds zero, plus (iii) 100% of any
               proceeds from equity issuances of capital stock of the US
               Borrower (other than (A) the Eligible IPO and (B) in
               connection with exercises of stock options of the officers,
               directors and employees of the US Borrower in the ordinary
               course of business). As used in this Section 6.13, the term
               "INCREASE DATE" shall mean the earlier of (x) June 30, 2001
               and (y) the date of the Eligible IPO."

         3.10  Section 6.17 of the Credit Agreement shall be amended and
restated in its entirety to read as follows:

               "Section 6.17. INTEREST COVERAGE RATIO. The US Borrower will
               not permit its Interest Coverage Ratio for any period of four
               consecutive fiscal quarters, as determined for such
               four-quarter period ending on the last day of any fiscal
               quarter, to be less than 3.0:1.0.

         3.11  Section 11.1 of the Credit Agreement shall be amended by (i)
deleting the reference to "or the Administrative Agent" appearing therein and
(ii) deleting the reference to "the signature pages hereof" appearing therein
and inserting "the signature pages hereof and, in the case of the
Administrative Agent, at 111 West Monroe Street, Chicago, Illinois 60603,
Attention: Thad Rasche, Telephone: (312) 461-5739, Facsimile: (312) 461-5225."

         3.12  The pricing grid set forth on page 3 of Appendix 1 of the Credit
Agreement shall be amended and restated in its entirety to read as set forth
below:

<TABLE>
<CAPTION>
------------------------------- ---------------------------- ---------------------------- ----------------------------
            STATUS                        LEVEL I                     LEVEL II                     LEVEL III
------------------------------- ---------------------------- ---------------------------- ----------------------------
<S>                             <C>                          <C>                          <C>
Leverage Ratio                  less than 3.00               greater than or equal to     greater than or equal to
                                                             3.00 less than 3.50          3.50 less than 4.00
------------------------------- ---------------------------- ---------------------------- ----------------------------
Euro-Dollar  Margin for B Term  3.25%                        3.25%                        3.25%
Loans
------------------------------- ---------------------------- ---------------------------- ----------------------------
Euro-Dollar   Margin  for  All  1.50%                        1.75%                        2.00%
Other Loans
------------------------------- ---------------------------- ---------------------------- ----------------------------
Base  Rate  Margin  for B Term  2.25%                        2.25%                        2.25%
Loans
------------------------------- ---------------------------- ---------------------------- ----------------------------
Base  Rate   Margin   for  all  0.50%                        0.75%                        1.00%
Other Loans
------------------------------- ---------------------------- ---------------------------- ----------------------------

                                       5

<PAGE>
------------------------------- ---------------------------- ---------------------------- ----------------------------
Swing Margin                    .625%                        .875%                        1.125%
------------------------------- ---------------------------- ---------------------------- ----------------------------
Applicable    Commitment   Fee  .30%                         .375%                        .45%
Percentage
------------------------------- ---------------------------- ---------------------------- ----------------------------

</TABLE>

         3.13  Exhibits A-1, A-2, A-3, A-4 and A-5 and Schedule II of the
Credit Agreement shall each be amended and restated in their entirety to read
as set forth on Annexes I, II, III, IV, V and VI respectively to this
Amendment.

SECTION 4.  CONDITIONS PRECEDENT.

         The effectiveness of this Amendment shall be subject to the
satisfaction of the following conditions precedent:

            (a)    The Borrowers, the Guarantors, the Departing Agent, the
         New Agent and the Required Banks shall have executed and delivered this
         Amendment. With respect to the amendment set forth in Sections 2 and
         3.7 hereof, the Majority Banks of each of the Tranches comprising the
         US Term Loans, A Term Loans and B Term Loans shall also have executed
         and delivered this Amendment.

            (b)    The New Agent shall have received for delivery to the
         applicable Banks new Notes in the forms of Annexes II, III, IV and V to
         this Amendment payable to the order of each applicable Bank, such new
         Notes to constitute "NOTES" for all purposes of the Credit Agreement
         upon the New Agent's receipt of the same for each Bank.

            (c)    The US Borrower shall have paid, in accordance with the
         terms of a Fee Letter by the US Borrower to the Banks dated as of
         September 22, 2000, to the New Agent (for the account of each Bank
         which joins in this Amendment by the time and date contemplated in such
         Fee Letter) an amendment fee in an amount equal to 0.15% of the sum of
         such Bank's outstanding Term Loans plus such Bank's Revolving Loan
         Commitment, in each case before giving effect to this Amendment.

            (d)    The New Agent shall have received an amendment or
         assignment to each Credit Document (including without limitation the
         Security Documents and all financing statements and other collateral
         filings in connection therewith) requested by the New Agent and
         reflecting, INTER ALIA, the changes in the Administrative Agent,
         Pledgee and the Collateral Agent contemplated hereby, each to be
         satisfactory to the New Agent as to form and substance.

            (e)    The New Agent shall be in receipt of one or more
         certificates of insurance (naming the New Agent, as Collateral Agent,
         loss payee and additional insured) to the extent such insurance is
         required under the terms of a Credit Document.

            (f)    The US Borrower shall have delivered to the New Agent a
         certificate of good standing or foreign equivalent, as appropriate, for
         each Borrower from the jurisdiction of its incorporation dated no
         earlier than September 15, 2000.

                                       6

<PAGE>

            (g)    All legal matters incident to the execution and delivery
         of this Amendment and the instruments and documents contemplated hereby
         shall be satisfactory to the Banks and their counsel; and the New Agent
         shall have received (with a signed copy for each Bank): (1) the signed
         Certificate of the Secretary or an Assistant Secretary of each Credit
         Party, dated the date hereof, certifying (A) a true and correct copy of
         resolutions adopted by the Board of Directors of each Credit Party
         authorizing or ratifying the transactions and instruments contemplated
         hereby and (B) the incumbency and specimen signatures of officers of
         each Credit Party executing the documents referred to in Section 4
         hereof and any other documents delivered to the New Agent in connection
         with this Amendment and (2) an opinion of counsel to the Borrowers, in
         form and substance satisfactory to the New Agent and its counsel,
         covering the transactions contemplated hereby.

            (h)    The New Agent shall have received copies executed or
         certified (as may be appropriate) of all legal documents or proceedings
         taken in connection with the execution and delivery of the Credit
         Documents and this Amendment and the other instruments and documents
         contemplated thereby.

SECTION 5.  REPRESENTATIONS.

         In order to induce the Banks to execute and deliver this Amendment,
each Borrower hereby represents to each Bank that as of the date hereof, after
giving effect to this Amendment, the representations and warranties set forth in
Section 5 of the Credit Agreement are and shall be and remain true and correct
(except that the representations contained in Section 5.4 shall be deemed to
refer to the most recent financial statements of each Borrower delivered to the
Administrative Agent) and, after giving effect to this Amendment, (i) each
Borrower is in full compliance with all of the terms and conditions of the
Credit Agreement and (ii) no Default or Event of Default has occurred and is
continuing under the Credit Agreement.

SECTION 6.  MISCELLANEOUS.

            (a)    Each Borrower and Guarantor has heretofore executed and
         delivered to the Administrative Agent and the Banks certain Security
         Documents and the other Credit Documents and each Borrower and
         Guarantor hereby acknowledges and agrees that, notwithstanding the
         execution and delivery of this Amendment, the Security Documents and
         the other Credit Documents remain in full force and effect and the
         rights and remedies of the Administrative Agent, the Pledgee and the
         Collateral Agent and the Banks thereunder, the obligations of each
         Borrower and Guarantor thereunder and the liens and security interests
         created and provided for thereunder remain in full force and effect and
         shall not be affected, impaired or discharged hereby. Nothing herein
         contained shall in any manner affect or impair the priority of the
         liens and security interests created and provided for by the Security
         Documents and the other Credit Documents as to the indebtedness which
         would be secured thereby prior to giving effect to this Amendment.

            (b)    Except as specifically amended herein or waived hereby,
         the Credit Agreement shall continue in full force and effect in
         accordance with its original terms. Reference to this specific
         Amendment need not be made in the Credit Agreement, the

                                       7

<PAGE>

         Notes, or any other instrument or document executed in connection
         therewith, or in any certificate, letter or communication issued or
         made pursuant to or with respect to the Credit Agreement, any
         reference in any of such items to the Credit Agreement being
         sufficient to refer to the Credit Agreement as amended hereby.

            (c)    Each Bank agrees to return to the Borrowers, promptly
         after the effectiveness hereof, the existing Notes heretofore issued to
         each Bank (or such lost note affidavits as may reasonably be
         satisfactory to the Borrowers).

            (d)    The Borrowers agree to pay on demand all reasonable costs
         and expenses of or incurred by the Departing Agent and the New Agent in
         connection with the negotiation, preparation, execution and delivery of
         this Amendment.

            (e)    By signing below, each Bank hereby (i) appoints and
         authorizes Harris Trust and Savings Bank to take such action as
         Administrative Agent, Pledgee and Collateral Agent on its behalf and to
         exercise such powers under the Credit Agreement and the other Credit
         Documents as are delegated to the Administrative Agent, Pledgee and the
         Collateral Agent by the terms thereof, together with such powers as are
         reasonably incidental thereto and (ii) consents to the taking of all
         actions reasonably deemed necessary or desirable by the Departing Agent
         and the New Agent to effect the foregoing.

            (f)    This Amendment may be executed in any number of
         counterparts, and by the different parties on different counterpart
         signature pages, all of which taken together shall constitute one and
         the same agreement. Any of the parties hereto may execute this
         Amendment by signing any such counterpart and each of such counterparts
         shall for all purposes be deemed to be an original. This Amendment
         shall be governed by the laws of the State of New York.

                          [SIGNATURE PAGES TO FOLLOW]

                                       8

<PAGE>

Dated as of September 29, 2000.

                            ALLIANCE DATA SYSTEMS CORPORATION

                            By:     /s/ Robert P. Armiak
                                ------------------------------------------------
                            Name:   Robert P. Armiak, CCM
                                 -----------------------------------------------
                            Title:  Vice President, Treasurer
                                  ----------------------------------------------

                            LOYALTY MANAGEMENT GROUP CANADA, INC.

                            By:     /s/ Carolyn S. Melvin
                               -------------------------------------------------
                            Name:   Carolyn S. Melvin
                                 -----------------------------------------------
                            Title:  Secretary
                                  ----------------------------------------------

Accepted and agreed to as of the date and year last above written.

                            HARRIS TRUST AND SAVINGS BANK, in its individual
                            capacity as a Bank, as the New Agent and as the
                            Administrative Agent

                            By:     /s/ Thad D. Rasche
                               -------------------------------------------------
                            Name:   Thad D. Rasche
                                 -----------------------------------------------
                            Title:  Vice President
                                  ----------------------------------------------

                                       9

<PAGE>

         Acknowledged and agreed to as of the date last above written. Upon the
execution and delivery of this Amendment by each of the parties hereto and
satisfaction of the conditions set forth in Section 5 above, the Departing Agent
further agrees to: (i) deliver to the New Agent the Collateral in the Departing
Agent's possession, to be thereafter held by the New Agent as collateral
security for the Obligations, and such executed original counterparts of the
Credit Agreement, the Security Documents and each other Credit Document and all
amendments, modifications and waivers entered into or otherwise delivered in
connection therewith, together with copies of all resolutions, good standing
certificates, organizational documents, regulatory approvals and opinion letters
delivered in connection therewith as may be in the possession of the Departing
Agent, (ii) deliver to the New Agent original file stamped copies of all UCC
financing statements (and their comparable equivalents for purposes of the
Canadian Security Documents) in the Departing Agent's possession that were filed
in connection with the Security Documents, together with all amendments,
assignments and continuations thereof, (iii) execute and deliver to the New
Agent UCC-3 assignment filings prepared by the New Agent, the Borrowers or their
respective counsels (and their comparable equivalents for purposes of the
Canadian Security Documents) assigning to the New Agent all rights, title and
interest in each financing statement running in favor of the Departing Agent
that were filed in connection with the Security Documents and (iv) execute and
deliver, at the expense of the US Borrower, such other instruments and documents
prepared by the New Agent, the Borrowers or their respective counsels, including
additional instruments of assignment and/or transfer, as the Borrowers or the
New Agent may reasonably request to more fully vest in the New Agent the rights
of the Departing Agent with respect to the Obligations and the Collateral.

                                    MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
                                    in its capacity as the Departing Agent

                                    By:      /s/ Colleen B. Galle
                                       -----------------------------------------
                                    Name:    Colleen B. Galle
                                         ---------------------------------------
                                    Title:   Vice President
                                          --------------------------------------

                                       10

<PAGE>

                                  MORGAN GUARANTY TRUST COMPANY OF NEW YORK

                                  By:      /s/ Colleen B. Galle
                                     -------------------------------------------
                                  Name:    Colleen B. Galle
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  FIRST UNION NATIONAL BANK

                                  By:      /s/ Susan Schwartz
                                     -------------------------------------------
                                  Name:    Susan Schwartz
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  BANK ONE, NA

                                  By:      /s/ Scott Miller
                                     -------------------------------------------
                                  Name:    Scott Miller
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  UNION BANK OF CALIFORNIA, N.A.

                                  By:      /s/ Robert C. Nagel
                                     -------------------------------------------
                                  Name:    Robert C. Nagel
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  ARCHIMEDES FUNDING II, LTD.
                                  By:      ING Capital Advisors, Inc.,
                                           as Collateral Manager

                                  By:      /s/ Richard Barger
                                     -------------------------------------------
                                  Name:    Richard Barger
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  KZH ING-2 LLC

                                  By:      /s/ Kimberly Rowe
                                     -------------------------------------------
                                  Name:    Kimberly Rowe
                                       -----------------------------------------
                                  Title:   Authorized Agent
                                        ----------------------------------------

                                       11

<PAGE>

                                  KZH ING-3 LLC

                                  By:      /s/ Kimberly Rowe
                                     -------------------------------------------
                                  Name:    Kimberly Rowe
                                       -----------------------------------------
                                  Title:   Authorized Agent
                                        ----------------------------------------

                                  PILGRIM AMERICA HIGH INCOME INVESTMENTS, LTD.
                                  By:      Pilgrim Investments, Inc.,
                                           as its Investment Manager

                                  By:      /s/ Michel Prince
                                     -------------------------------------------
                                  Name:    Michel Prince
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  PILGRIM PRIME RATE TRUST
                                  By:      Pilgrim Investments, Inc.,
                                           as its Investment Manager

                                  By:      /s/ Michel Prince
                                     -------------------------------------------
                                  Name:    Michel Prince
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  THE HUNTINGTON NATIONAL BANK

                                  By:      /s/ Nancy J. Cracolice
                                     -------------------------------------------
                                  Name:    Nancy J. Cracolice
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  CHASE MANHATTAN BANK (formerly known as
                                      Chase Bank of Texas, NA)

                                  By:      /s/ Michael J. Lister
                                     -------------------------------------------
                                  Name:    Michael J. Lister, Vice President
                                       -----------------------------------------
                                  Title:   The Chase Manhattan Bank
                                        ----------------------------------------

                                       12

<PAGE>

                                  BARCLAYS BANK PLC

                                  By:      /s/ Richard Herder
                                     -------------------------------------------
                                  Name:    Richard Herder
                                       -----------------------------------------
                                  Title:   Director
                                        ----------------------------------------

                                  SUNTRUST BANK (formerly known as SunTrust
                                  Bank, Central Florida, N.A.)

                                  By:      /s/ Stephen L Leister
                                     -------------------------------------------
                                  Name:    Stephen L. Leister
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  ARCHIMEDES FUNDING III, LTD.
                                  By:      ING Capital Advisors, LLC,
                                           as Collateral Manager

                                  By:      /s/ Richard Barger
                                     -------------------------------------------
                                  Name:    Richard Barger
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  VAN KAMPEN PRIME RATE INCOME TRUST
                                  By:      Van Kampen Investment Advisory Corp.

                                  By:      /s/ Darvin D. Pierce
                                     -------------------------------------------
                                  Name:    Darvin D. Pierce
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                  SEQUILS-ING I (HBDGM), LTD.

                                  By:      /s/ Richard Barger
                                     -------------------------------------------
                                  Name:    Richard Barger
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                       13

<PAGE>

                                  PILGRIM CLO 1999-1 LTD.
                                  By:      Pilgrim Investments, Inc.,
                                           as its Investment Manager

                                  By:      /s/ Michel Prince
                                     -------------------------------------------
                                  Name:    Michel Prince, CFA
                                       -----------------------------------------
                                  Title:   Vice President
                                        ----------------------------------------

                                       14

<PAGE>

                               GUARANTORS' CONSENT

         By their execution of the Credit Agreement, the undersigned have
heretofore guaranteed certain Guaranteed Obligations under Article 10 of the
Credit Agreement. Each of the undersigned hereby consents to the Amendment to
the Credit Agreement as set forth above and confirms that all of each of the
undersigned's obligations as a Guarantor remain in full force and effect. The
undersigned further agree that the consent of the undersigned to any further
amendments to the Credit Agreement shall not be required as a result of this
consent having been obtained.

                           ADS ALLIANCE DATA SYSTEMS, INC.

                           By       /s/ Robert P. Armiak
                             -------------------------------------------------
                             Name          Robert P. Armiak, CCM
                                 ---------------------------------------------
                             Title         Vice President, Treasurer
                                  --------------------------------------------

                           ADS COMMERCIAL SERVICES, INC.

                           By       /s/ Robert P. Armiak
                             -------------------------------------------------
                             Name          Robert P. Armiak, CCM
                                 ---------------------------------------------
                             Title         Vice President, Treasurer
                                  --------------------------------------------

                           HARMONIC TECHNOLOGY LICENSING, INC.

                           By       /s/ Robert P. Armiak
                             -------------------------------------------------
                             Name          Robert P. Armiak, CCM
                                 ---------------------------------------------
                             Title         Vice President, Treasurer
                                  --------------------------------------------

                                       15

<PAGE>

                                     ANNEX I
                                   EXHIBIT A-1

                                  US TERM NOTE

                                                               Chicago, Illinois

                                                             ---------- --, ----

         For value received, Alliance Data Systems Corporation, a Delaware
corporation (the "BORROWER"), promises to pay to the order of Harris Trust and
Savings Bank (the "ADMINISTRATIVE AGENT"), for the account of the [Name of Bank]
(the "Bank"), the unpaid principal amount of each US Term Loan made by the Bank
to the Borrower pursuant to the Credit Agreement referred to below on the
maturity date provided for in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of each such US Term Loan on the dates
and at the rate or rates provided for in the Credit Agreement. All such payments
of principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Harris Trust and
Savings Bank, 111 West Monroe Street, Chicago, Illinois 60603.

         All US Term Loans made by the Bank, the respective types thereof and
all repayments of the principal thereof shall be recorded by the Bank and, if
the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such US Term Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; PROVIDED, that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.

         This note is one of the US Term Notes referred to in the Credit
Agreement dated as of July 24, 1998 among Alliance Data Systems Corporation,
Loyalty Management Group Canada Inc. (f/k/a 1302598 Ontario Inc.), the Banks
parties thereto and Harris Trust and Savings Bank, as Administrative Agent (as
the same may be amended, restated or supplemented from time to time, the "CREDIT
AGREEMENT"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
pre-payment hereof and the acceleration of the maturity hereof.

                                  ALLIANCE DATA SYSTEMS CORPORATION

                                  By
                                    --------------------------------------------
                                    Name
                                        ----------------------------------------
                                    Title
                                         ---------------------------------------

<PAGE>

<TABLE>
<CAPTION>

                                 LOANS AND PAYMENTS OF PRINCIPAL

----------------------------------------------------------------------------------------------------------------------
          Date                   Amount                   Type                 Amount of
                                   of                      of                  Principal              Notation
                                  Loan                    Loan                  Repaid                 Made By
<S>                       <C>                    <C>                     <C>                    <C>
----------------------------------------------------------------------------------------------------------------------

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

</TABLE>

                                       2

<PAGE>

                                    ANNEX II
                                   EXHIBIT A-2

                                   A TERM NOTE

                                                               Chicago, Illinois

                                                              --------- --, ----

         For value received, Loyalty Management Group Canada Inc. (f/k/a 1302598
Ontario Inc.), an Ontario corporation (the "BORROWER"), promises to pay to the
order of Harris Trust and Savings Bank (the "ADMINISTRATIVE AGENT"), for the
account of the [Name of Bank] (the "BANK"), the unpaid principal amount of each
A Term Loan made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below on the maturity date provided for in the Credit Agreement. The
Borrower promises to pay interest on the unpaid principal amount of each such A
Term Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Harris Trust and Savings Bank, 111 West Monroe Street, Chicago,
Illinois 60603.

         All A Term Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such A Term Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; PROVIDED, that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.

         This note is one of the A Term Notes referred to in the Credit
Agreement dated as of July 24, 1998 among Alliance Data Systems Corporation,
Loyalty Management Group Canada Inc. (f/k/a 1302598 Ontario Inc.), the Banks
parties thereto and Harris Trust and Savings Bank, as Administrative Agent (as
the same may be amended, restated or supplemented from time to time, the "CREDIT
AGREEMENT"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.

                        LOYALTY MANAGEMENT GROUP CANADA INC.

                        By
                          ------------------------------------------------------
                          Name
                              --------------------------------------------------
                          Title
                               -------------------------------------------------

<PAGE>

<TABLE>
<CAPTION>

                         LOANS AND PAYMENTS OF PRINCIPAL

----------------------------------------------------------------------------------------------------------------------
          Date                   Amount                   Type                 Amount of
                                   of                      of                  Principal              Notation
                                  Loan                    Loan                  Repaid                 Made By
<S>                       <C>                    <C>                     <C>                    <C>
----------------------------------------------------------------------------------------------------------------------

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

</TABLE>

                                       2

<PAGE>

                                    ANNEX III
                                   EXHIBIT A-3

                                   B TERM NOTE

                                                               Chicago, Illinois

                                                             ---------- --, ----

         For value received, Loyalty Management Group Canada Inc. (f/k/a 1302598
Ontario Inc.), an Ontario corporation (the "BORROWER"), promises to pay to the
order of Harris Trust and Savings Bank (the "ADMINISTRATIVE AGENT"), for the
account of the [Name of Bank] (the "BANK"), the unpaid principal amount of each
B Term Loan made by the Bank to the Borrower pursuant to the Credit Agreement
referred to below on the maturity date provided for in the Credit Agreement. The
Borrower promises to pay interest on the unpaid principal amount of each such B
Term Loan on the dates and at the rate or rates provided for in the Credit
Agreement. All such payments of principal and interest shall be made in lawful
money of the United States in Federal or other immediately available funds at
the office of Harris Trust and Savings Bank, 111 West Monroe Street, Chicago,
Illinois 60603.

         All B Term Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such B Term Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; PROVIDED, that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.

         This note is one of the B Term Notes referred to in the Credit
Agreement dated as of July 24, 1998 among Alliance Data Systems Corporation,
Loyalty Management Group Canada Inc. (f/k/a 1302598 Ontario Inc.), the Banks
parties thereto and Harris Trust and Savings Bank, as Administrative Agent (as
the same may be amended, restated or supplemented from time to time, the "CREDIT
AGREEMENT"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
pre-payment hereof and the acceleration of the maturity hereof.

                                  LOYALTY MANAGEMENT GROUP CANADA INC.

                                  By
                                    --------------------------------------------
                                    Name
                                        ----------------------------------------
                                    Title
                                         ---------------------------------------

<PAGE>

<TABLE>
<CAPTION>

                         LOANS AND PAYMENTS OF PRINCIPAL

----------------------------------------------------------------------------------------------------------------------
          Date                   Amount                   Type                 Amount of
                                   of                      of                  Principal              Notation
                                  Loan                    Loan                  Repaid                 Made By
<S>                       <C>                    <C>                     <C>                    <C>
----------------------------------------------------------------------------------------------------------------------

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

</TABLE>

                                       2

<PAGE>

                                    ANNEX IV
                                   EXHIBIT A-4

                                 REVOLVING NOTE

                                                               Chicago, Illinois

                                                             ---------- --, ----

         For value received, Alliance Data Systems Corporation, a Delaware
corporation (the "BORROWER"), promises to pay to the order of Harris Trust and
Savings Bank (the "ADMINISTRATIVE AGENT"), for the account of the [Name of Bank]
(the "BANK"), the unpaid principal amount of each Revolving Loan made by the
Bank to the Borrower pursuant to the Credit Agreement referred to below on the
maturity date provided for in the Credit Agreement. The Borrower promises to pay
interest on the unpaid principal amount of each such Revolving Loan on the dates
and at the rate or rates provided for in the Credit Agreement. All such payments
of principal and interest shall be made in lawful money of the United States in
Federal or other immediately available funds at the office of Harris Trust and
Savings Bank, 111 West Monroe Street, Chicago, Illinois 60603.

         All Revolving Loans made by the Bank, the respective types thereof and
all repayments of the principal thereof shall be recorded by the Bank and, if
the Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Revolving Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; PROVIDED, that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.

         This note is one of the Revolving Notes referred to in the Credit
Agreement dated as of July 24, 1998 among Alliance Data Systems Corporation,
Loyalty Management Group Canada Inc. (f/k/a 1302598 Ontario Inc.), the Banks
parties thereto and Harris Trust and Savings Bank, as Administrative Agent (as
the same may be amended, restated or supplemented from time to time, the "CREDIT
AGREEMENT"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.

                                    ALLIANCE DATA SYSTEMS CORPORATION

                                    By
                                      ------------------------------------------
                                      Name
                                          --------------------------------------
                                      Title
                                           -------------------------------------

<PAGE>

<TABLE>
<CAPTION>

                         LOANS AND PAYMENTS OF PRINCIPAL

----------------------------------------------------------------------------------------------------------------------
          Date                   Amount                   Type                 Amount of
                                   of                      of                  Principal              Notation
                                  Loan                    Loan                  Repaid                 Made By
<S>                       <C>                    <C>                     <C>                    <C>
----------------------------------------------------------------------------------------------------------------------

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

</TABLE>

                                       2

<PAGE>

                                     ANNEX V
                                   EXHIBIT A-5

                                   SWING NOTE

                                                               Chicago, Illinois

                                                           ------------ --, ----

         For value received, Alliance Data Systems Corporation, a Delaware
corporation (the "BORROWER"), promises to pay to the order of Harris Trust and
Savings Bank (the "ADMINISTRATIVE AGENT"), for its own account as Swing Lender
under the Credit Agreement (in such capacity, the "BANK"), the unpaid principal
amount of each Swing Loan made by the Bank to the Borrower pursuant to the
Credit Agreement referred to below on the maturity date provided for in the
Credit Agreement. The Borrower promises to pay interest on the unpaid principal
amount of each such Swing Loan on the dates and at the rate or rates provided
for in the Credit Agreement. All such payments of principal and interest shall
be made in lawful money of the United States in Federal or other immediately
available funds at the office of Harris Trust and Savings Bank, 111 West Monroe
Street, Chicago, Illinois 60603.

         All Swing Loans made by the Bank, the respective types thereof and all
repayments of the principal thereof shall be recorded by the Bank and, if the
Bank so elects in connection with any transfer or enforcement hereof,
appropriate notations to evidence the foregoing information with respect to each
such Swing Loan then outstanding may be endorsed by the Bank on the schedule
attached hereto, or on a continuation of such schedule attached to and made a
part hereof; PROVIDED, that the failure of the Bank to make any such recordation
or endorsement shall not affect the obligations of the Borrower hereunder or
under the Credit Agreement.

         This note is one of the Swing Notes referred to in the Credit Agreement
dated as of July 24, 1998 among Alliance Data Systems Corporation, Loyalty
Management Group Canada, Inc., (f/k/a 1302598 Ontario Inc.), the Banks parties
thereto and Harris Trust and Savings Bank, as Administrative Agent (as the same
may be amended, restated or supplemented from time to time, the "CREDIT
AGREEMENT"). Terms defined in the Credit Agreement are used herein with the same
meanings. Reference is made to the Credit Agreement for provisions for the
prepayment hereof and the acceleration of the maturity hereof.

                                     ALLIANCE DATA SYSTEMS CORPORATION

                                     By
                                       -----------------------------------------
                                       Name
                                           -------------------------------------
                                       Title
                                            ------------------------------------

<PAGE>

<TABLE>
<CAPTION>

                         LOANS AND PAYMENTS OF PRINCIPAL

----------------------------------------------------------------------------------------------------------------------
          Date                   Amount                   Type                 Amount of
                                   of                      of                  Principal              Notation
                                  Loan                    Loan                  Repaid                 Made By
<S>                       <C>                    <C>                     <C>                    <C>
----------------------------------------------------------------------------------------------------------------------

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

</TABLE>

                                       2

<PAGE>

                                    ANNEX VI
                                   SCHEDULE II
                        Alliance Data Systems Corporation

                                INVESTMENT POLICY

STATEMENT OF PURPOSE

         The purpose of this policy is to institute proper guidelines for the
ongoing management of the cash investments of Alliance Data Systems Corp. and
its subsidiaries.

INVESTMENT OBJECTIVES

         The assets are to be invested in a manner, which preserves capital,
provides adequate liquidity, maintains appropriate diversification and generates
returns relative to these guidelines and prevailing market conditions. The
intent is that all of the investments shall be held to maturity.

RESPONSIBILITIES

         A.   It is the responsibility of the Board of Directors of the
Company to adopt the Investment Policy.

         B.   It is the responsibility of the Treasurer or the Chief
Financial Officer to implement the Investment Policy of the Company including
the direction of purchases and sales of securities.

         C.   The approval of either the Treasurer or the Chief Financial
Officer shall be required to transfer Company funds to Company banks or
investment accounts.

         D.   The Treasurer and Chief Financial Officer may employ the
services of a Bank or a Registered Investment Advisor to direct a portion or
all of the investment activities of the Company consistent with the
guidelines set forth in the Investment Policy. The firms selected must
maintain a net worth of at least $1 billion.

         E.   The Treasurer and Chief Financial Officer will monitor ongoing
investment activities to insure that proper liquidity is being maintained and
that the investment strategy is consistent with the Company objectives.

         F.   The Treasurer or the Chief Financial Officer will report to the
Board of Directors quarterly concerning the investment performance during the
most recent quarter.

<PAGE>

               ALLIANCE DATA SYSTEMS CORPORATION AND SUBSIDIARIES

                              INVESTMENT GUIDELINES

      A.       APPROPRIATE INVESTMENTS

               1.     Direct obligations of the U.S. or Canadian Treasury
      including Treasury Bills, Notes and Bonds. Canadian Government Debt must
      be rated A or better.

               2.     Federal Agency Securities which carry the direct or
      implied guarantee of the U.S. Government including Government National
      Mortgage Association, Federal Home Loan Bank, Federal Farm Credit Bank,
      Federal National Mortgage Association, Student Loan Marketing
      Association, and World Bank. Investments can include Notes, Discount
      Notes, Medium Term Notes and Floating Rate Notes.

               3.     Certificates of Deposit, Guaranteed Investment Contracts,
      Banker's Acceptance and Time Deposits including Eurodollar denominated
      and Yankee issues. Investments will be limited to those institutions with
      total assets in excess of $1 billion and which carry a short term rating
      of "A2" or "P2" or "F2" or better, or a Keefe Bruyette and Woods rating
      of at least "A" or better.

               4.     Corporate Securities (including commercial paper or loan
      participations) and corporate debt instruments (including medium term
      notes and floating rate notes) issued by Canadian or U.S. corporations
      and carry a minimum long term rating of "A" or short term rating of "A2"
      or "P2" or "F2" or "R1 (L)" or better.

               5.     Tax Exempt Securities including municipal notes,
      commercial paper, auction rate floaters, and floating rate notes rated A2
      or P2 or F2 or better; Municipal Notes rated SP-2/MIG-2/VMIG-2 or better,
      or a long term rating of "A" or better.

               6.     Auction rate preferred stock or bonds issued with a rate
      reset mechanism and a maximum term of 180 days. Investment will be
      limited to those issuers who have a minimum long term rating of "A" or
      short term rating of "A2" or "P2" or "F2" or "RI (L)" or better.

               7.     Money market mutual funds, which offer daily purchase and
      redemption and maintain a constant share price (no equities allowed).

               8.     Repurchase Agreements. The underlying collateral (of at
      least 102%) shall consist of US Government obligations and/or government
      agency securities. Investments in repurchase agreements may not exceed
      3 days.

      B.       INVESTMENT CONCENTRATION LIMITS

               1.     Investments rated AAA (long term) or A1 (short term) or
      equivalent - no limit.

               2.     Investments rated AA or equivalent - not to exceed 70% of
      total portfolio.

                                       2

<PAGE>

               3.     Investments rated A (long term) or A2 (short term) or
      equivalent - not to exceed 30% of total portfolio.

               4.     Bank or Insurance Company obligations - not to exceed
      50% of total portfolio.

               5.     Money Market Mutual Funds - no limit.

               6.     Repurchase Agreements - 30% of total portfolio.

               7.     No individual investment shall be in excess of $10
      million USD (or equivalent).

MATURITY LIMITS

               1.     No investments may exceed 5 years to maturity.

               2.     Commercial Paper/Loan Participations/Master Notes may not
      exceed 180 days.

               3.     A minimum of 30% of the portfolio must have a maturity of
      1 year or less.

SAFEKEEPING

      All securities firms with whom the Company does business must be
qualified to safekeep securities on the Company's behalf at no charge. The
CFO or Treasurer will authorize these firms to hold securities.

WAIVERS

      In certain circumstances the appropriate investment criteria and
portfolio concentration limits may be temporarily waived by the Chief
Financial Officer for a period not to exceed four (4) weeks. Any waivers
granted during a fiscal year will be reported to the ADS Board of Directors
annually.

INVESTMENT POLICY REVIEW

      THIS POLICY WILL BE REVIEWED ANNUALLY BY THE CFO AND TREASURER TO
ENSURE THAT IT REMAINS CONSISTENT WITH THE FINANCIAL OBJECTIVES OF THE
COMPANY AND CURRENT MARKET CONDITIONS.

                                       3<PAGE>

                                                                  Exhibit 10.50

                          COMMERCIAL REAL ESTATE LEASE

         This lease agreement (the "Lease") is entered into by and between ROUTE
7 REALTY, LLC, having a mailing address of P.O. Box 555, Marietta, Ohio 45750,
hereinafter called the Lessor, and ADS ALLIANCE DATA SYSTEMS, INC., DBA ALLIANCE
DATA SYSTEMS, a Delaware corporation, having a mailing address of 4590 E. Broad
Street, Columbus, Ohio 43213 hereinafter called the Lessee

                                   WITNESSETH:

         In consideration of the mutual covenants herein contained, arid other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties intending to be legally bound hereby agree as follows:

         The Lease is subject to all of the following terms and conditions:

1.       LEASE OF PREMISES.

         Subject to the terms and conditions set forth herein, Lessor leases to
Lessee, and Lessee leases from Lessor, 6,240 square feet, being a portion of the
two-story 20,000 square foot commercial office building (the "Building") located
at Route 7 North, Reno, Ohio, hereinafter referred to as the "Premises",
depicted on EXHIBIT A attached hereto and made a part hereof Effective October
1, 2000, subject to all the same terms and conditions sec forth herein, Lessee
shall lease an additional 5,900 square feet adjoining the 6,240 square feet.
Effective October 1, 2000, the "Premises" shall be defined as 12,140 square
feet. The additional 5,900 square feet is depicted on EXHIBIT B and attached
hereto and made a part hereof.

         Lessee shall have the exclusive use of a minimum of 72 parking spaces
on an assigned basis, which spaces shall be located in the northwest parking
lot.

         The term "Land" means the parcel of real property upon which the
Building is situated, as more particularly described on Exhibit B, attached
hereto and made a part hereof.

2.       INITIAL TERM AND RENEWAL OPTION.

         2.1.     INITIAL TERM. The initial term of this Lease (the "Initial
Term") shall be two (2) years commencing on May 1, 2000 (the "Commencement
Date") and terminating at 12:00 midnight on April 30, 2002 unless extended
pursuant to SECTION 2.2. For the period May 1, 2000 through September 30, 2000
of the initial term of this Lease, Lessee shall lease from Lessor 6,240 square
feet. Effective October 1, 2000, subject to all the same terms and conditions
set forth herein, Lessee shall lease from Lessor an additional 5,900 square feet
adjoining the 6,240 square feet, increasing the total "Premises" leased to
12,140 square feet.

         2.2.     RENEWAL OPTION. At the end of the Initial Term of this Lease,
Lessee shall have the option to renew this Lease for five (5) additional periods
of two (2) years each (each a "Renewal Term") provided Lessee gives Lessor
ninety (90) days written notice of its intent to

                                       1
<PAGE>

exercise its renewal option prior to the expiration of the Initial Term or
any subsequent Renewal Terms.

3.       RENT.

         3.1.     GROSS LEASE. This Lease is intended to be a "gross" lease and
payment of Rent by Lessee shall include all applicable utilities, taxes, and
insurance. Except as specifically set forth herein, Lessee shall have no
obligation to pay or reimburse Lessor for any operating expenses, service
charges, taxes, insurance, utilities or any other costs or charges associated
with operation, repair or maintenance of the Building or the Premises, all such
costs shall be Lessor's sole responsibility.

         3.2.     INITIAL TERM. For the Initial Term of this Lease, Lessee shall
pay Lessor rent in equal monthly installments on the first (1st) day of each
month, in advance, as follows:

<TABLE>
<CAPTION>

TERM:                      SQ. FT.      RENT PER SQ. FT.     MONTHLY RENT AMOUNT      RENT ANNUALLY
-----                      -------      ----------------     -------------------      -------------
<S>                        <C>          <C>                  <C>                      <C>
Year One
Dates (5.1.00-9.30.00)        6,240           $11.00          $ 5,720 @  5 months         $28,600
Dates (10.1.00-4.30.01)      12,140           $11.00          $11,128 @  7 months         $77,896
Year Two
Dates (5.01.01-4.30.02)      12,140           $12.00          $12,140 @ 12 months        $145,680
</TABLE>

         3.3.     RENEWAL TERM. Rent rates for any Renewal Term shall be
negotiated and agreed to between the Lessor and Lessee at least one hundred
twenty (120) days prior to the expiration of the Initial Term or any subsequent
Renewal Terms.

         3.4.     PAYMENT.

         Unless specifically noted otherwise, Lessee shall make all payments to
Lessor under this Lease on or before the first day of each calendar month, in
advance, by normal business methods, at the address of Lessor set forth in
Section 23 or at such other place as Lessor may designate by notice to Lessee
from time to time. If the date for commencement of Rent under this Lease is not
the first day of a calendar month, Lessee's Rent for the first and last months
of the Term shall be prorated on a daily basis and Lessee's first payment of
Rent shall be due on the Commencement Date. If Lessee fails to make any payment
of Rent within ten (10) days after it becomes due, then, in addition to all
other rights of Landlord under this Lease, Lessee shall pay Lessor a late charge
of five percent (5%) of the delinquent amount for each 30-day period or fraction
thereof from the due date until paid, as liquidated damages to cover Lessor's
additional costs and expenses relating thereto.

         3.5.     ACCORD AND SATISFACTION.

         No payment by Lessee or receipt by Lessor of a lesser amount than the
full Rent or other amount payable under this Lease shall be deemed to be other
than on account of the earliest

                                       2
<PAGE>

stipulated Rent or other amount. No endorsement or statement of any kind on
any check or any letter accompanying any check or payment shall be deemed to
be an accord and satisfaction. Lessor may accept such check or payment
without prejudice to Lessor's right to recover the balance of such Rent or
other amount, or to pursue any other remedy provided in this Lease at law or
in equity. Every demand for Rent or other amount due whenever and wherever,
made shall have the same effect as if made at the time it falls due and at
the place of payment, and, after the service of any notice or commencement of
any suit, or final judgment therein, Lessor may receive and collect any Rent
or other amount due, and such collection or receipt shall not operate as a
waiver, nor shall it affect such notice, suit or judgment. Any acceptance by
Lessor of payment of less than the full amount owed by Lessee under this
Lease shall be deemed to have been made with full reservation by Lessor of
his rights to recover all the remainder of the amounts owed to it under this
Lease, irrespective of whether or not Lessor so indicates in writing or
otherwise on any check or elsewhere

         ALL COMMUNICATIONS CONCERNING DISPUTED DEBTS, INCLUDING ANY CHECKS OR
         OTHER INSTRUMENTS TENDERED AS FULL SATISFACTION OF A DEBT, MUST BE SENT
         BY CERTIFIED MAIL TO LESSOR AT: ROUTE 7 REALTY, LLC, ATTN: RUDOLPH JOHN
         LEHMAN, P.O. BOX 555, MARIETTA, OHIO 45750, OR TO SUCH OTHER PLACE OR
         PERSON AS LESSOR MAY DESIGNATE FROM TIME TO TIME IN ACCORDANCE WITH
         SECTION 23.

4.       UTILITIES, TAXES, & SECURITY DEPOSIT.

         4.1.     UTILITIES. Lessor shall contract for and pay all reasonable
charges for electricity, gas, water and other utility services furnished to the
Premises. Such utilities shall be made available to the Premises seven (7) days
per week, twenty-four (24) hours per day, 365 (or 366) days per year. Lessee
shall use commercially reasonable efforts to minimize waste of electricity, gas,
water, and other utility services. Lessee shall only be required to turn off the
lighting to the Premises if Lessor installs a separate on/off switch for such
lighting. Lessee shall not be required to turn off the lighting from the
electrical circuit box.

         4.2.     TAXES AND ASSESSMENTS. Lessor shall pay when due all real
estate taxes and assessments levied against the Land and the Building and any
taxes due with respect to Rent due hereunder.

         4.3.     SECURITY DEPOSIT. Lessee has paid a security deposit in the
amount of $5,200.00, which is to be held by Lessor, without interest, as
security for the payment of any money for which Lessee shall or may become
liable to Lessor under this Lease, including any damage or destruction to the
Premises, and for the faithful performance of Lessee of all covenants and
agreements under this Lease. Said security deposit shall be returned to Lessee
within thirty (30) days after the termination of this Lease or any renewal
thereof, provided Lessee shall not be in default and has vacated the Premises.
Nothing in this paragraph shall be deemed to limit the amount of any claim,
demand or cause of action of Lessor against Lessee under the provisions of this
Lease.

5.       USE OF PREMISES.

                                       3
<PAGE>

         5.1.     Lessee shall use the Premises solely for the functions
associated with the operation of its business, including those uses reasonably
incidental to it, and shall not permit the Premises to be used for any other
purpose without first obtaining Lessor's expressed written consent to that
specific use. Lessee shall not use the Premises in any manner contrary to the
applicable zoning, health, fire or safety regulations, ordinances or statutes
(whether now in effect or hereafter enacted) of the city, county, and state in
which the Premises are located.

         5.2.     SMOKING. Smoking is not permitted in the Building, whether in
common areas or private offices Smoking shall be permitted in those areas
designated as "smoking areas" on Exhibit "A". Such areas shall be limited to
exterior areas. Lessee shall have the right to provide shelter to such "smoking
areas" at Lessee's expense.

         5.3.     ELEVATOR AND RESTROOMS. Lessor shall provide Lessee and its
agents and employees with access to the existing elevator located along the
north wall of the subject building and handicap accessible restrooms to be
installed on the first floor space beneath the subject space, which will be in
compliance with the Americans with Disabilities Act.

6.       COMPLIANCE WITH LAWS.

         Lessee shall comply in full with all laws, regulations, and
requirements of all governments and other lawful authorities and all regulations
and orders of the National Board of Fire Underwriters, or other organization
hereafter exercising similar functions, which now or at any time hereafter may
apply to or affect the Premises or any business conducted on the Premises.

7.       CONDITION OF PREMISES.

         Lessor has made no representation or warranty, expressed or implied,
with respect to the condition of the Premises or the fitness of the Premises for
any particular use. Lessee acknowledges that it has fully investigated and is
familiar with the size, dimensions, and physical condition of the Premises and
is accepting the Premises "as is". Except as expressly described in this Lease,
Lessor shall not be required to make any improvement, repair, alteration, or
restoration of the Premises or in any manner maintain the Premises, and shall
have no liability for any defects in or any condition of the Premises.

8.       MAINTENANCE AND REPAIRS.

         8.1.     BY LESSOR. Lessor shall keep all structural portions of all
improvements, including without limitation the roof, the heating, cooling,
plumbing, ventilation, and electrical systems and all components thereof,
exclusive of doors and windows on the Premises and Building in good condition
and repair throughout the term of this Lease and any renewals thereof. In the
event that the Premises should become in need of repairs to be made by Lessor
hereunder, Lessee shall give prompt written notice thereof to Lessor.

         Lessor shall keep and maintain adjoining areas and sidewalks in a
clean, safe and attractive condition and free from snow and ice. Lessor shall be
responsible for any maintenance of the parking lot, including, but not limited
to, blacktopping and restriping of parking spaces

                                       4
<PAGE>

and snow and ice removal. Lessee acknowledges that the driveway and parking
lot are in satisfactory condition as of the date of this Lease.

         8.2.     BY LESSEE. Lessee agrees to accept the Premises in the
condition existing as of the Commencement Date, to maintain the Premises, and to
make and pay for all necessary routine, normal maintenance (including regular
janitorial service), and reasonable non-structural repairs to properly maintain
the Premises, normal wear and tear excepted. Lessee shall keep the Premises in
good, clean condition and shall at its expense make all needed non-structural
repairs and replacements, except for repairs and replacements required to be
trade by Lessor under the provisions of Section 8.1. At the expiration of this
Lease, or any renewals thereof, Lessee shall surrender the Premises in good
condition, except for reasonable wear and tear, loss by fire or other casualty,
or any repairs or replacements required to be made by Lessor; and shall
surrender all keys for the Premises to Lessor Lessee shall be responsible for
the payment of trash removal service for trash generated by Lessee.

9.       ALTERATIONS. No alteration, addition, improvement, remodeling. or other
change in or to the Premises (hereinafter collectively called an "Alteration")
shall be made by Lessee except under the following terms and conditions:

         9.1.     CONSENT. No Alteration shall be made without first obtaining
the prior written consent of Lessor to the specific alteration and, where
appropriate, the plans and specifications for it.

         9.2.     LICENSES AND PERMITS. No Alteration shall be commenced until
Lessee has first obtained and paid for all required permits and authorizations,
and has fully complied with all building and zoning laws, and all other laws,
ordinances, regulations, and requirements of all governmental authorities, the
National Board of Fire Underwriters, and any other body that may hereafter
exercise similar functions.

         9.3.     COSTS. The cost of all Alterations shall be paid in cash or
its equivalent by Lessee so that the Premises shall at all times be free of
liens and claims for work, labor, or materials supplied or claimed to have been
supplied to the Premises.

         9.4.     OWNERSHIP. All Alterations or improvements made by Lessee to
the Premises, other than trade fixtures or Lessee's personal property, shall
become the property of Lessor upon termination of this Lease, unless required to
be removed at the direction of Lessor. Lessor, at its option, may require Lessee
to remove any and all alterations or improvements installed or made by Lessee
upon termination of the Lease, in which event Lessee shall repair any damage
caused by such removal to restore Lessor's property to substantially the
condition as on the Commencement Date, reasonable wear and tear excepted.

10.      INSURANCE.

         10.1.    HAZARD INSURANCE. Lessor shall, during the Lease Term, keep in
full force art "all risk" policy of fire and casualty insurance on the Building.
Lessee, at its expense, shall keep all its improvements on the Premises,
including improvements currently or hereafter in existence, insured against loss
or damage by fire and the hazards covered by extended coverage insurance

                                       5
<PAGE>

in an amount equal to not less than the full replacement value of such
improvements without offset for depreciation.

         10.2.    LIABILITY INSURANCE. Lessor shall, during the Lease term, at
its expense, keep in full force and effect a policy of commercial general
liability insurance Lessee, shall, at its expense, during the Lease Term,
maintain comprehensive general liability insurance insuring Lessor and Lessee
against death, injury to persons or damage to property on or about the Premises,
with minimum limits of $1,000,000 for injuries to or death of one person as a
result of any one accident or disaster, $2,000,000 for injuries to or death of
more than one person as a result of any one accident or disaster, and $2,000,000
for property damage.

         10.3.    BLANKET COVERAGE; OTHER PROVISIONS. Any insurance maintained
by Lessee pursuant to this Section 10 may be carried under a blanket policy
covering the Premises and other facilities of Lessee or any affiliate of Lessee;
may name Lessee or any affiliate of Lessee as additional insured with respect to
the Premises, as their interests may appear, and may have such deductible amount
or amounts as Lessee may deem appropriate, but if proceeds of such insurance are
payable to Lessor under this Lease, then Lessee shall pay to Lessor the amount
of any such deductible in connection with such insured loss. Any insurance
policies maintained by Lessee pursuant to this Section 10 shall be issued by a
company licensed to do business in Ohio, shall contain a provision prohibiting
termination with respect to Lessor or the demised Premises without at least
thirty (30) days prior written notice to Lessor, and shall name Lessee and
Lessor, as their interests may appear.

11.      LIENS.

         Lessee shall keep the Premises free from all liens. If, within ten (10)
days following imposition of any lien, Lessee does not cause the lien to be
released of record, Lessor may, in addition to its other remedies cause the hen
to be released. All sums paid by Lessor for the release of any lien, and all
expenses incurred by it in connection with it, together with interest at the
rate of twelve percent (12%) per annum, shall be payable to Lessor by Lessee on
demand. Lessor may post on the Premises any notices Lessor deems proper for the
protection of Lessor and the Premises from liens.

12.      SIGNS AND ADDRESS.

         Lessee may, at its expense, utilize or remove any existing sign or
install new signs on the Premises as may be reasonable, which conforms to all
applicable law, and which shall not damage or impair the attractiveness of the
Premises. Lessee may erect three (3) signs, which signs shall be installed at
the entrance to the Premises, in the lobby area of the Building and on a
monument sign located on the Land outside the Building. Such signs shall be at
Lessee's sole expense and shall be approved by Lessor, which approval shall not
be unreasonably withheld, conditioned or delayed. Lessee shall be entitled to
remove any or all such signs at any time during the term of this Lease, or
within fifteen (15) calendar days after termination of this Lease, provided such
removal does not cause irreparable or unreasonable harm to the Premises. In any
event Lessee, at its expense, shall repair any damage caused by such removal.
Lessor will obtain for the Premises during the first year of the Initial Term a
separate suite number or address for mail delivery to the Premises by the U.S.
Postal Service

                                       6
<PAGE>

13.      COMMON AREAS. The term "Common Areas" shall mean those parts of the
Land and Building designated by Lessor from time to time for the common use of
Lessor, tenants and their employees, agents, customers, and invitees, including
the employee cafeteria, parking areas, sidewalks, landscaping, curbs, loading
areas, foyers, hallways, rest rooms, elevator, and other areas provided and
designated by Lessor for the common use of Lessor and tenants, all of which
shall be subject to Lessor's sole management and control and shall be operated
and maintained in such a manner as Lessor in its reasonable discretion shall
determine. Lessor shall have the right to modify the size, use, nature, location
or configuration of the Common Areas, provided, however, that no such change
shall unreasonably interfere with Lessee's access to or use of the Premises.
Lessee shall have the non-exclusive right to use the Common Areas in common with
Lessor and other tenants of the Buildings, if any. Lessee shall use the Common
Areas in a safe and careful manner and shall not commit waste on or about the
Common Areas.

14.      RESTORATION.

         If at any time the Premises are materially damaged or destroyed, Lessor
may, at its option, repair or restore the Premises to their condition
immediately prior to such damage or destruction or terminate this Lease as of
the date of such damage or destruction. Upon such termination, the Rent payable
by Lessee shall be apportioned as of the date of such damage or destruction.
Lessor shall give written notice to Lessee of its election either to repair or
restore the Premises or to terminate this Lease within thirty (30) days after
the date such damage or destruction occurs. If damage or destruction to the
Premises occurs which does not result in a termination of this Lease, the rent
payable by the Lessee shall be abated until the Premises of any part thereof so
damaged have been made fit for occupancy. Notwithstanding anything in this
paragraph to the contrary,

                  (a) Lessor's obligation to repair or restore shall be limited
         to cost in the amount of insurance proceeds payable under policies of
         fire or extended coverage insurance maintained under the terms and
         conditions of this Lease; provided, however, that if the Premises are
         not restored to substantially the same condition as such Premises are
         in on the Commencement Date of this Lease, then Lessee shall have the
         option to terminate this Lease;

                  (b) Lessee shall bear all costs and expenses of repair and
         restoration required as a result of damage caused solely by the
         intentional or negligent act or omission of Lessee, its employees,
         agents, guests, or invitees;

                  (c) If any mortgage encumbering the Premises contains
         different restoration/repair requirements than those contained in this
         Lease, the provisions of such mortgages shall apply and supersede those
         contained in this Lease, to the extent of such difference or conflict,
         and such differing terms shall be deemed incorporated in this Lease;
         and

                  (d) If the Premises are damaged to an immaterial or
         non-substantial degree, Lessor shall promptly cause them to be repaired
         and restored within thirty (30) days (or if such work cannot be
         completed within such thirty (30) days, such work shall be

                                       7
<PAGE>

         commenced within thirty (30) days and diligently pursued through
         completion), subject to (b) above.

         In the event the Premises shall at any time during the Lease term be
damaged by fire or other unavoidable casualty, through no fault or negligence of
Lessee, so as to render said Premises or any part thereof unfit for occupancy,
Lessee shall have the option of terminating this Lease upon thirty (30) days
prior written notice to Lessor.

15.      EMINENT DOMAIN.

         Lessor shall deliver to Lessee within ten (10) days after receipt
thereof any notice of a governmental entity's intent to exercise its power of
eminent domain with respect to all or a portion of the Premises.

16.      CONDEMNATION.

         If all or a material part of the Premises are taken by any condemning
authority under the power of eminent domain or by any purchase of other
acquisition in lieu of condemnation, this Lease shall terminate as of the date
possession is required by the condemning authority, and Rent payable by the
Lessee shall be apportioned as of the termination date. In any event, Lessor
shall be entitled to receive the entire appropriation award or consideration
paid by the condemning authority, and Lessee shall have no rights to or in such
award or consideration.

         For purposes of this Section 16, any negotiated sale to a public or
quasi-public authority under the threat of condemnation shall be deemed to
constitute a taking by such public or quasi-public authority under the power of
eminent domain.

17.      MORTGAGE OF LESSOR'S INTEREST.

         This Lease and Lessee's rights under it shall be subject and
subordinate to any mortgages upon the Premises. The subordination of this Lease
and Lessee's rights under it shall be automatic and self-operative, and no
separate instrument of subordination shall be necessary. However, if requested
by the holder of any mortgage, Lessee shall execute, acknowledge, and deliver
any and all documents requested by such holder, provided that the documents are
reasonably acceptable to Lessee.

18.      DEFAULT.

         18.1.    DEFAULT BY LESSEE. Lessee shall be deemed in default of the
Lease in the event the Lessee should: (a) default in the prompt payment of rent
when the same is due and remain in violation of or continue to fail to make such
payment with late payment charge for a period of thirty (30) days from and after
due date of such rental; and (b) fail to perform any of the other covenants,
conditions and agreements performable by Lessee hereunder for a period of thirty
(30) days following the receipt of written notification of Lessee's failure to
comply herewith, or in the event the correction of such default shall take more
than thirty (30) days to complete, then in the event the Lessee should fail to
begin the correction of such default within a period of twenty (20) days
following the receipt for written notification thereof and shall fail to pursue
the

                                       8
<PAGE>

correction of such default with due diligence; or (c) should Lessee file a
voluntary petition in bankruptcy, be adjudged bankrupt, be placed in or
subjected to a receivership, or make an assignment for benefit of creditors.
Upon such default, Lessor may elect to cancel this Lease or relet the
premises as agent for Lessee or otherwise, and receive the Rent therefore,
applying the same first to the payment of such expenses as the Lessor may be
put to in entering and letting. The balance remaining will be applied to the
payment of the Rent payable under this Lease, and fulfillment of Lessee's
covenants hereunder, the balance, if any, to be paid to Lessee who shall
remain liable for deficiency. Or, at the option of Lessor, upon any such
default, Lessor may demand the entire Rent for the balance of the term due
and payable as if by the terms of this Lease it were all payable in advance.

         18.2.    DEFAULT BY LESSOR. Should Lessor fail to perform any of its
duties or obligations hereunder, Lessor shall have a period of thirty (30) days
after receipt of written notice from Lessee of a failure of performance within
which to commence a cure of that failure. Failure of Lessor to commence that
cure within the thirty-day (30-day) period or to effect that cure within that
thirty-day (30-day) period shall be an event of default under this Lease and
Lessee may, at its option, elect to commence such cure itself, and Lessee may
either, at its option, offset any expenses it incurs in effecting such cure
against the Rent and other charges due and payable by Lessee hereunder, or
require that Lessor immediately reimburse Lessee for its expenses; provided,
however, in the event of an emergency, Lessee may immediately effect a cure of
Lessor's failure should Lessor fail to act immediately to do so, without the
requirement of any notice by Lessee to Lessor.

         18.3.    CUMULATIVE RIGHTS. No right or remedy herein conferred upon or
reserved to Lessor or Lessee is intended to be exclusive of any other right or
remedy provided herein or by law, but each shall be cumulative and in addition
to every other right or remedy given herein or now or hereafter existing at law
or in equity or by statute.

19.      RIGHTS TO CURE DEFAULTS.

         If Lessee fails to perform any of its obligations under this Lease, for
a period of thirty (30) days following the receipt of written notification of
Lessee's failure to comply herewith, or in the event the correction of such
default shall take more than thirty (30) days to complete, then in the event the
Lessee should fail to begin the correction of such default within a period of
twenty (20) days following the receipt for written notification thereof and
shall fail to pursue the correction of such default with due diligence, Lessor
may, but shall not be obligated to, cause the performance thereof, and all costs
and expenses incurred by Lessor in connection therewith, including without
limitation reasonable attorneys' fees, shall be immediately due and payable from
Lessee to Lessor, with interest thereon from the time paid by Lessor until
Lessor is reimbursed in full by Lessee at a rate of twelve (12%) percent per
annum.

20.      ASSIGNMENT OR SUBLEASE.

         Lessee shall neither assign this Lease nor sublease all or any part of
the Premises, except to an affiliate of Lessee, without first obtaining Lessor's
expressed written consent to such assignment or sublease, which consent shall
not unreasonably be withheld by Lessor. Lessor may assign this Lease to an
affiliated party without the consent of Lessee.

                                       9
<PAGE>

21.      LESSOR'S ACCESS.

         Lessor and its designees shall have the right to enter the Premises at
any reasonable times upon 24 hours prior verbal or written notice for
non-emergency purposes including, but not limited to, inspecting the Premises,
determining compliance herewith by Lessee, performing any work which the Lessor
is required or elects to undertake, and exhibiting the Premises for sale or
lease. Lessor shall have the right to enter the Premises without notice at any
time deemed necessary by Lessor for emergency and/or urgent maintenance issues.

         Nothing herein shall imply any duty upon Lessor to do any such work
that Lessee is required to perform under any provision of this Lease, and the
performance of any such work by Lessor shall not constitute a waiver of Lessees
default.

22.      SURRENDER AND HOLDING OVER.

         Subject to Lessor's rights under this Lease, Lessee shall deliver and
surrender possession of the Premises to Lessor upon the expiration of this
Lease, or its termination in any way, in as good condition and repair as the
Premises were on the date of Rent commencement, ordinary wear and tear excepted.
If Lessee, or any party claiming under Lessee, remains in possession of the
Premises, or any part of the Premises, after any termination of this Lease,
Lessee or such party claiming under Lessee shall be deemed a Lessee from
month-to-month upon the covenants, provisions and conditions herein contained
and at a rental equal to one hundred and twenty percent (120%) of the rental in
effect during the last month of the term of this Lease, as extended or renewed,
prorated and payable for the period of such occupancy.

23.      NOTICES.

         Except as provided in SECTION 3.5 any notices, requests, demands, or
other communications required, permitted, or desired to be made or given under
the terms of this Lease shall be in writing, signed by or on behalf of the party
making or giving the same and shall be deemed fully made or given upon personal
delivery, receipted courier, or the deposit of the same in the United States
mail, postage pre-paid certified mail, return receipt requested and addressed to
the other party at its office as set forth below, or at such other address as
each party may have furnished to the other party by like notice.

         LESSOR:                                     LESSEE:
         Route 7 Realty, LLC                         Alliance Data Systems
         Attn: Rudolph John Lehman                   Attn: Oren J. Snell
         P.O. Box 555                                4590 East Broad Street
         Marietta, OH 45750                          Columbus, OH 43213

24.      GENERAL.

         24.1.    ENTIRE AGREEMENT. This Lease sets forth the entire agreement
and understanding of the parties in respect of the transactions contemplated
hereby and supersedes all prior agreements, arrangements and understandings
relating to the subject matter hereof.

                                      10
<PAGE>

         24.2.    BINDING AGREEMENT. All of the terms, covenants,
representations, warranties and conditions of this Lease shall be binding upon,
and inure to the benefit of and be enforceable by, the parties hereto and their
respective permitted successors and assigns.

         24.3.    AMENDMENTS. This Lease may be amended only by a written
instrument, duly executed by Lessor and Lessee, which specifically refers to
this Lease and states that it amends this Lease.

         24.4.    WAIVER. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
at a later time to enforce the same. No waiver by any party of any condition, or
of any breach of any term, covenant, representation or warranty, contained in
this Lease, in any one or more instances, shall be deemed to be or construed as
a further or continuing waiver of any such condition or breach, or a waiver of
any other condition or of any breach of any other term, covenant, representation
or warranty.

         24.5.    GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without regard to
the conflicts of law principles thereof.

         24.6.    QUIET ENJOYMENT. Upon payment of all amounts required to be
paid by, and full performance of all obligations and covenants of Lessee under
this Lease, Lessee shall peaceably and quietly hold, occupy and enjoy the
Premises during the Term of this Lease without any hindrance by Lessor or any
person lawfully claiming under Lessor.

         24.7.    TIME OF ESSENCE. Time is expressly declared and agreed to be
of the essence in this Lease with respect to any and all terms, covenants,
conditions, agreements, provisions, options, rights of termination and all other
matters relating to this Lease.

         24.8.    CUMULATIVE EFFECT. The rights and remedies by this Lease are
cumulative and the use of any one right or remedy by either party shall not
preclude or waive its right to use any or all other remedies. Said rights and
remedies are given in addition to any other rights the parties may have by law,
statute, ordinance or otherwise.

         24.9.    SEVERABILITY. In case of any one or more of the provisions
contained in this Lease shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not effect any other provision hereof and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.

25.      AUTHORITY. Except as otherwise provided herein, each individual
executing this Lease in a representative capacity warrants and represents to the
other party that he has all requisite authority to execute the same on behalf of
the entity represented, in the capacity in which he has executed the same.

26.      ATTORNEYS' FEES. In the event of any litigation involving the parties
to this Lease to enforce any provision of this Lease, to enforce any remedy
available upon default under this Lease, or seeking a declaration of the rights
of either party under this Lease, the prevailing party

                                      11
<PAGE>

shall be entitled to recover from the other such attorneys' fees and costs as
may be reasonably incurred, including the costs of reasonable investigation,
preparation and professional or expert consultation incurred by reason of
such litigation. All other attorneys' fees and costs relating to this Lease
and the transactions contemplated hereby shall be borne by the party
incurring the same.

27.      CONFIDENTIALITY. Lessee understands that the terms of this Lease are
confidential in nature and that disclosure of these terms by Lessee would
jeopardize Lessor's negotiations and/or related business relationships with its
other tenants or potential tenants. Therefore, Lessee agrees to maintain the
terms of this Lease in confidence and not divulge, publish, or communicate the
rental payment terms of this Lease to any individual, firm, or corporation,
without the expressed written consent of Lessor, except to the extent disclosure
is required by applicable law or is necessary in the regular course of the
Lesees's business to be disclosed to its accountants, tax advisors or attorneys.

         IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the day and year written below the signature of the parties or their duly
authorized representative

                                       LESSOR:
WITNESS:                               ROUTE 7 REALTY, LLC

/s/                                    By:       /s/ Rudolph John Lehman
----------------------------------        -----------------------------------
                                          Rudolph John Lehman

/s/
----------------------------------
                                       Date:          10/24/00
                                            ---------------------------------

                                       LESSEE:

WITNESS:                               ADS ALLIANCE DATA SYSTEMS, INC.

/s/                                    By:  /s/     Robert G. Case
----------------------------------        -----------------------------------

/s/                                    Printed Name:   Robert G. Case
----------------------------------                  -------------------------

                                       Title:    Sr. V.P. Retail Operations
                                             --------------------------------

                                       Date:      10/10/00
                                            ---------------------------------

                                      12
<PAGE>

                                 ACKNOWLEDGMENTS

STATE OF OHIO                  )
COUNTY OF WASHINGTON           )       SS:

         This document was signed and acknowledged before me on this 24th day of
October, 2000, by Rudolph John Lehman on behalf of Route 7 Realty, LLC, the
Lessor hereunder.

                                       /s/ Patricia Huck
                                       ---------------------------------------
                                       Notary Public
                                       PATRICIA HUCK, Notary
                                       Public in and For the State
                                       of Ohio My commission,
                                       Expires July 9, 2002

STATE OF OHIO                  )
COUNTY OF FRANKLIN             )       SS:

         This document was signed and acknowledged before me on this 10 day of
October, 2000, by Robert Case on behalf of ADS Alliance Data Systems, Inc., the
Lessee hereunder.

                                       /s/ Mary Brewer
                                       ---------------------------------------
                                       Notary Public

                                      13

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