Document:

EX-10.1

Exhibit 10.1

AMENDMENT NO.  3 TO

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

This Amendment No.  3 to Amended and Restated Loan and Security Agreement (this “Amendment”)
is dated as of June  2 , 2006, is by and among LASALLE BANK NATIONAL ASSOCIATION, for
itself as a lender, and as Agent (“Agent”) for the lenders (“Lenders”) from time to time party to
the Amended and Restated Loan Agreement (as defined below) and APAC CUSTOMER SERVICES, INC.
(“Borrower”).

Preliminary Statements

Agent and Borrower are party to that certain Amended and Restated Loan and Security Agreement
dated as of October 31, 2005 (as amended, restated, supplemented or otherwise modified from time to
time, the (“Amended and Restated Loan Agreement”). Capitalized terms used but not defined in this
Amendment shall have the meanings ascribed to such terms in the Amended and Restated Loan
Agreement.

Borrower has requested, among other things, that Agent amend the Amended and Restated Loan
Agreement to provide for changes to the definitions of Eligible Account and Permitted Liens
pursuant to Section 1, the Indebtedness covenant pursuant to Section 13(b), the Interest Coverage
covenant pursuant to Section 14(b), the Minimum Free Cash Flow covenant pursuant to Section 14(c),
the Maximum Cash Restructuring Charge covenant pursuant to 14(e), and the Fixed Charge Coverage
covenant pursuant to Section 14(f) as set forth herein and Agent is willing to do so on the terms
and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual covenants and
agreements set forth herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Amendment to Amended and Restated Loan Agreement. In reliance on the
representations and warranties set forth in Section 2 below and subject to the satisfaction of the
conditions set forth in Section 3 below, the Amended and Restated Loan Agreement is hereby amended
as follows:

(a) The definition of “Designated Entities” in Section 1 of the Amended and Restated Loan
Agreement is hereby deleted in its entirety and the phrase “Intentionally Omitted” substituted in
its place.

(b) The definition of “Eligible Account” in Subsection 1(xiii) of the Amended and Restated
Loan Agreement is hereby amended and restated in its entirety, as follows:

(xiii) it is not an Account which, when added to a particular Account Debtor’s other Accounts
owed to Borrower, exceeds twenty percent (20%) (or thirty percent (30%) with respect to
Wellpoint, Inc. or any of its Affiliates and twenty-five percent (25%) with respect to either
Verizon or UPS or any of their Affiliates) of all Accounts of Borrower or a credit limit determined
by Agent (any changes to which Agent will provide notice to Borrower) in its sole discretion,
determined in good faith for that Account Debtor (except that Accounts excluded from Eligible
Accounts solely by reason of this clause (xiii) shall be excluded only to the extent of such
excess); and

(c) The definition of “Permitted Liens” in Section 1 of the Amended and Restated Loan
Agreement is hereby amended and restated in its entirety, as follows:

"Permitted Liens” shall mean (i) liens imposed by law, statutory liens of landlords, carriers,
warehousemen, processors, mechanics, workmen, repairmen, materialmen or suppliers and other similar
liens incurred in the ordinary course of business (including, without limitation, deposits made to
obtain the release of such liens) and securing amounts not yet due or declared to be due by the
claimant thereunder; (ii) liens or security interests in favor of Agent on behalf of the Lenders;
(iii) zoning restrictions and easements, rights-of-way licenses, covenants, matters of plat, minor
defects or irregularity in title or other agreements of record and other restrictions affecting the
use of real property that do not individually or in the aggregate have a material adverse effect on
Borrower’s ability to use such real property for its intended purpose in connection with Borrower’s
business; (iv) liens in connection with purchase money indebtedness (as defined in 9-103 of the
Uniform Commercial Code) and capitalized leases otherwise permitted pursuant to this Agreement,
provided, that such liens attach only to the assets the purchase of which was financed by such
purchase money indebtedness or which is the subject of such capitalized leases; (v) liens set forth
on Schedule 1-B hereto and such liens as may arise from any extension, renewal or
refinancing of the indebtedness relating to such scheduled lien; (vi) liens, pledges or deposits in
the ordinary course of business to secure obligations under workers’ compensation, unemployment
insurance laws, old age benefits, other types of social security or similar legislation; (vii) tax
liens with respect to taxes not required to be paid by Section 12(h) and liens resulting from
judgments to the extent not constituting an Event of Default hereunder or securing appeal or other
surety bonds related to such judgments; (viii) any interest or title of a lessor or sublessor under
any operating lease or any capitalized lease; (ix) liens on Cash Equivalents relating to banker’s
liens, rights of set-off or similar rights as to deposit or securities accounts and liens of a
collection bank arising under Section 4-210 of the Uniform Commercial Code on items in the course
of collection; (x) liens or encumbrances (including, without limitation, any interest of a
licensee) under licensing agreements for use of intellectual property existing on the date hereof
and hereafter entered into in the ordinary course of business; (xi) liens securing indebtedness or
other obligations under swaps, interest rate management agreements, hedge agreements or other
similar agreements not prohibited by this Agreement; (xii) liens of sellers of goods arising under
Article 2 of the Uniform Commercial Code; (xiii) liens or deposits to secure the performance of
contracts, leases or other obligations of a like nature incurred in the ordinary course of
business; provided in each case that the obligation is not for borrowed money and that the
obligation secured is not overdue, or, if overdue, is being contested in good faith by appropriate
proceedings which prevent enforcement of any lien relating thereto and adequate reserves have been
established therefor; and (xiv) liens on insurance policies and the proceeds thereof securing
the financing of the premiums with respect thereto.

(d) Section 13(b) of the Amended and Restated Loan Agreement is hereby amended and restated in
its entirety, as follows:

(b) Indebtedness.

Borrower shall not create, incur, assume or become obligated (directly or
indirectly), for any loans or other indebtedness for borrowed money other than the
Revolving Loans, except that Borrower may (i) borrow money from a Person on an
unsecured and subordinated basis if a subordination agreement in favor of Agent for
the benefit of Lenders and in form and substance satisfactory to Agent in its sole
discretion determined in good faith is executed and delivered to Agent relative
thereto; (ii) maintain its present indebtedness listed on Schedule 11(n)
hereto, in each case, together with any refinancing, extension or renewal thereof so
long as the principal amount of such indebtedness and the Collateral therefor are
not increased or expanded, as applicable; (iii) incur unsecured indebtedness to
trade creditors in the ordinary course of business; (iv) incur purchase money
indebtedness or capitalized lease obligations in connection with Capital
Expenditures; (v) incur operating lease obligations requiring payments not to exceed
$12,000,000 in the aggregate during any Fiscal Year of Borrower; (vi) incur
indebtedness under swaps, interest rate management agreements, foreign currency or
commodity hedge agreements entered into in the ordinary course of business;
(vii) incur financing for the premiums on insurance policies secured by such
insurance policies and the proceeds thereof; and (viii) incur indebtedness
consisting of guaranties of indebtedness described in clauses (i)-(vii) hereof.

(e) Section 14(b) of the Amended and Restated Loan Agreement is hereby amended and restated in
its entirety, as follows:

(b) Interest Coverage.

Borrower shall not permit the ratio of (x) EBITDA for the applicable period
minus unfinanced Capital Expenditures for the applicable period to (y) interest
expense (determined in accordance with generally accepted accounting principles) for
the applicable period of Borrower and its Subsidiaries to be less than (i) 2.0 to
1.0 for the trailing 2 fiscal quarter period of Borrower ending on or about March
31, 2006, (ii) 1.20 to 1.0 for the trailing 3 fiscal quarter period of Borrower
ending on or about June 30, 2006, (iii) 1.25 to 1.0 for the trailing 4 fiscal
quarter period of Borrower ending on or about September 30, 2006, (iv) 1.30 to 1.0
for the trailing 4 fiscal quarter period of Borrower ending on or about December 31,
2006, and (v) 1.40 to 1.0 for each trailing 4 fiscal quarter period ending on the
last day of each fiscal quarter of Borrower thereafter.

(f) Section 14(c) of the Amended and Restated Loan Agreement is hereby amended and restated in
its entirety, as follows:

(c) Minimum Free Cash Flow.

Borrower shall not permit EBITDA minus unfinanced Capital Expenditures
(“Minimum Free Cash Flow”) to be less than the amounts set forth below during the
period indicated below:

	 	 	 	 	 
	Fiscal Period
	 	Minimum Free Cash Flow

	 
	 	 	 	 
	For the trailing 2 fiscal quarter period of
Borrower ending on or about March 31, 2006
	 	$	1,000,000	 
	 
	 	 	 	 
	For the trailing 3 fiscal quarter period of
Borrower ending on or about June 30, 2006
and, if applicable, each fiscal quarter
thereafter on a trailing 4 fiscal quarter
period of Borrower basis
	 	$	1,000,000	 
	 
	 	 	 	 

; provided, that this covenant shall not be applicable and Minimum Free Cash
Flow shall not be tested after the date of the fiscal quarter ending on or
about June 30, 2006 if no Event of Default has occurred and is continuing on
such date.

(g) Section 14(e) of the Amended and Restated Loan Agreement is hereby amended and restated in
its entirety, as follows:

(e) Maximum Cash Restructuring Charge.

Borrower shall not incur cash restructuring charges in excess of
$5,000,000 in the aggregate in connection with the Restructuring during the
period between January 1, 2006 and December 31, 2006.

(h) Section 14(f) of the Amended and Restated Loan Agreement is hereby amended and restated in
its entirety, as follows:

(f) Fixed Charge Coverage.

With respect to Borrower’s fiscal quarters ending on or about September 30,
2006 and thereafter, Borrower shall not permit the ratio of its EBITDA to Fixed
Charges for the trailing twelve fiscal month period of Borrower ending on the last
day of each fiscal quarter to be less than or equal to 1.00 to 1:00; provided that
Fixed Charge Coverage shall not be tested unless and until Minimum Free Cash Flow
ceases to be tested pursuant to Section 14(c).

2. Representations and Warranties of Borrower. Borrower represents and warrants that,
as of the date hereof:

(a) The execution, delivery and performance by Borrower of this Amendment, are within the
organizational power of Borrower, have been duly authorized by all necessary action, have received
all necessary governmental approval (if any shall be required), other than approvals which could
not reasonably be expected to have a Material Adverse Effect on Borrower, and do not and will not
contravene or conflict with any provision of law applicable to Borrower, the articles of
incorporation, by-laws or any other organizational document of Borrower, any order, judgment or
decree of any court or governmental agency, or any agreement, instrument or document binding upon
Borrower or any property of Borrower, in each case, which contravention or conflict could
reasonably be expected to have a Material Adverse Effect on Borrower;

(b) Each of the Amended and Restated Loan Agreement, as amended by this Amendment and the
Other Agreements to which Borrower is a party are the legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective terms, except as limited
by applicable bankruptcy, insolvency or other laws related to enforcement of creditor’s rights
generally and general principles of equity related to enforcement;

(c) After giving effect to the amendments set forth herein, no Event of Default or event or
condition which upon notice, lapse of time or both would constitute an Event of Default has
occurred and is continuing; and

(d) After giving effect to the amendments set forth herein, the representations and warranties
of the Borrower contained in the Amended and Restated Loan Agreement and the Other Agreements are
true and accurate as of the date hereof with the same force and effect as if such had been made on
and as of the date hereof, except for those specific to a past date (which shall be true and
correct as of such past date).

3. Conditions Precedent. The effectiveness of this Amendment is subject to the
satisfaction of the following condition precedent:

(a) Agent shall have received this Amendment executed by Borrower, Agent and LaSalle Bank
National Association;

(b) Agent shall have received the Consent and Reaffirmation executed by each Obligor (other
than the Borrower);

(c) Borrower shall have paid a legal fee of One Thousand and No/100 ($1,000.00) for Agent’s
internal legal costs to prepare this Amendment No. 3 to Amended and Restated Loan and Security
Agreement; and

(d) All proceedings taken in connection with this Amendment and all documents, instruments and
other legal matters incident thereto shall be satisfactory to Agent and its legal counsel such
acceptance to be evidenced by Agent’s execution hereof.

4. No Novation. This Amendment is not intended to nor shall be construed to create a
novation or accord and satisfaction with respect to any of the Liabilities.

5. Severability. Any provision of this Amendment that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof or affecting
the validity or enforceability of such provision in any other jurisdiction.

6. Ratification. Except as expressly waived and modified hereby, the Amended and
Restated Loan Agreement and the Other Agreements each hereby are ratified and confirmed by the
parties hereto and remain in full force and effect in accordance with the respective terms thereof.
Agent and Lenders willingness to provide the waivers herein and agree to the amendments herein
shall not be deemed to indicate or require Agent’s or Lenders’ willingness to agree to any
deviation from the terms of the Amended and Restated Loan Agreement (as modified hereby) in the
future.

7. Choice of Law. This Amendment shall be governed and controlled by the laws of the
State of Illinois as to interpretation, enforcement, validity, construction, effect and in all
other respects.

[Remainder of page intentionally left blank, signatures to follow]

1

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under
seal and delivered by their respective duly authorized officers on the date first written above.

	 
	 

	LASALLE BANK NATIONAL ASSOCIATION, as Agent and a Lender

By /s/ Douglas Colletti

	 

	Its Senior Vice President

	 

	 

	APAC CUSTOMER SERVICES, INC.,

as Borrower

By/s/ George H. Hepburn III

	 

	Its Senior Vice President and CFO

	 

2

CONSENT AND REAFFIRMATION

The undersigned (“Guarantors”), hereby (i) acknowledge receipt of a copy of the foregoing
Amendment No. 3 to Amended and Restated Loan and Security Agreement (the “Amendment”); (ii) consent
to Borrower’s execution and delivery of the Amendment; and (iii) reaffirm that each of the Other
Agreements that it is a party to continue to remain in full force and effect. Although Guarantors
have been informed of the matters set forth herein and have acknowledged same, Guarantors
understand that Agent and Lenders have no obligation to inform Guarantors of such matters in the
future or to seek Guarantors’ acknowledgment to future amendments, waivers or consents, and nothing
herein shall create such a duty.

IN WITNESS WHEREOF, Guarantors have executed this Consent and Reaffirmation on and as of the
date of the Amendment.

	 
	 

	APAC CUSTOMER SERVICES, L.L.C.

APAC CUSTOMER SERVICES OF ILLINOIS, INC.

APAC CUSTOMER SERVICES GENERAL

PARTNER, INC.

ITI HOLDINGS, LLC

APAC CUSTOMER SERVICES OF IOWA, L.L.C.

APAC CUSTOMER SERVICES OF TEXAS, L.P.

by its general partner, APAC Customer Services General Partner, Inc.

Each By /s/ Robert J. Keller

	 

	Its President

	 

S:\\LBCI-LLC\\APAC\LtrAmd\Amendment No. 3 To Amended And Restated Loan And Security Agreement

Final

3EX-10.1

ALLIANCE DATA SYSTEMS CORPORATION

	 	 	 
	 
	 	 
	
 
	 	NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN

(Effective June 5, 2006)

1

ALLIANCE DATA SYSTEMS CORPORATION

NON-EMPLOYEE DIRECTOR DEFERRED COMPENSATION PLAN

TABLE OF CONTENTS

	 	 	 
	ARTICLE I.

	 	PREAMBLE
	 

	 	 
	ARTICLE II.

	 	DEFINITIONS
	 

	 	 
	ARTICLE III.

	 	ELIGIBILITY
	 

	 	 
	ARTICLE IV.

	 	CONTRIBUTIONS
	 

	 	 
	ARTICLE V.

	 	VESTING
	 

	 	 
	ARTICLE VI.

	 	FUNDING AND INVESTMENT
	 

	 	 
	ARTICLE VII.

	 	DISTRIBUTION OF BENEFITS
	 

	 	 
	ARTICLE VIII.

	 	AMENDMENT AND TERMINATION
	 

	 	 
	ARTICLE IX.

	 	ADMINISTRATION
	 

	 	 
	ARTICLE X.

	 	MISCELLANEOUS
	 

	 	 

2

ARTICLE I. PREAMBLE

The Alliance Data Systems Corporation Non-employee Director Deferred Compensation Plan has been
established to allow non-employee directors to defer a portion of their annual and meeting
compensation payable for their services on the Board of Directors (the “Board”) of Alliance Data
Systems Corporation (“ADSC”), effective as of June 5, 2006. The Plan is unfunded for tax purposes
and is not subject to the Employee Retirement Income Security Act of 1974, as amended.

ARTICLE II. DEFINITIONS

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

Section 2.2 ADSC means Alliance Data Systems Corporation.

Section 2.3 Change of Control means one of the following events: (i) the merger,
consolidation or other reorganization of ADSC in which its outstanding common stock, $0.01 par
value, is converted into or exchanged for a different class of securities of ADSC, a class of
securities of any other issuer (except a direct or indirect wholly owned subsidiary of ADSC), cash,
or other property, (ii) the sale, lease or exchange of all or substantially all of the assets of
ADSC to any other corporation or entity (except a direct or indirect wholly owned subsidiary of
ADSC), (iii) the adoption by the stockholders of ADSC of a plan of liquidation and dissolution,
(iv) the acquisition (other than any acquisition pursuant to any other clause of this definition)
by any person or entity other than (x) Welsh Carson Anderson & Stowe partnerships and partners or
(y) Limited Brands, Inc. and its affiliates, including without limitation a “group” as contemplated
by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (whether or not such Act is
then applicable to ADSC), of beneficial ownership, as contemplated by such section, of more than
twenty percent (20%) (based on voting power) of ADSC’s outstanding capital stock and such person,
entity or group either has, or either publicly or by written notice to ADSC states an intention to
seek, a representative member on the Board, (v) the acquisition (other than any acquisition
pursuant to any other clause of this definition) by any person, entity or group other than (x)
Welsh Carson Anderson & Stowe partnerships and partners or (y) Limited Brands, Inc. and its
affiliates, of beneficial ownership of more than thirty percent (30%) (based on voting power) of
ADSC’s outstanding capital stock, or (vi) as a result of or in connection with a contested election
of directors, the persons who were the directors of ADSC before such election shall cease to
constitute a majority of the Board.

Section 2.4 Code means the Internal Revenue Code of 1986, as amended.

Section 2.5 Code Section 409A means Section 409A of the Code and any guidance or proposed or
final regulations issued thereunder.

Section 2.6 Committee means the committee appointed pursuant to Section 9.1 to administer the
Plan.

Section 2.7 Contributions means contributions directed by a Participant to the Plan pursuant
to Section 4.1.

Section 2.8 Eligible Compensation means cash payments that are made with respect to annual
service on the Board and cash payments made with respect to meeting attendance. Excluded from
Eligible Compensation are stock option earnings, restricted stock or other equity-based
compensation.

Section 2.9 Employer means with ADSC and any other entity affiliated ADSC that has adopted the
Plan with the approval of the Committee.

Section 2.10 Non-employee Director means any member of the Board who is not currently an
employee of ADSC or any other entity affiliated with ADSC and who is entitled to receive Eligible
Compensation.

Section 2.11 Participant means any Non-employee Director who has elected to participate in the
Plan.

Section 2.12 Plan means this Alliance Data Systems Corporation Non-employee Director Deferred
Compensation Plan.

ARTICLE III. ELIGIBILITY

Section 3.1 Eligibility. Any Non-employee Director is eligible to participate in the Plan.
Further, any individual who has been nominated to serve as a Non-employee Director but who has not
yet been appointed or elected is eligible to participate on the date on which he or she is
nominated provided that such individual is later appointed or directed.

Section 3.2 Enrollment Procedure. To be eligible to make Contributions, a Non-employee
Director must complete and file the Enrollment Form approved by the Committee prior to the
beginning of the calendar year in which the Participant performs the services for which the
election is to be effective. Notwithstanding the foregoing, to defer any compensation payable on
or after June 6, 2006 through December 31, 2006, to a Non-employee Director who is expected to
serve or continue to serve on the Board from June 6, 2006 through December 31, 2006, the
Non-employee Director must make a deferral election no later than June 5, 2006. Further, with
respect to any individual who is not serving on the Board on June 6, 2006, but who is expected to
be elected or appointed to the Board after such date, such individual must make an election no
later than 30 days after the date on which he or she has been nominated to the Board but in no
event later than the date on which he or she is elected or appointed to the Board.

ARTICLE IV. CONTRIBUTIONS

Section 4.1 Contributions. At the time of enrollment, a Participant may direct ADSC to
withhold a percentage of his or her Eligible Compensation. The percentage selected may be any
whole number percentage up to fifty (50).

Section 4.2 Crediting Contributions. The amount of Eligible Compensation that a Participant
elects to defer pursuant to Section 4.1 shall be credited to the Participant’s Account as of the
date such Compensation would otherwise become payable to the Participant.

ARTICLE V. VESTING

	 	 	 
	Participants are always 100% vested in their Contributions and the related earnings.

	 
	 	 
	ARTICLE VI.

	 	FUNDING AND INVESTMENT

Section 6.1 Unfunded Plan. No Contributions shall be set aside in a trust or otherwise
funded. Any assets of ADSC available to pay Plan benefits shall be subject to the claims of its
general unsecured creditors and may be used by ADSC in its sole discretion for any purpose. Any
payments made to Participants under the Plan will be made from the general assets of ADSC.

Section 6.2 Change of Control. Notwithstanding the foregoing, in the event of a Change of
Control, ADSC will establish the type of trust known as a “rabbi trust,” to which will be
contributed sufficient assets to fully fund all Accounts. All assets in the rabbi trust will
remain subject to the claims of ADSC’s creditors, and a Participant will continue to have the
status of an unsecured creditor with respect to ADSC’s obligation to make benefit payments.

Section 6.3 Investment of Accounts. Contributions shall be credited with interest at a rate
established by, and adjusted periodically at the sole discretion of the Committee. The Committee
may, in its sole discretion, direct that ADSC invest the amount credited to an Account, in whole or
in part, in such property (real, personal, tangible or intangible), as the Committee may select
(collectively the “Investments”), or may direct that ADSC retain the amount credited as cash to be
added to its general assets. ADSC shall be the sole owner and beneficiary of all Investments, and
all contracts and other evidences of the Investments shall be registered in the name of ADSC.

ARTICLE VII. DISTRIBUTION OF BENEFITS

Section 7.1 In-Service Distributions. A Participant who is actively serving on the Board
generally may not withdraw or otherwise access any amounts credited to an Account. However, at the
time a Participant elects to make Contributions, a Participant may elect to have all contributions
made pursuant to that election for that year distributed as of January 1 of any subsequent year,
subject however, to any restriction imposed under Code Section 409A. The distribution shall be
made within 60 days of the specified date or, if earlier, the date required under Section 7.2.
Furthermore, amounts may be withdrawn in the event of an “unforeseeable emergency,” within the
meaning of Code Section 409A(a)(2)(B)(ii). Any such early withdrawal must be approved by the
Committee and may not exceed the amount necessary to meet the emergency, taking into account other
assets available to the Participant, as well as any taxes incurred as a result of the distribution.
If the Committee or its delegate approves a distribution on this basis, the distribution shall be
made as soon as practicable thereafter; and the Participant’s right to make Contributions shall be
suspended until the first day of the following year.

Section 7.2 Other Distributions. If a Participant has a “separation from service,” within the
meaning of Code Section 409A(a)(2)(A)(i) or becomes “disabled,” within the meaning of Code Section
409A(a)(2)(C), the value of the Participant’s Account, and any accrued interest thereon, will be
distributed. All benefits will be paid in one (1) lump-sum payment, subject to any applicable tax
withholding.

Section 7.3 Death Benefits. Any undistributed amount credited to a Participant’s Account on
the date he or she dies shall be distributed in one lump sum to the Participant’s designated
beneficiary. If the Committee determines there is no valid beneficiary designation on file, or
cannot locate the designated beneficiary, benefits will be paid to the Participant’s estate.

Section 7.4 Withholding. If ADSC believes it is required to withhold and pay over any taxes
or other amounts from a Participant’s Eligible Compensation pursuant to any state, federal, or
local law, such amounts shall, to the extent possible, be withheld from the Participant’s Eligible
Compensation before such amounts are credited under the Plan. Any additional withholding amount
required shall be paid by the Participant to ADSC as a condition to the crediting of any
contributions to the Participant’s Account. ADSC shall withhold any required state, federal, or
local taxes or other amounts from any benefits payable to a Participant or beneficiary.

ARTICLE VIII. AMENDMENT AND TERMINATION

Section 8.1 Amendment. ADSC may at any time amend, suspend, or reinstate any or all of the
provisions of the Plan, except that no such amendment, suspension, or reinstatement may adversely
affect the vested portion of any Participant’s Account as it existed as of the effective date of
such amendment, suspension, or reinstatement, without such Participant’s prior written consent,
unless the Committee determines, in its sole discretion, that the amendment is needed to preserve
favorable tax treatment. Written notice of any amendment or other action with respect to the Plan
shall be given to each Participant.

Section 8.2 Termination. ADSC, in its sole discretion, may terminate this Plan at any time
and for any reason whatsoever. Upon termination of the Plan, the Committee shall cause to be
distributed to each Participant the entire value of his or her Account as soon as the distribution
may be made without adverse tax consequences. The Committee shall take such actions as it deems
appropriate, in its sole discretion, to administer any Accounts existing prior to such termination
distributions.

ARTICLE IX. ADMINISTRATION

Section 9.1 Committee. The Committee shall administer the Plan. The members of the Committee
shall be the same individuals who administer the Alliance Data Systems Corporation Executive
Deferred Compensation Plan. The Committee has complete and absolute authority to interpret any
provision of the Plan and, in its sole discretion, decide all questions and issues arising under
the Plan including, without limitation, questions of fact, eligibility to participate in the Plan,
and the amount of benefits, if any, due under the Plan. Decisions of the Committee are final and
binding upon all parties. Additional information about the Plan is available by contacting:

Executive Deferred Compensation Plan Committee

c/o Executive Vice President of Human Resources

Alliance Data Systems Corporation

17655 Waterview Parkway

Dallas, TX 75252

Section 9.2 Claims Procedure. In the event a Participant or beneficiary has a dispute
concerning his or her benefit, the claim for the benefit shall first be submitted in writing to the
Executive Vice President of Human Resources, of ADSC. In the event that the Executive Vice
President of Human Resources, does not provide a response satisfactory to the Participant within
ninety (90) days after receipt of the claim, the Participant or named beneficiary may submit the
claim in writing, within sixty (60) days thereafter to the Committee, whose decision regarding the
claim shall be final and binding on each Participant or person claiming under the Plan. The
claimant shall be notified of the Committee’s decision within sixty (60) days, unless special
circumstances require an extension of time for processing, in which case a decision shall be
rendered within a reasonable period of time, but not later than one hundred twenty (120) days after
receipt of a request for review. The Committee’s decision shall be final and binding.

Section 9.3 Participant Statements. A summary of the status of each Participant’s Account
reflecting Contributions and accrued interest will be prepared and distributed annually.

ARTICLE X. MISCELLANEOUS

Section 10.1 Not a Contract of Employment. This Plan shall not be deemed to constitute a
contract of employment or other service between ADSC and any Participant. Nothing herein contained
shall be deemed to give any Non-employee Director or other person, whether or not in the employ or
service of ADSC any right to be retained in the employ or service of ADSC, or to serve on its
Board, nor to interfere with the right of ADSC and its stockholders to discontinue the service of
any Non-employee Director by any means permissible under ADSC’s bylaws.

Section 10.2 Non-Assignability. Except as may otherwise be required by law, no distribution or
payment under the Plan to any Participant, named beneficiary, heirs and successors shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or
charge, whether voluntary or involuntary; and any attempt to so anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void. Nor shall any such
distribution or payment be in any way subject to the debts, contracts, liabilities, engagements, or
torts of any person entitled to such distribution or payment. If any Participant, named
beneficiary, heir, or successor is adjudicated bankrupt or purports to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge any such distribution or payment, voluntarily or
involuntarily, the Committee, in its discretion, may cancel such distribution or payment or may
hold or cause to be held or applied such distribution or payment, or any part thereof, to or for
the benefit of such Participant, named beneficiary, heir or successor in such manner as the
Committee shall direct.

Section 10.3 Savings Clause. If any provision of this instrument is finally held by a court
of competent jurisdiction to be invalid or unenforceable, the remaining provisions hereof shall
continue to be fully effective.

Section 10.4 Governing Law. The provisions of the Plan shall be construed, administered and
governed under applicable Federal law and the laws of the State of Delaware.

Section 10.5 Section 409A Compliance. To the extent applicable, it is intended that this Plan
comply with the requirements of Section 409A and any related regulations or other guidance
promulgated with respect to that section by the U.S. Department of the Treasury or the Internal
Revenue Service. Any provision that would cause the Plan to fail to satisfy Code Section 409A will
have no force or effect until amended to comply with Code Section 409A, which amendment may be
retroactive to the extent permitted by Code Section 409A.

This Plan is hereby adopted and effective this 5th day of June 2006.

ALLIANCE DATA SYSTEMS CORPORATION

/S/ TRANSIENT TAYLOR

By: Transient Taylor

Title: Executive Vice President of Human Resources

3

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