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Exhibit 10.7    
    

 
 

AMENDMENT TO THE
  ALLIANCE DATA SYSTEMS 401(k) AND RETIREMENT SAVINGS PLAN
  (EFFECTIVE AS OF JANUARY 1, 2001)    
    

        The Alliance Data Systems 401(k) and Retirement Savings Plan, established effective as of January 24, 1996 and amended and restated effective as
January 1, 2001 (the "Plan") is hereby further amended in the following respects: 

        1.     Effective
January 1, 1997, Article 3, Section 3.8(C) is amended and restated in its entirety and replaced with the following: 

	"(C)
	Any
distribution of Excess Contributions for any Plan Year shall be made to Highly Compensated Employees in accordance with Code Section 401(k)(8)(C) and the rulings and
regulations thereunder. If, after performance of the two tests in Section 3.6, the deferral percentage test would still be violated as of the end of the Plan Year, then notwithstanding any
other provision hereof, every Tax Deferred Deposit included in the Actual Deferral Percentage for a Participant who is a Highly Compensated Employee and whose Actual Deferral Percentage is greater
than the permitted maximum shall be revoked to the extent necessary to comply with such deferral percentage limitation of Section 3.6 and the amount of such Tax Deferred Deposits, to the extent
revoked, shall constitute an Excess Contribution to be distributed to such Participant (with earnings thereon as calculated in Section 3.8(B)) no later than the last day of the Plan Year
following the Plan Year for which such contribution was made. Excess Contributions are allocated to the Highly Compensated Employees with the largest amounts of Tax Deferred Deposits (and Employer
contributions, as applicable), which are taken into account in calculating the deferral percentage limitation for the Plan Year in which the excess arose, beginning with the Highly Compensated
Employee with the largest amount of such Tax Deferred Deposits (and Employer contributions, as applicable), and continuing in descending order until all Excess Contributions have been allocated. For
purposes of the preceding sentence, the "largest" amount is determined after distribution of any amounts distributed hereunder pursuant to Section 3.5 hereof." 

        2.     Effective
January 1, 1997, Article 4, Section 4.4(C) is amended and restated in its entirety and replaced with the following: 

	"(C)
	Any
distribution of Excess Aggregate Contributions for any Plan Year shall be made to Highly Compensated Employees in accordance with Code Section 401(m)(6)(C) and the rulings
and regulations thereunder. If, after performance of the percentage limitation in Section 4.2, the contribution percentage test would still be violated as of the end of the Plan Year, then
notwithstanding any other provision hereof, every Employer Matching Contribution and Taxed Deposit included in the Average Contribution Percentage for a Highly Compensated Participant whose Average
Contribution Percentage is greater than the permitted maximum shall automatically be revoked to the extent necessary to comply with such contribution percentage test of Section 4.2 and the
amount of such contribution, to the extent revoked, shall constitute an Excess Aggregate Contribution to be distributed to such Participant (with earnings thereon as calculated in
Section 4.4(B)) or forfeited, if applicable, no later than the last day of the Plan Year following the Plan Year for which such contribution was made. Excess Aggregate Contributions are
allocated to the Highly Compensated Employees with the largest amounts of Employer Matching Contributions and Taxed Deposits (and Employer contributions, as applicable), taken into account in
calculating the contribution percentage test for the Plan Year in which the excess arose, beginning with the Highly Compensated Employee with the largest amount of such Employer Matching Contributions
and Taxed Deposits (and Employer contributions, as applicable), and continuing in descending order until all Excess 

Aggregate
Contributions have been allocated. For purposes of the preceding sentence, the "largest amount" is determined after first determining required distributions under Section 3.5 hereof,
and then determining Excess Contributions under Section 3.8(C)." 

        3.     Effective
January 1, 2000, Article 18, Section 18.2(A) is amended and restated in its entirety and replaced with the
following:

	"(A)
	 Eligible Rollover Distribution

An
Eligible Rollover Distribution is any distribution of all or any portion of any benefit due to the Distributee, except that an Eligible Rollover Distribution does not include: any distribution that
is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of other Distributee or other joint lives (or joint life
expectancies) of the Distributee and the Distributee's designated beneficiary, or for a specified period of ten (10) years or more; any distribution to the extent such distribution is required
under Section 401(a)(9) of the Code; the portion of any distribution that is not includible in gross income (determined without regard to the
exclusion for net unrealized appreciation with respect to employer securities); any hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code (or, on or after
January 1, 2002, any distribution made upon hardship); and any other distribution(s) that is reasonably expected to total less than $200 during a Plan Year. Effective for distributions made
after December 31, 2001, a portion of a distribution shall not fail to be an eligible rollover distribution merely because the portion consists of after-tax employee contributions
which are not includible in gross income. However, such portion may be transferred only to an individual retirement account or annuity described in section 408(a) or (b) of the Code, or
to a qualified defined contribution plan described in section 401(a) or 403(a) of the Code that agrees to separately account for amounts so transferred, including separately accounting for the
portion of such distribution which is includible in gross income and the portion of such distribution which is not so includible." 

        4.     Effective
January 1, 2001, Article 16, Section 16.2(E) is amended and restated in its entirety and replaced with the following: 

	"(E)
	"Required
Aggregation Group" means

	(1)
	Each
qualified plan of the Employer in which a Key Employee participates or participated (regardless of whether the Plan has terminated); and

	(2)
	Each
other such qualified plan of an Employer which enables any plan in which a Key Employee participates to meet the requirements of Section 401(a)(4) or Section 410 of
the Code." 

        IN
WITNESS WHEREOF, ADS Alliance Data Systems, Inc. has caused this instrument to be executed on February 4, 2003, effective as provided herein. 

	 	 	ADS ALLIANCE DATA SYSTEMS, INC.
	

 	
 	

By:	

 
	 	 	 	

	 	 	Printed Name: Dwayne Tucker

	 	 	Title: Chief Administrative Officer

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Exhibit 10.7

AMENDMENT TO THE ALLIANCE DATA SYSTEMS 401(k) AND RETIREMENT SAVINGS PLAN (EFFECTIVE AS OF JANUARY 1, 2001)QuickLinks
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Exhibit 10.8    
    

 
 

AMENDMENT NO. 2 TO
  ALLIANCE DATA SYSTEMS 401(k) AND RETIREMENT SAVINGS PLAN
  (EFFECTIVE AS OF JANUARY 1, 2001)    
    

        The Alliance Data Systems 401(k) and Retirement Savings Plan, established effective as of January 24, 1996 and amended and restated effective as
January 1, 2001 (the "Plan") is hereby further amended in the following respects: 

        1.     Effective
January 1, 1999, Article 9 is amended by adding the following Section 9.7 at the end thereof: 

	"9.7
	Harmonic Systems Qualified Joint and Survivor Provisions

	(A)
	Joint and Survivor Annuity. The Benefits Administration Committee must direct the Trustee to distribute a married or unmarried
Participant's nonforfeitable Accrued Benefit in the form of a qualified joint and survivor annuity, unless the Participant makes a valid waiver election (described in paragraph (b) below)
within the 90 day period ending on the annuity starting date. If, as of the annuity starting date, the Participant is married, a qualified joint and survivor annuity is an immediate annuity
which is purchasable with the Participant's nonforfeitable Accrued Benefit and which provides a life annuity for the Participant and a survivor annuity payable for the remaining life of the
Participant's surviving Spouse equal to 50% of the amount of the annuity payable during the life of the Participant. If, as of the annuity starting date, the Participant is not married, a qualified
joint and survivor annuity is an immediate life annuity for the Participant which is purchasable with the Participant's nonforfeitable Accrued Benefit. On or before the annuity starting date, the
Benefits Administration Committee, without Participant or spousal consent, must direct the Trustee to pay the Participant's nonforfeitable Accrued Benefit in a lump sum, in lieu of a qualified joint
and survivor annuity, in accordance with Section 9.3, if the Participant's nonforfeitable Accrued Benefit is not greater than $5,000 ($3,500 before January 1, 1998). This Section applies
only to a Participant who has completed at least one Hour of Service with the Employer after August 22, 1984.

	(1)
	Preretirement Survivor Annuity. If a married Participant dies prior to his annuity starting date, the Benefits
Administration Committee will direct the Trustee to distribute a portion of the Participant's nonforfeitable Accrued Benefit to the Participant's surviving Spouse in the form of a preretirement
survivor annuity, unless the Participant has a valid waiver election (as described in paragraph (c) below) in effect, or unless the Participant and his Spouse were not married throughout the
one year period ending on the date of his death. A preretirement survivor annuity is an annuity which is purchasable with 50% of the Participant's nonforfeitable Accrued Benefit (determined as of the
date of the Participant's death) and which is payable for the life of the Participant's surviving Spouse. The value of the preretirement survivor annuity is attributable to Employer contributions and
to Employee contributions in the same proportion as the Participant's nonforfeitable Accrued Benefit is attributable to those contributions. The portion of the Participant's nonforfeitable Accrued
Benefit is payable to the Participant's Beneficiary, in accordance with the other provisions of this Plan. If the present value of the preretirement survivor annuity does not exceed $5,000 ($3,500
before January 1, 1998), the Benefits Administration Committee, on or before the annuity starting date, must direct the Trustee to make a lump sum distribution to the Participant's surviving
Spouse, in lieu of a preretirement survivor annuity. This paragraph (1) applies only to a Participant who dies after August 22, 1984, and either (i) completes at 

least
one Hour of Service with the Employer after August 22, 1984, or (ii) Separated from Service with at least 10 Years of Vesting Service and completed at least one Hour of Service
with the Employer in a Plan Year beginning after December 31, 1975. 

	(2)
	Surviving Spouse Elections. If the present value of the preretirement survivor annuity exceeds $5,000 ($3,500 before
January 1, 1998), the Participant's surviving Spouse may elect to have the Trustee commence payment of the preretirement survivor annuity at any time following the date of the Participant's
death, but not later than the mandatory distribution periods described in Section 401(a)(9) of the Code, and may elect any of the forms of payment described in Section 9.2, in lieu of
the preretirement survivor annuity. In the absence of an election by the surviving Spouse, the Benefits Administration Committee must direct the Trustee to distribute the preretirement survivor
annuity on the first distribution date following the close of the Plan Year in which the latest of the following events occurs: (i) the Participant's death; (ii) the date the Benefits
Administration Committee receives notification of or otherwise confirms the Participant's death; (iii) the date the Participant would have attained Normal Retirement Age; or (iv) the
date the Participant would have attained age 62.

	(3)
	Special Rules. If the Participant has in effect a valid waiver election regarding the qualified joint and survivor
annuity or the preretirement survivor annuity, the Benefits Administration Committee must direct the Trustee to distribute the Participant's nonforfeitable Accrued Benefit in accordance with the terms
of the Plan. The Benefits Administration Committee will reduce the Participant's nonforfeitable Accrued Benefit by any security interest (pursuant to any offset rights authorized by Article 11)
held by the Plan by reason of a Participant loan to determine the value of the Participant's nonforfeitable Accrued Benefit distributable in the form of a qualified joint and survivor annuity or
preretirement survivor annuity, provided any post-August 18, 1985, loan satisfied the spousal consent requirement described in Article 11 of the Plan. For purposes of
applying this paragraph (3), the Benefits Administration Committee treats a former Spouse as the Participant's Spouse or surviving Spouse to the extent provided under a qualified domestic
relations order described in Article 7. The provisions of this Section 9.7(A) and of Section 9.7(B) and Section 9.7(C) apply separately to the portion of the Participant's
nonforfeitable Accrued Benefit subject to the qualified domestic relations order and to the portion of the Participant's nonforfeitable Accrued Benefit not subject to that order.

	(B)
	Waiver Election—Qualified Joint and Survivor Annuity. Not earlier than 90 days, but not later than 30 days,
before the Participant's annuity starting date, the Benefits Administration Committee must provide the Participant a written explanation of the terms and conditions of the qualified joint and survivor
annuity, the Participant's right to make, and the effect of, an election to waive the joint and survivor form of benefit, the rights of the Participant's Spouse regarding the waiver election and the
Participant's right to make, and the effect of, a revocation of a waiver election. The Plan does not limit the number of times the Participant may revoke a waiver of the qualified joint and survivor
annuity or make a new waiver during the election period. 

A
married Participant's waiver election is not valid unless (1) the Participant's Spouse (to whom the survivor annuity is payable under the qualified joint and survivor annuity), after the
Participant has received the written explanation described in this Section 9.7(B), has consented in writing to the waiver election, the Spouse's consent acknowledges the effect of the election,
and a notary public or the Benefits Administration Committee (or its representative) witnesses the Spouse's consent, 

(2) the
Spouse consents to the alternate form of payment designated by the Participant or to any change in that designated form of payment, and (3) unless the Spouse is the Participant's
sole primary Beneficiary, the Spouse consents to the Participant's Beneficiary designation or to any change in the Participant's Beneficiary designation. The Spouse's consent to a waiver of the
qualified joint and survivor annuity is irrevocable, unless the Participant revokes the waiver election. The Spouse may execute a blanket consent to any form of payment designation or to any
Beneficiary designation made by the Participant, if the Spouse acknowledges the right to limit that consent to a specific designation but, in writing, waives that right. The consent requirements of
this Section 9.7(B) apply to a former Spouse of the Participant, to the extent required under a qualified domestic relations order described in Article 7. 

The
Benefits Administration Committee will accept a valid waiver election which does not satisfy the spousal consent requirements if the Benefits Administration Committee establishes the Participant
does not have a Spouse, the Benefits Administration Committee is not able to locate the Participant's Spouse, the Participant is legally separated or has been abandoned (within the meaning of state
law) and the Participant has a court order to that effect, or other circumstances exist under which the Secretary of the Treasury will excuse the consent requirement. If the Participant's Spouse is
legally incompetent to give consent, the Spouse's legal guardian (even if the guardian is the Participant) may give consent. 

	(C)
	Waiver Election—Preretirement Survivor Annuity. The Benefits Administration Committee must provide a written explanation of
the preretirement survivor annuity to each married Participant, within the following period which ends last: (1) the period beginning on the first day of the Plan Year in which the Participant
attains age 32 and ending on the last day of the Plan Year in which the Participant attains age 34; (2) a reasonable period after an Employee becomes a Participant; (3) a reasonable
period after the joint and survivor rules become applicable to the Participant; or (4) a reasonable period after a fully subsidized preretirement survivor annuity no longer satisfies the
requirements for a fully subsidized benefit. A reasonable period described in paragraphs (2), (3) and (4) is the period beginning one year before and ending one year after the applicable
event. If the Participant separates from Service before attaining age 35, paragraphs (1), (2), (3) and (4) do not apply and the Benefits Administration Committee must provide the written
explanation within the period beginning one year before and ending one year after the Separation from Service. The written explanation must describe, in a manner consistent with Treasury regulations,
the terms and conditions of the preretirement survivor annuity comparable to the explanation of the qualified joint and survivor annuity required under Section 9.7(B). The Plan does not limit
the number of times the Participant may revoke a waiver of the preretirement survivor annuity or make a new waiver during the election period. 

A
Participant's waiver election of the preretirement survivor annuity is not valid unless (i) the Participant makes the waiver election no earlier than the first day of the Plan Year in which
he attains age 35 and (ii) the Participant's Spouse (to whom the preretirement survivor annuity is payable) satisfies the consent requirements described in Section 9.7(B), except the
Spouse need not consent to the form of benefit payable to the designated Beneficiary. The Spouse's consent to the waiver of the preretirement survivor annuity is irrevocable, unless the Participant
revokes the waiver election. Irrespective of the time of election requirement described in clause (i), if the Participant separates from Service prior to the first day of the Plan Year in which
he attains age 35, the Benefits Administration Committee will accept a waiver election as respects the Participant's Accrued Benefit attributable to his 

Service
prior to his Separation from Service. Furthermore, if a Participant who has not separated from Service makes a valid waiver election, except for the timing requirement of clause (a),
the Benefits Administration Committee will accept that election as valid, but only until the first day of the Plan Year in which the Participant attains age 35. A waiver election described in this
paragraph is not valid unless made after the Participant has received the written explanation described in this Section 9.7(C)." 

        2.     Effective
January 1, 2002, the first paragraph of Section 3.5 is hereby amended and restated in its entirety with the following paragraph: 

"No
Participant shall be permitted to have Tax Deferred Deposits made under this Plan in excess of the dollar limitation contained in Section 402(g) of the Code in effect for such taxable year,
except to the extent permitted under Section 414(v) of the Code, if applicable. The limitation set by this Section 3.5 applies on an individual basis to all elective deferrals
(within the meaning of Section 401(k) of the Code) made by each Participant during a year under this or any other qualified plan of the Employer." 

        3.     Effective
January 1, 2002, Article 13 is amended by adding the following Section 13.7 at the end thereof:

	"13.7
	 Conversion Period

However,
notwithstanding any provision of the Plan to the contrary, during any conversion period, in accordance with procedures established by the Employer, the Employer may temporarily suspend, in
whole or in part, certain provisions of the Plan, which may include, but are not limited to, a Participant's right to change his Deposit Election, to change his investment election, to borrow or
withdraw from his Account, or to obtain a distribution from his Account." 

        4.     Effective
January 1, 2002, Appendix A, Service Commencement Date, is hereby amended by adding the following rows of information to the end thereof: 

	"Employing Company
	 	Years of Eligibility
	 	Years of Vesting"

	Frequency Marketing, Inc. ("FMI")	 	Date of hire with FMI if employed with FMI on December 31, 2001	 	Date of hire with FMI if employed with FMI on December 31, 2001
	

Loyalty RealTime, Inc. (formerly d/b/a Loyalty RealTime, LLC) ("LRI")	
 	

Date of hire with LRI if employed with LRI on December 31, 2001	
 	

Date of hire with LRI if employed with LRI on December 31, 2001

        IN
WITNESS WHEREOF, ADS Alliance Data Systems, Inc. has caused this instrument to be executed on April 7, 2003, effective as provided herein. 

	 	 	ADS ALLIANCE DATA SYSTEMS, INC.
	

 	
 	

By:	

 
	 	 	 	

	

 	
 	

Printed Name: Dwayne Tucker

	

 	
 	

Title: Chief Administrative Officer

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Exhibit 10.8

AMENDMENT NO. 2 TO ALLIANCE DATA SYSTEMS 401(k) AND RETIREMENT SAVINGS PLAN (EFFECTIVE AS OF JANUARY 1, 2001)

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