Document:

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                     GENERAL RELEASE AND SEVERANCE AGREEMENT

         This General Release and Severance Agreement (hereinafter "Agreement")
is entered into by and between JAMES ANDERSON (hereinafter "ASSOCIATE"), and ADS
ALLIANCE DATA SYSTEMS, INC. (hereinafter "ALLIANCE"), and also ALLIANCE DATA
SYSTEMS CORPORATION ("ADSC") but only to the extent specifically provided in
this Agreement.

         WHEREAS, ASSOCIATE and ALLIANCE will mutually, willingly, and
voluntarily terminate their employment relationship effective as of December 31,
2000 ("TERMINATION DATE");

         WHEREAS, ASSOCIATE and ALLIANCE desire to compromise, settle and
forever resolve and dispose of all differences and potential claims and
controversies between them, up to and including the Termination Date;

         WHEREAS, all words used in this Agreement will have their plain meaning
in ordinary English; and

         WHEREAS, the effective date of this Agreement shall be on the eighth
day following ASSOCIATE'S execution of this Agreement (the "EFFECTIVE DATE").

         NOW, THEREFORE, in consideration of the foregoing and promises and
other good and sufficient consideration contained hereinafter, the parties agree
as follows:

                                       I.

         A. SEVERANCE PAY. In exchange for ASSOCIATE entering into this
Agreement and signing the General Release, ALLIANCE agrees to pay to ASSOCIATE
beginning the first payroll cycle after the Effective Date of this Agreement
severance pay equal to fifty-two (52) weeks ("SEVERANCE PAY PERIOD") of his
current annual base salary, payable in bi-weekly installments. All payments
under this paragraph will be subject to appropriate payroll tax deductions and
income tax withholdings.

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 1
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         ALLIANCE and ASSOCIATE agree that as of the Termination Date, ASSOCIATE
is no longer eligible to participate in ALLIANCE's 401(k) savings plan, and
therefore, the aforementioned severance payments shall not be subject to 401(k)
withholdings or employer matching.

         B. PAYMENT OF WAGES AND OTHER BENEFITS. ALLIANCE represents and agrees
that as of the Effective Date of this Agreement, ALLIANCE will have made payment
in full to ASSOCIATE for all wages earned through the Termination Date and all
other benefits owed to ASSOCIATE through the Termination Date, including five
(5) weeks of vacation pay. Further, ALLIANCE and ASSOCIATE agree that after the
Termination Date, ASSOCIATE will not accrue any vacation or other benefits for
which he was eligible or previously entitled.

         C. CONTINUATION OF BENEFITS. ALLIANCE shall continue ASSOCIATE'S health
and life benefits through the end of the month in which the Termination Date
falls. Thereafter, should ASSOCIATE elect to continue health benefits pursuant
to the Comprehensive Omnibus Budget Reconciliation Act ("COBRA"), as amended, he
will continue to pay the employee premium he paid prior to the Termination Date,
and ALLIANCE agrees to pay the additional cost of the applicable premiums under
COBRA for such coverage, through the Severance Pay Period, or the date he
becomes eligible for coverage with any employer. The ASSOCIATE premium amount(s)
will be withheld from future installment payments upon notification of COBRA
election. Any missed premiums will be deducted retroactively.

         D. INCENTIVE COMPENSATION. ASSOCIATE will be entitled to receive an
incentive compensation payment pursuant to the 2000 Incentive Compensation Plan
in the amount of $117,500.00, less required income tax withholdings. ASSOCIATE
will not be eligible to participate in ALLIANCE'S 2001 Incentive Compensation
Plan.

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 2
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         E. ONE-TIME CONDITIONAL PAYMENT. Within thirty (30) days of ASSOCIATE's
notification to ALLIANCE that he is closing on the sale of his Dallas-area home,
and provided at such time ASSOCIATE has not been relocated from or within the
Dallas/Ft. Worth metroplex at the sole cost and expense of another employer,
ALLIANCE will make a one-time cash payment to ASSOCIATE in the amount of
eighty-thousand dollars ($80,000.00), less any required income tax withholdings.

         F. STOCK OPTIONS. ASSOCIATE, ALLIANCE and Alliance Data Systems
Corporation ("ADSC") agree to amend, as provided in this Paragraph F, the
Incentive Stock Option Agreements dated May 1, 1997, July 24, 1998, December 1,
1998, and May 7, 1999 between ADSC and ASSOCIATE pursuant to the Alliance Data
Systems Corporation and its Subsidiaries Stock Option and Restricted Stock
Purchase Plan ("ORIGINAL PLAN") and the Incentive Stock Option Agreement dated
September 1, 2000 between ADSC and ASSOCIATE pursuant to the Amended and
Restated Alliance Data Systems Corporation and its Subsidiaries Stock Option and
Restricted Stock Plan ("AMENDED AND RESTATED PLAN") (hereinafter, both plans are
referred to as the "Plan" or "Plans". The amendments shall provide as follows:

          1) ORIGINAL PLAN. The stock options granted to ASSOCIATE pursuant to
the Original Plan ("ORIGINAL PLAN STOCK OPTIONS") which are vested as of the
Termination Date ("VESTED ORIGINAL PLAN STOCK OPTIONS"), may be exercised
pursuant to the Original Plan until February 28, 2002. Except as otherwise set
forth in this subsection (1) all other Original Plan Stock Options unvested as
of the Termination Date ("UNVESTED ORIGINAL PLAN STOCK OPTIONS") will be
forfeited. Notwithstanding the foregoing sentence, however, if the Board of
Directors determines that the vesting of a certain

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 3
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portion of the Unvested Original Plan Stock Options shall be accelerated to
January 31, 2001 due to Company performance, such options so designated by
the Board of Directors ("JANUARY, 2001 OPTIONS") will vest as of January 31,
2001 ("JANUARY VESTING DATE") and may be exercised until February 28, 2002.
ASSOCIATE hereby agrees and acknowledges that the January Options may be
converted from Incentive Stock Options to Non-Qualified Stock Options.

         2) AMENDED AND RESTATED PLAN. One-third of the stock options granted to
ASSOCIATE pursuant to the Amended and Restated Plan on September 1, 2000, the
amount of which is 26,400 options ("SEPTEMBER, 2000 OPTIONS"), will vest on
August 31, 2001 ("EXTENDED VESTING DATE") and may be exercised pursuant to the
Amended and Restated Plan for each such stock options until February 28, 2002.
All other stock options which were granted on September 1, 2000 will be
forfeited. ASSOCIATE hereby agrees and acknowledges that the aforementioned
options which are subject to the Extended Vesting Date may be converted from
Incentive Stock Options to Non-Qualified Stock Options.

         3) CHANGE OF CONTROL. Notwithstanding the foregoing subsections I(F)(1)
and (2), ALLIANCE hereby agrees that if all or substantially all of ALLIANCE's
assets or outstanding common stock is purchased by another entity ("STOCK
PURCHASE") before the expiration of the Severance Pay Period, and in conjunction
with the Stock Purchase the Board of Directors determines that it shall
accelerate the vesting of either or both of the January, 2001 Options or the
September, 2000 Options, the vesting of such options shall be accelerated as
determined by the ALLIANCE Board of Directors.

          4) NO OTHER ACCELERATION. Except as set forth in this Section F,
ASSOCIATE agrees and acknowledges that no other unvested options awarded to
ASSOCIATE prior to the

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 4
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Termination Date under either the Original Plan or the Amended and Restated
Plan shall be accelerated for any reason.

         G. RESTRICTED STOCK AWARDS. ASSOCIATE hereby acknowledges and agrees
that because his employment with ALLIANCE will cease as of December 31, 2000,
any and all Restricted Stock Awards ("RSA") granted to him prior to the
Termination Date will be forfeited and he will no longer be a participant in the
RSA plan as of December 31, 2000. However, if in 2001, the ALLIANCE Board of
Directors decides that all or a portion of the restrictions on such RSA's should
lapse for each and every ALLIANCE executive committee member who was, effective
September 1, 2000, granted RSA's and who is, on the date such lapsing takes
effect, then participating in the RSA plan, ALLIANCE agrees to make a one-time
cash payment to ASSOCIATE in an amount equal to the fair market value of ADSC
common stock underlying such RSA on the date such lapsing takes effect
multiplied by 7,000 ("Associate's 2000 Vesting Target") multiplied by the
percentage of Associate's 2000 Vesting Target on which the Board of Directors
deems such restrictions should lapse ("Lapsed Restriction Percentage"). For
example, if the Board designates in 2001 that the Lapsed Restriction Percentage
should be 100%, ASSOCIATE's cash payment would be calculated by multiplying the
fair market value of ADSC common stock on the date such lapsing takes effect by
7,000 and multiplying that number by 100%. Alternatively for example, if the
Board designates in 2001 that the Lapsed Restriction Percentage should be 40%,
then ASSOCIATE's cash payment would be calculated by multiplying the fair market
value of the ADSC common stock on the date such lapsing takes effect by 7,000
and multiplying that amount by 40%. For purposes of this Section I(G), the fair
market value of one share of the ADSC common stock shall be that number as
calculated by the ADSC finance department in the normal course of business for
similar purposes unless on the

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 5
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date the fair market value must be determined the ADSC common stock is traded
on a nationally recognized securities exchange, in which case the fair market
value of one share of the ADSC common stock shall be the closing price of the
ADSC common stock on such date, or if such date is not a trading day, then
the closing price per share of the ADSC common stock on the next trading day
thereafter.

         If ALLIANCE does not accelerate the vesting of the RSAs referenced
above, in such event ASSOCIATE will receive no such cash payment and nothing in
this paragraph shall be construed to entitle ASSOCIATE to any other future
payments of any kind pursuant to this paragraph.

         H. FURTHER ACTIONS. ASSOCIATE, ALLIANCE, and ADSC agree to execute such
documents and to take such actions as are necessary to implement the amendments
described in this Paragraph F and Paragraph G above.

         I. REFERENCES. To each prospective employer, ASSOCIATE agrees to name
either Mike Parks, ALLIANCE's Chief Executive Officer ("Parks") or Dwayne
Tucker, ALLIANCE's Executive Vice President ("Tucker"), as a reference to whom
such prospective employer may contact with regard to ASSOCIATE'S employment with
ALLIANCE. ALLIANCE shall cause Parks and Tucker, as applicable to give ASSOCIATE
a favorable reference to each such prospective employer if and when contacted by
such prospective employer.

         In the event Associate breaches any of the promises and covenants
contained in this Agreement, ALLIANCE's duties hereunder shall cease.

                                       II.

         A. GENERAL RELEASE BY ASSOCIATE. In exchange for the consideration set
forth above in Section I. and other good and sufficient consideration set forth
herein, ASSOCIATE, for and

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 6
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on behalf of himself individually and his heirs, representatives, and
assigns, if any, hereby fully, finally, completely, and forever releases,
discharges, acquits, and relinquishes ALLIANCE, ADSC and their predecessors,
successors, parent entities, subsidiaries, related or affiliated companies,
attorneys, officers, directors, employees, former employees, agents and
assigns (collectively the "Released Parties"), jointly and/or severally, from
any and all claims, actions, demands, liabilities, and/or causes of action of
whatever kind or character, joint or several, whether now known or unknown,
asserted or unasserted, under any federal, state or local statute and common
law dealing with age, race, sex and other types of discrimination in employment,
including, but not limited to, the Texas Commission on Human Rights Act;
Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act
of 1991; the Americans with Disabilities Act; the Age Discrimination in
Employment Act ("ADEA") the Employee Retirement Security Act of 1974; or any
other claim, regardless of the forum in which it might be brought, if any,
which he has, might have, or might claim to have against the Released Parties,
or any of them individually, for any and all injuries, harm, damages,
penalties, costs, losses, expenses, attorneys' fees, and/or liability or
other detriment, if any, whenever incurred, or suffered by ASSOCIATE as a
result of any and all acts, omissions, or events by the Released Parties,
collectively or individually, through the Termination Date. It is expressly
agreed and understood by ASSOCIATE that this Agreement and Release includes
without limitation any and all claims, actions, demands, and causes of action,
if any, arising from or in any way connected with the employment relationship
between ASSOCIATE and ALLIANCE and the termination thereof, including any
claim of discrimination, retaliation, harassment, failure to accommodate,
wrongful termination, breach of contract, and/or tortious conduct, including
all claims that were or could have been brought by ASSOCIATE.

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 7
<PAGE>

         B. ADEA RELEASE. ASSOCIATE hereby acknowledges that he knowingly and
voluntarily enters into this Agreement with the purpose of waiving and releasing
any claims under the Age Discrimination in Employment Act of 1967, and as such,
he acknowledges and agrees that:

         (1)      this Agreement is worded in an understandable way;

         (2)      any rights or claims arising under the ADEA are waived;

         (3)      claims under the ADEA that may arise after the date this
                  Agreement is executed are not waived;

         (4)      the rights and claims waived in this Agreement are in exchange
                  for additional consideration over and above anything to which
                  ASSOCIATE was already undisputedly entitled;

         (5)      ASSOCIATE has been advised in writing to consult with an
                  attorney prior to executing this Agreement;

         (6)      ASSOCIATE has been given a twenty-one (21) day period of time,
                  if desired, to consider this Agreement.

         (7)      He may revoke this waiver and release of any ADEA (age
                  discrimination) claims covered by this Agreement within seven
                  days from execution of this Agreement; provided, however, that
                  such a revocation may, at the election of ASSOCIATE, be deemed
                  to cause a failure of consideration for this Agreement,
                  whereupon ALLIANCE would be entitled to a return of any monies
                  paid to ASSOCIATE under this Agreement; and

         (8)      Any changes made to this Agreement, whether material or
                  immaterial, will not restart the running of this twenty-one
                  (21) day period.

                                      III.

         For the same consideration set forth herein, ASSOCIATE further agrees
as follows:

         A. CONFIDENTIALITY AND NONDISCLOSURE. ASSOCIATE acknowledges and agrees
that he has had access to confidential ALLIANCE business information concerning
the business, plans, finances and assets of ALLIANCE and/or its subsidiaries and
affiliates (including, but not limited to financial information, marketing
plans, and the design and development of

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 8
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ALLIANCE systems) and which is not generally known outside ALLIANCE
("Confidential Information"). Accordingly, ASSOCIATE agrees that, unless
otherwise compelled by law, for a period of five (5) years from and after the
Termination Date he shall not, without the proper written authorization of
ALLIANCE, directly or indirectly use, divulge, furnish or make accessible to
any person any Confidential Information, but instead shall keep all
Confidential Information strictly and absolutely confidential. ASSOCIATE will
use reasonable and prudent care to safeguard and prevent the unauthorized use
or disclosure of Confidential Information. ASSOCIATE further agrees that he
shall continue to be bound by any and all prior confidentiality agreements he
executed while an employee of ALLIANCE. ASSOCIATE further covenants and
agrees that he will not take with him following the Termination Date, any
Confidential Information, documents, papers or materials in any form (including
without limitation originals or copies, printed or in electronic form) in
ASSOCIATE'S possession or control containing any confidential information and
that he will surrender all such material upon the Termination Date.

         B. NONDISPARAGEMENT. The parties further agree that for a period of
five (5) years from and after the Termination Date, the parties will not make or
publish any statement, written or oral, materially disparaging the reputation of
ASSOCIATE or of ALLIANCE, any of its present or future officers, shareholders,
subsidiaries or affiliates, or any of such parties' respective businesses or
products.

         C. NON-SOLICITATION.

         1) EMPLOYEE. ASSOCIATE agrees that for a period of twenty-four (24)
months after the expiration of the Severance Pay Period, ASSOCIATE agrees not to
(a) directly or indirectly solicit for employment any person then employed by
ALLIANCE or any of its

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 9

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affiliates or subsidiaries, any then engaged individual subcontractors of
ALLIANCE or its affiliates or subsidiaries used in connection with
ALLIANCE-related work or (b) advise or recommend to any other person, firm,
partnership, or corporation that competes with ALLIANCE'S business in those
areas of the United States where ALLIANCE conducts business, that it employ
or solicit for employment any person then employed by ALLIANCE or any of its
affiliates or subsidiaries used in connection with ALLIANCE-related work;
provided, however, that ASSOCIATE shall not be prohibited from communicating
with any current or former employee of ALLIANCE as to matters other than as
described in this Paragraph III(C)(1).

         2) CUSTOMER. ASSOCIATE agrees that for a period of twenty-four (24)
months after the expiration of the Severance Pay Period ("Restricted
Period"), ASSOCIATE agrees not to (a) directly or indirectly solicit, offer
to provide, or provide, any services similar to those offered by ALLIANCE or
any of its affiliates to any person or entity, who, as of the Termination
Date, is (or is associated with), a client, customer, or agent of ALLIANCE or
any of its affiliates, nor will ASSOCIATE encourage or assist any such person
or entity to stop doing business with ALLIANCE or any of its subsidiaries or
affiliates. ASSOCIATE agrees that during the Restricted Period, if such a
client, customer, or agent contacts ASSOCIATE about discontinuing business
with ALLIANCE or any of its subsidiaries or affiliates and/or moving that
business elsewhere, ASSOCIATE will inform such client, customer, or agent
that he cannot discuss the matter further without informing ALLIANCE or such
affected subsidiary or affiliate.

         D. NON-COMPETITION. ASSOCIATE agrees that for a period of
twenty-four (24) months after the expiration of the Severance Pay Period, he
will not, without the express written permission of Parks or his successor,
directly or indirectly (i) participate in the ownership, management,
operation or control of, (ii) be connected as an officer, employee,
consultant,

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 10

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partner, member, or director of, (iii) have any financial interest in, or
(iv) aid or assist anyone in the conduct of, a Competing Business. For this
purpose, a Competing Business means any entity, person, or operation whose
business is primarily the provision of third-party service bureau billing
and/or customer services to regulated or deregulated gas, electric or water
utilities in the United States. Nothing in this paragraph shall be construed
to preclude the ownership of securities of corporations which are listed on a
national securities exchange or traded in the national over-the-counter
market in an amount which shall not exceed one percent (1%) of the
outstanding shares in such corporation.

         E. INJUNCTIVE RELIEF. ASSOCIATE agrees that enforcement of the
Confidentiality and Non-Disclosure, Nondisparagement, Non-Solicitation, and
Non-Competition convenants would be difficult if not impossible to enforce
through an action at law. Therefore, ASSOCIATE agrees that ALLIANCE may seek
any all remedies available to it to enforce these covenants, including
seeking any injunctive relief to enjoin ASSOCIATE from further violation of
the covenants or for specific enforcement of this Agreement. ASSOCIATE
further agrees that ALLIANCE may seek recovery of all actual damages incurred
as a result of ASSOCIATE'S breach of any of the above-referenced sections
including but not limited to attorneys' fees, courts costs and expenses
incurred by ALLIANCE in seeking to enforce this section.

                                       IV.

         ASSOCIATE further agrees that any and all sums paid or provided to
him in consideration for this Agreement will be forfeited and become
immediately due and payable to ALLIANCE, at its sole discretion, in the event
that ASSOCIATE asserts any claim, demand or cause of action, arising out of,
resulting from, or in any way related to any of the claims released by
ASSOCIATE under this Agreement, or any action to set aside, invalidate, or
void this

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 11

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Agreement, except as a result of ALLIANCE's or ADSC's breach of their
respective obligations under this Agreement, unless ASSOCIATE withdraws such
claim, demand or cause of action within ten (10) days after receipt of
written notice from ALLIANCE. ASSOCIATE also agrees that a breach of the
covenant set forth in this Section IV will entitle ALLIANCE and its
successors and assigns to a full recovery in an action for damages,
including, but not limited to, recovery of its or their costs, expenses and
attorneys' fees for investigation, prosecution or defense of any action
brought in breach of this covenant. Such recovery of monies shall not
otherwise affect the enforceability of this Agreement or of other individual
promises contained in this Agreement.

                                       V.

         ASSOCIATE hereby represents and warrants that he has not assigned or
otherwise transferred to any other person or entity any interest in any
claim, demand, action and/or cause of action he has, or may have, or may
claim to have against any Released Party. ASSOCIATE agrees to indemnify and
hold harmless all of the Released Parties from any and all injuries, harm,
damages, costs, losses, expenses and/or liability, including reasonable
attorneys' fees and court costs, incurred as a result of any claims or
demands which may hereafter be asserted against any such Released Parties by,
through, or by virtue of an assignment or other transfer by ASSOCIATE.

                                       VI.

         ASSOCIATE acknowledges and agrees that by signing this Agreement, he
is hereby releasing and forever waiving re-employment or reinstatement with
ALLIANCE in any capacity; although nothing herein shall prevent ALLIANCE from
reemploying ASSOCIATE should ALLIANCE, in its own discretion decide to
reemploy him.

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 12

<PAGE>

                                      VII.

         This Agreement, the offer of this Agreement and compliance with this
Agreement shall not constitute or be construed as an admission by the
Released Parties or any of them individually, of any wrongdoing or liability
of any kind or an admission by any of them of any violation of the rights of
ASSOCIATE, but rather, such liability or wrongdoing is expressly denied. This
Agreement shall not be admissible in any judicial, administrative or other
proceeding or cause of action as an admission of liability or for any purpose
other than to enforce the terms of this Agreement. Moreover, ASSOCIATE agrees
that he will not disclose to any third parties except as provided below the
fact that the parties have entered into this Agreement or the terms and
conditions of this Agreement. Unless otherwise authorized in writing by
ALLIANCE, ASSOCIATE may not disclose the fact the parties have entered this
Agreement as well as the information contained herein, except with respect to
his family, financial advisors, attorneys and tax advisors (the "Associate
Authorized Parties"), but only upon advising the Associate Authorized Parties
of the restrictions of this Section VII and obtaining the agreement of the
Associate Authorized Parties to terms of same. This Agreement is not intended
to prohibit or interfere with either ASSOCIATE'S ability to inform a
prospective employer as to the restrictions placed upon ASSOCIATE pursuant to
this Agreement or to respond to or cooperate with any governmental agency
request or subpoena or court order. However, in the event ASSOCIATE receives
such a subpoena or order, ASSOCIATE agrees to provide ALLIANCE notice of the
subpoena or order within (5) days of ASSOCIATE's receipt of such subpoena or
order, with delivery to HR Counsel, Alliance Data Systems, 17655 Waterview
Parkway, Dallas, Texas 75252.

                                      VIII.

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 13

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         The parties agree that the terms of this Agreement are contractual
in nature and not merely recitals and shall be governed and construed in
accordance with the laws of the State of Texas. The parties further agree
that should any part of this Agreement be declared or determined by a court
of competent jurisdiction to be illegal, invalid, or unenforceable, the
parties intend the legality, validity, and enforceability of the remaining
parts shall not be affected thereby, and said illegal, invalid or
unenforceable part shall be deemed not to be a part of this Agreement. Venue
to decide any disputes arising under this Agreement shall be in Dallas County.

         The parties further agree that while a breach of any of the
covenants set forth in this Agreement will entitle the ALLIANCE and its
successors and assigns to a full recovery in an action for damages,
including, but not limited to, recovery of its or their costs, expenses and
attorneys' fees for investigation, prosecution or defense of any action
brought in breach of such covenants, the recovery of monies shall not
otherwise affect the enforceability of this Agreement or of other individual
promises contained in this Agreement.

                                       IX.

         This Agreement shall be binding upon and the benefits shall inure to
ASSOCIATE and his heirs, successors, and assigns, and to ALLIANCE, ADSC and
their successors and assigns.

                                       X.

         No waiver of any of the terms of this Agreement shall be valid
unless in writing and signed by the party to this Agreement against whom such
waiver is sought to be enforced. The waiver by any party hereto of any
provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by any party, nor shall any waiver operate or be
construed as a recission of this Agreement.

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 14

<PAGE>

                                       XI.

         All notices, requests, consents, and other communications under this
Agreement shall be in writing and shall be deemed to have been delivered on
the date personally delivered or on the date deposited in a receptacle
maintained by the United States Postal Service for such purpose, postage
prepaid, by certified mail, return receipt requested, addressed to HR Legal
Counsel, Legal Department at:

         ADS Alliance Data Systems, Inc.
         17655 Waterview Parkway
         Dallas, Texas 75252

and to ASSOCIATE at the address set forth below ASSOCIATE'S signature on the
signature page hereto. Either party hereto may designate a different address
by providing written notice of such new address to the other party hereto.

                                      XII.

         ASSOCIATE agrees that in executing this Agreement he does not rely
and has not relied on any document, representation or statement, whether
written or oral, other than those specifically set forth in this written
Agreement. The parties agree that this Agreement constitutes the entire
agreement between ASSOCIATE, ALLIANCE, and ADSC and supersedes any and all
prior agreements or understandings, written or oral, pertaining to the
subject matter of this Agreement, and contains all the covenants and
agreements in any manner whatsoever between the parties with respect to such
matters. No oral understandings, statements, promises or inducements contrary
to the terms of this Agreement exist. This Agreement cannot be changed or
terminated orally, but may be changed only through written addendum executed
by both parties.

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 15

<PAGE>

                                      XIII.

         The wording in this Agreement was reviewed and accepted by all
parties after reasonable time to review with legal counsel, and no party
shall be entitled to have any wording of this Agreement construed against the
other party as the drafter of the Agreement in the event of any dispute in
connection with this Agreement.

                                      XIV.

         ASSOCIATE and ALLIANCE agree that prior to the execution of this
Agreement, ASSOCIATE has returned to ALLIANCE all Company property within
ASSOCIATE'S possession, or control, including, but not limited to, beepers,
cellular telephones, keys, access cards, computers and peripheral equipment,
software, automobiles, equipment, customer lists, forms, plans, documents,
and other written and computer material, and copies of the same, belonging to
ALLIANCE or its affiliates, or any of their customers. ASSOCIATE represents
and warrants that he has not and will not at any time copy or reproduce any
of the items referred to in this Section XIV.

                                       XV.

         ASSOCIATE declares that the terms of this Agreement have been
completely read, are fully understood, and are voluntarily accepted, after
complete consideration of all facts and him legal rights, of which he has
been fully advised by him respective attorneys for the purpose of making a
full and final compromise, adjustment and settlement of any and all claims,
disputed or otherwise, that ASSOCIATE may have against the Released Parties.

         IN WITNESS WHEREOF, the parties have executed this Agreement as
follows:

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 16

<PAGE>

JAMES ANDERSON

  /s/ James Anderson
--------------------------------------------

  3513 Potomac Avenue, Dallas, Texas  75205
--------------------------------------------
ADDRESS

Date: 1/08/01
     ---------------------------------------

ADS ALLIANCE DATA SYSTEMS, INC.

By:  Dwayne H. Tucker
   ---------------------------------------------------------------

Its: Executive Vice President and Chief Administrative Officer
    --------------------------------------------------------------

Date: 1/08/01
     -------------------------------------------------------------

As to the provisions of this Agreement to which it is mentioned:

ALLIANCE DATA SYSTEMS CORPORATION

By:  Dwayne H. Tucker
   ---------------------------------------------------------------

Its: Executive Vice President and Chief Administrative Officer
    --------------------------------------------------------------

Date: 1/08/01
     -------------------------------------------------------------

GENERAL RELEASE AND SEVERANCE AGREEMENT - PAGE 17<PAGE>

                                                                   EXHIBIT 10.32

                              EMPLOYMENT AGREEMENT

            THIS EMPLOYMENT AGREEMENT (this "Agreement") is entered into as of
July 17, 2000 by and between Photronics, Inc., a Connecticut corporation (the
"Company") and Robert Bollo ("Executive").

                                   WITNESSETH:

            WHEREAS, the Company and Executive desire to enter into this
Agreement to assure the Company of the continuing service of Executive and to
set forth the terms and conditions of Executive's employment with the Company.

            NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties agree as follows:

            1. TERM. The Company agrees to employ Executive and Executive hereby
accepts such employment, in accordance with the terms of this Agreement,
commencing July 17, 2000 and ending October 31, 2003 unless this Agreement is
earlier terminated as provided herein (the "Term"); provided, however, that
unless the Company or Executive gives written notice to the other party at least
45 days prior to the end of the Term of this Agreement (as may be extended
pursuant to this Section), the Term of this Agreement shall automatically be
extended for an additional two (2) year term from such date.

            2. SERVICES AND EXCLUSIVITY OF SERVICES. So long as this Agreement
shall continue in effect, Executive shall devote Executive's full business time,
energy and ability to the business, affairs and interests of the Company and its
affiliates or subsidiaries and matters related thereto. Executive shall use his
best efforts and abilities to promote the Company's interests and shall perform
the services contemplated by this Agreement in accordance with the Company's
policies as established by the Board of Directors of the Company and such
policies as may be established by and under the direction of the Company's Chief
Executive Officer (the "CEO"). Executive agrees to faithfully and diligently
promote the business, affairs and interests of the Company and its affiliates or
subsidiaries.

            Without the prior express written authorization of the CEO,
Executive shall not, directly or indirectly, during the Term of this Agreement:
(a) render services to any other person or firm for compensation or (b) engage
in any activity whether alone, as a partner, officer, employee or significant
investor of or in any other entity. An investment of greater than 5% of the
outstanding capital or equity securities of an entity shall be deemed
significant for these purposes.

            Executive represents to the Company that Executive has no other
outstanding commitments inconsistent with any of the terms of this Agreement or
the services to be rendered hereunder.

                                       1

<PAGE>

            3. DUTIES AND RESPONSIBILITIES. Executive shall serve as Senior Vice
President of Finance and Chief Financial Officer of the Company. In the
performance of Executive's duties, Executive shall report directly to the CEO
and shall be subject solely to the direction of the CEO and to such reasonable
limits on Executive's authority as the CEO may from time to time impose. During
the Term of this Agreement, the Company shall not reduce materially Executive's
duties, authority or responsibilities; provided, however, that the continuation
of Executive's primary duties, authority, and responsibilities after a "change
of control" of the Company (as such term is defined below) in a larger
organization shall not constitute a reduction of Executive's duties, authority
or responsibilities for purposes hereof.

            In addition to following the directives of the CEO, Executive agrees
to observe and comply with the policies, rules and regulations of the Company.
The Company agrees that the duties which may be assigned to Executive shall be
reasonable, usual and customary duties of the office or position to which
Executive will from time to time be appointed or elected and shall not be
inconsistent with the provisions of the charter documents of the Company or
applicable law. Executive shall have such corporate power and authority as shall
reasonably be required to enable Executive to perform the responsibilities and
duties required in any office that may be held.

            4.    COMPENSATION.

            (a)   BASE COMPENSATION.

            During the Term of this Agreement, the Company agrees to pay
Executive a base salary at the rate of $225,000 per year, payable in accordance
with the Company's practices in effect from time to time (the "Base Salary").
All payments required hereunder, including the payments required by this Section
4(a), may be allocated by the Company to one or more of its subsidiaries to
which Executive renders services but the Company shall remain responsible for
all payments hereunder and Executive shall have no obligation to seek payment
from such subsidiaries.

            (b)   PERIODIC REVIEW.

            The Compensation Committee of the Board of Directors of the Company
shall review Executive's Base Salary and Additional Benefits (as defined below)
then being paid to Executive at each annual meeting of the Board of Directors of
the Company. The annual meeting of the Board of Directors is customarily the
first board meeting held following the end of each fiscal year of the Company.
Following such review, the Company may at its sole discretion increase (but
shall not be required to increase except as set forth below) the Base Salary or
any other benefits, but may not decrease the Base Salary during the time
Executive serves as Senior Vice President of Finance and Chief Financial Officer
and the level of Executive's Additional Benefits shall be commensurate with
those then being provided to the other executive officers of the Company who are
"Named Executives" in the Company's annual proxy statement

                                       2

<PAGE>

on Schedule 14A that is filed annually with the Securities and Exchange
Commission. At the annual meeting of the Board of Directors following completion
of the Company's fiscal year ended October 31, 2000 and at every annual meeting
of the Board of Directors thereafter during the Term of this Agreement,
Executive's Base Salary shall be increased by an amount no less than the amount
obtained by multiplying such previous Base Salary by the percentage increase of
the Consumer Price Index, as reported by the Bureau of Labor Statistics of the
United States Department of Labor for the State of Connecticut. The amount of
such increase combined with the previous year's Base Salary shall then
constitute Executive's Base Salary for purposes of this Agreement.

            (c)   BONUS.

            Executive shall be entitled to receive a minimum annual cash bonus
for the fiscal year ending October 31, 2000 of $35,000 and for the fiscal year
ended October 31, 2001 of $65,000. These bonuses shall not preclude the
Executive from receiving additional bonus awards as may be granted by the
Compensation Committee of the Company from time to time. Each bonus awarded
under the provisions of the clause 4(c) shall be paid to the Executive within 30
days of each such date.

            (d) STOCK OPTION AWARDS

      Following approval of the Compensation Committee of the Board of Directors
of the Company, Executive shall receive an option to purchase 75,000 shares of
the Company's common stock (NASDAQ: PLAB) to be granted within 15 calendar days
of the signing date of this Agreement and a further stock option award to
purchase an additional 25,000 shares of the Company's common stock to be granted
within 195 calendar days of the signing date of this agreement pursuant to the
provision of the Company's Employee Stock Option Plan effective at the time of
each of these two stock option awards respectively.

            These stock option awards shall not preclude the Executive from
receiving additional stock option awards as may be granted by the Compensation
Committee of the Company during the Term of this agreement.

            (e)   LIFE INSURANCE.

            During the Term of this Agreement, the Company shall provide the
Executive with a life insurance benefit consistent with the Company's policies
and provisions applicable to executive officers of the Company who are "Named
Executives" in the Company's annual proxy statement on Schedule 14A that is
filed annually with the Securities and Exchange Commission.

                                       3

<PAGE>

            (f)   AUTOMOBILE ALLOWANCE.

            During the Term of this Agreement, the Company shall provide the
Executive with a Company business automobile use benefit consistent with the
Company's policies and provisions applicable to executive officers of the
Company who are "Named Executives" in the Company's annual proxy statement on
Schedule 14A that is filed annually with the Securities and Exchange Commission.

            (g)   PERQUISITES.

            During the Term of this Agreement, Executive shall be entitled to
receive a paid vacation benefit in addition to all holidays of the Company in
accordance with the plans, policies, programs and practices as are in effect
generally with respect to executive officers of the Company who are "Named
Executives" in the Company's annual proxy statement on Schedule 14A that is
filed annually with the Securities and Exchange Commission. Executive may not,
however, take vacation time of more than ten (10) consecutive working days at
any one time from the Company for vacation.

            (h)   ADDITIONAL BENEFITS.

            During the Term of this Agreement, the Company shall provide the
Executive with health insurance in addition to all rights and benefits for which
Executive is otherwise eligible under any additional bonus plan, incentive,
participation or extra compensation plan, stock purchase plan, 401K pension
plan, profit-sharing plan, life, medical, dental, disability, or insurance plan
or policy, the Company's medical executive reimbursement plan or other plan or
benefit that the Company may provide for Senior Vice President(s) or (provided
Executive is eligible to participate therein) for executive officers of the
Company who are "Named Executives" in the Company's annual proxy statement on
Schedule 14A that is filed annually with the Securities and Exchange Commission,
as from time to time in effect, during the Term of this Agreement (collectively,
"Additional Benefits").

            5. TERMINATION. This Agreement and all obligations hereunder (except
the obligations contained in Sections 7, 8, 9, 10, 11 and 12 (Confidential
Information, Non-Competition, Non-Solicitation of Customers, Non-Interference
with Employees, Intellectual Property, and Remedies) which shall survive any
termination hereunder) shall terminate upon the earliest to occur of any of the
following:

            (a) EXPIRATION OF TERM. The expiration of the Term provided for in
      Section 1 or the voluntary termination by Executive following 45 day's
      written notice to the Company or retirement from the Company in accordance
      with the normal retirement policies of the Company.

                                       4

<PAGE>

            (b) DEATH OR DISABILITY OF EXECUTIVE. The death or disability of
      Executive. For the purposes of this Agreement, disability shall mean the
      absence of Executive performing Executive's duties with the Company on a
      full-time basis for a period of sixty business days, or for shorter
      periods aggregating sixty or more business days in any twelve (12)-month
      period, as a result of incapacity due to mental or physical illness which
      is determined to be total and permanent by a physician selected by the
      Company or its insurers. If Executive shall become disabled, Executive's
      employment may be terminated only by written notice from the Company to
      Executive. If Executive's employment is terminated by reason of
      Executive's death or disability, this Agreement shall terminate without
      further obligations to Executive (or Executive's heirs or legal
      representatives) under this Agreement, other than for (1) payment of the
      sum of (A) Executive's Base Salary through the date of termination to the
      extent not theretofore paid, (B) any accrued bonus due to Executive based
      on a pro rata allocation of such bonus as of the date of termination, (C)
      any compensation previously deferred by Executive (together with any
      accrued interest or earnings thereon), and (D) any accrued vacation pay,
      in each case to the extent not theretofore paid (the sum of the amounts
      described in clauses (A), (B), (C) and (D) shall be hereinafter referred
      to as the "Accrued Obligations"), which shall be paid to Executive or
      Executive's estate or beneficiary, as applicable, in a lump sum in cash
      within 15 business days after the date of termination or any earlier time
      required by applicable law; and (2) payment to Executive or Executive's
      estate or beneficiary, as applicable, of any amount accrued pursuant to
      the terms of any applicable benefit plan.

            (c)   TERMINATION FOR CAUSE.

            The Company may terminate Executive's employment and all of
      Executive's rights to receive Salary, bonus and any Additional Benefits
      hereunder for cause. For purposes of this Agreement, the term "cause"
      shall be defined as any of the following; provided, however, that the
      Company must determine the presence of such cause in good faith:

                  i. Executive's material breach of one or more of the duties
            and responsibilities under this Agreement (other than as a result
            of incapacity due to Executive's disability);

                  ii. Executive's conviction by, or entry of a plea of guilty
            in, a court of competent and final jurisdiction for any felony;

                   iii. Executive's commission of an act of fraud upon the
            Company; or

                  iv.  Executive's willful failure or refusal to perform
            Executive's duties or responsibilities under this Agreement or
            Executive's violation of any duty of loyalty (i.e., engaging in
            self-interested transactions,

                                       5

<PAGE>

            misappropriation of business opportunities that belong to the
            Company, etc.) to the Company or a breach of Executive's
            fiduciary duties to the Company.

            (d)   WITHOUT CAUSE.

            Notwithstanding any other provision of this Section 5, the CEO shall
      have the right to terminate Executive's employment with the Company
      without cause at any time, but any such termination other than as
      expressly provided in Section 5(a), (b) or (c) herein shall be without
      prejudice to Executive's rights to receive any and all remuneration due
      him as provided for under the terms of this agreement through such
      termination date. If Executive is so terminated without cause, Executive
      shall receive from the Company a payment ("Severance Payment ") equal to
      Executive's Base Salary during the then current fiscal year. The Severance
      Payment shall be paid by the Company to Executive in twelve equal monthly
      installments over the twelve-month period of time immediately following
      such termination, the first of such payments to be paid within ten (10)
      business days of the date of such termination.

            Such payments shall be in lieu of all rights of Executive, including
      any rights to any Additional Benefits hereunder, all of which shall
      terminate upon the date of termination.

            (e) EXCLUSIVE REMEDY. Executive agrees that the Severance Payment
      provided and contemplated by this Agreement shall constitute the sole and
      exclusive obligation of the Company in respect of Executive's employment
      with and relationship to the Company and that the full payment thereof
      shall be the sole and exclusive remedy for any termination of Executive's
      employment. Executive covenants not to assert or pursue any other
      remedies, at law or in equity, with respect to any termination of
      employment.

            6. BUSINESS EXPENSES. During the Term of this Agreement, to the
extent that such expenditures satisfy the criteria under the Internal Revenue
Code or other applicable laws for deductibility by the Company (whether or not
fully deductible by the Company) for federal income tax purposes as ordinary and
necessary business expenses, the Company shall provide the Executive with
reimbursement of reasonable business expenses incurred by the Executive while
conducting Company business in a manner consistent with the Company's policies
and provisions applicable to the Executives of the Company.

            7. CONFIDENTIAL INFORMATION. Executive acknowledges that the nature
of Executive's engagement by the Company is such that Executive shall have
access to information of a confidential and/or trade secret nature which has
great value to the Company and which constitutes a substantial basis and
foundation upon which the business of the Company is based. Such information
includes financial, manufacturing and marketing data, techniques, processes,
formulas, developmental or

                                       6

<PAGE>

experimental work, work in process, methods, trade secrets (including, without
limitation, customer lists and lists of customer sources), or any other secret
or confidential information relating to the products, services, customers, sales
or business affairs of the Company or its Affiliates (the "Confidential
Information"). Executive shall keep all such Confidential Information in
confidence during the Term of this Agreement and at any time thereafter and
shall not disclose any of such Confidential Information to any other person,
except to the extent such disclosure is (i) necessary to the performance of this
Agreement and in furtherance of the Company's best interests, (ii) required by
applicable law, (iii) lawfully obtainable from other sources, or (iv) authorized
in writing by the Board. Upon termination of Executive's employment with the
Company, Executive shall deliver to the Company all documents, records,
notebooks, work papers, and all similar material containing any of the foregoing
information, whether prepared by Executive, the Company or anyone else.

            8. NON-COMPETITION. In order to protect the Confidential
Information, Executive agrees that during the Term of this Agreement, and for a
one-year period following any termination of this Agreement, Executive shall
not, directly or indirectly, whether as an owner, partner, shareholder, agent,
employee, willful creditor or otherwise, promote, participate or engage in any
activity or other business competitive with the Company's business or the
business of any affiliate of the Company in all territories in which the Company
operates.

            9. NON-SOLICITATION OF CUSTOMERS. Executive agrees that for a period
of one-year after any termination of this Agreement, Executive will not, on
behalf of Executive or on behalf of any other individual, association or entity,
call on any of the customers of the Company or any affiliate of the Company for
the purpose of soliciting or inducing any of such customers to acquire (or
providing to any of such customers) any product or service provided by the
Company or any affiliate of the Company, nor will Executive in any way, directly
or indirectly, as agent or otherwise, in any other manner solicit, influence or
encourage such customers to take away or to divert their business to Executive
or any other person or entity by or with which Executive is employed,
associated, affiliated or otherwise related.

            10. NON-INTERFERENCE WITH EMPLOYEES. In order to protect the
Confidential Information, Executive agrees that during the Term of this
Agreement and for a period of one-year following any termination of this
Agreement, Executive will not, directly or indirectly, induce or entice any
employee of the Company or its affiliates to leave such employment or cause
anyone else to leave such employment.

            11. INTELLECTUAL PROPERTY. Executive has no interest (except as
disclosed to the Company) in any inventions, designs, improvements, patents,
copyrights and discoveries which are useful in or directly or indirectly related
to the business of the Company or to any experimental work carried on by the
Company. Except as may be limited by applicable law, all inventions, designs,
improvements, patents, copyrights and discoveries conceived by Executive during
the Term of this

                                       7

<PAGE>

Agreement which are useful in or directly or indirectly related to the business
of the Company or to any experimental work carried on by the Company, shall be
the property of the Company. Executive will promptly and fully disclose to the
Company all such inventions, designs, improvements, patents, copyrights and
discoveries (whether developed individually or with other persons) and will take
all steps necessary and reasonably required to assure the Company's ownership
thereof and to assist the Company in protecting or defending the Company's
proprietary rights therein.

            Executive also agrees to assist the Company in obtaining United
States or foreign letters patent and copyright registrations covering inventions
assigned hereunder to the Company and that Executive's obligation to assist the
Company shall continue beyond the termination of Executive's employment but the
Company shall compensate Executive at a reasonable rate for time actually spent
by Executive at the Company's request with respect to such assistance. If the
Company is unable because of Executive's mental or physical incapacity or for
any other reason to secure Executive's signature to apply for or to pursue any
application for any United States or foreign letters patent or copyright
registrations covering inventions assigned to the Company, then Executive hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Executive's agent and attorney-in-fact to act for and in
Executive's behalf and stead to execute and file any such applications and to do
all other lawfully permitted acts to further the prosecution and issuance of
letters patent or copyright registrations thereon with the same legal force and
effect as if executed by Executive. Executive hereby waives and quitclaims to
the Company any and all claims, of any nature whatsoever, which Executive now or
hereafter may have for infringement of any patent or copyright resulting from
any such application for letters patent or copyright registrations assigned
hereunder to the Company. Executive will further assist the Company in every way
to enforce any copyrights or patents obtained including, without limitation,
testifying in any suit or proceeding involving any of the copyrights or patents
or executing any documents deemed necessary by the Company, all without further
consideration but at the expense of the Company. If Executive is called upon to
render such assistance after the termination of Executive's employment, then
Executive shall be entitled to a fair and reasonable per diem fee in addition to
reimbursement of any expenses incurred at the request of the Company.

            12. REMEDIES. The parties hereto agree that the services to be
rendered by Executive pursuant to this Agreement, and the rights and privileges
granted to the Company pursuant to this Agreement, are of a special, unique,
extraordinary and intellectual character, which gives them a peculiar value, the
loss of which cannot be reasonably or adequately compensated in damages in any
action at law, and that a breach by Executive of any of the terms of this
Agreement will cause the Company great and irreparable injury and damage.
Executive hereby expressly agrees that the Company shall be entitled to the
remedies of injunction, specific performance and other equitable relief to
prevent a breach of this Agreement by Executive. This

                                       8

<PAGE>

Section 12 shall not be construed as a waiver of any other rights or remedies
which the Company may have for damages or otherwise.

            13. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, to achieve the intent of the parties to the extent possible. In any
event, all other provisions of this Agreement shall be deemed valid and
enforceable to the extent possible.

            14. SUCCESSION. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns and any such successor
or assignee shall be deemed substituted for the Company under the terms of this
Agreement for all purposes. As used herein, "successor" and "assignee" shall
include any person, firm, corporation or other business entity which at any
time, whether by purchase, merger or otherwise, directly or indirectly acquires
the stock of the Company or to which the Company assigns this Agreement by
operation of law or otherwise. The obligations and duties of Executive hereunder
are personal and otherwise not assignable. Executive's obligations and
representations under this Agreement will survive the termination of Executive's
employment, regardless of the manner of such termination.

            15.   CHANGE OF CONTROL.

            (a) For purposes of the Agreement, a "change of control" means, and
shall be deemed to have taken place, if: (I) any person or entity or group of
affiliated persons or entities, including a group which is deemed a "person" by
Section 3(d)(3) of the Securities Exchange Act of 1934, as amended, acquires in
one or more transactions, ownership of fifty percent (50%) or more of the
outstanding capital stock of the Company.

            (b) In the event Executive is terminated by the Company for any
reason (other than for Cause as defined in Section 5.1 thereof), during the
first twelve (12) months following a change in control of the Company (or any
successor), Executive shall be entitled to receive the greater of (i) the total
Severance Payment to which Executive may be entitled under section 5(d) hereof,
or (ii) a lump sum payment of $250,000 (the "Change of Control Payment"). In no
event shall Executive be entitled to receive both the Severance Payment
described in Section 5(d) hereof and the Change of Control payment described in
this Section 15(b).

            (c) Any payments to be made to Executive in connection with this
Section 15 shall be made within ten (10) business days after the date of the
Executive's termination under Section 15(b).

                                       9

<PAGE>

            16.   NOTICES.  Any notice or other communication provided for in
this Agreement shall be in writing and sent if to the Company to its
principal office at:

            Photronics, Inc.
            24 Stony Hill Road
            Bethel, CT  06801
            Attention: Chief Executive Officer

or at such other address as the Company may from time to time in writing
designate, and if to Executive at the address set forth on the signature page
hereof or at such address as Executive may from time to time in writing
designate. Each such notice or other communication shall be effective (I) if
given by written telecommunication, three (3) days after its transmission to the
applicable number so specified in (or pursuant to) this Section 16 and a
verification of receipt is received, (ii) if given by certified mail, once
verification of receipt is received, or (iii) if given by any other means, when
actually delivered to the addressee at such address and verification of receipt
is received.

            17.   ENTIRE AGREEMENT.  This Agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
any prior agreements, undertakings, commitments and practices relating to
Executive's employment by the Company.

            18.   AMENDMENTS.  No amendment or modification of the terms of
this Agreement shall be valid unless made in writing, duly executed by both
parties.

            19.   WAIVER. No failure on the part of any party to exercise or
delay in exercising any right hereunder shall be deemed a waiver thereof or of
any other right, nor shall any single or partial exercise preclude any further
or other exercise of such right or any other right.

            20.   GOVERNING LAW. This Agreement, and the legal relations between
the parties, shall be governed by and construed in accordance with the laws of
the State of Connecticut without regard to conflicts of law doctrines and any
court action arising out of this Agreement shall be brought in any court of
competent jurisdiction within the State of Connecticut.

            21.   ATTORNEYS' FEES. If any litigation shall occur between
Executive and the Company which litigation arises out of or as a result of this
Agreement or the acts of the parties hereto pursuant to this Agreement, or which
seeks an interpretation of this Agreement, the prevailing party shall be
entitled to recover all costs and expenses of such litigation, including
reasonable attorneys' fees and costs.

                                       10

<PAGE>

            22.   WITHHOLDING.  All compensation payable hereunder, including
salary and other benefits, shall be subject to applicable taxes, withholding
and other required, normal or elected employee deductions.

            23.   COUNTERPARTS.  This Agreement and any amendment hereto may
be executed in one or more counterparts.  All of such counterparts shall
constitute one and the same agreement and shall become effective when a copy
signed by each party has been delivered to the other party.

            24.   HEADINGS.  Section and other headings contained in this
Agreement are for convenience of reference only and shall not affect in any
way the meaning or interpretation of this Agreement.

                                       11

<PAGE>

            IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of July 17, 2000.

                                    THE COMPANY

                                    PHOTRONICS, INC.,
                                    A CONNECTICUT CORPORATION

                                    -------------------------------
                                    By: Constantine Macricostas
                                    Its: Chairman and CEO

                                    -------------------------------
                                    By:  James L. MacDonald
                                    Its: President

                                    EXECUTIVE

                                    ------------------------------
                                    Robert Bollo

                                       12

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