On December 13, 2016, the Boards of Directors of Alliance Data
Systems Corporation and ADS Alliance Data Systems, Inc.
(collectively, “Alliance Data”) approved and Alliance Data
entered into a Change in Control Severance Protection Agreement
with its Chief Executive Officer and President, Edward J.
Heffernan (the “Change in Control Agreement”). Concurrently
with entering into the Change in Control Agreement, the parties
terminated the existing agreement entered into in September 2003,
thereby eliminating the sole remaining tax gross-up provision
between Alliance Data and any of its named executive officers.
The description of the Change in Control Agreement herein is
qualified in its entirety by reference to the full text of such
Change in Control Agreement, a copy of which is attached hereto
as Exhibit 10.1 and incorporated by reference herein.

Qualifying Terminations

Payouts under the Change in Control Agreement are subject to a
“double trigger” qualification, whereby the executive will only
receive payout under the Change in Control Agreement following
both a change in control and a subsequent termination under the
enumerated circumstances. Payouts are triggered by a qualifying
termination, defined in the Change in Control Agreement as: (1)
termination by the executive for good reason within two years of
a change in control event; or (2) termination of the executive by
the company without cause within two years of a change in control
event. A termination of the executive’s employment due to
disability, retirement or death will not constitute a qualifying
termination.

to the Change in Control Agreement, “cause” for termination
includes: (1) material breach of the executive’s covenants or
obligations under any applicable employment agreement or offer
letter or any other agreement for services or non-compete
agreement; (2) continued failure after written notice from the
company or any applicable affiliate to satisfactorily perform
assigned job responsibilities or to follow the reasonable
instructions of the executive’s superiors, including, without
limitation, the board of directors; (3) conviction of, or plea of
guilty or nolo contendere to a crime constituting a felony (or
its equivalent) under the laws of any jurisdiction in which we or
any of our applicable affiliates conducts business or other crime
involving moral turpitude; or (4) material violation of any
material law or regulation or any policy or code of conduct
adopted by the company or engaging in any other form of
misconduct which, if it were made public, could reasonably be
expected to adversely affect the business reputation or affairs
of the company or of an affiliate. The board of directors, in
good faith, will determine all matters and questions relating to
whether the executive has been discharged for cause. to the
Change in Control Agreement, “good reason” for termination by
the executive includes the occurrence of any of the following
events, in each case without the executive’s consent: (1) a
material lessening of the executive’s responsibilities; (2) a
reduction of at least five percent in the executive’s annual
salary and/or opportunity for incentive compensation; or (3) the
company’s requiring the executive to be based anywhere other
than within 50 miles of the executive’s place of employment at
the time of the occurrence of the change in control, except for
reasonably required travel to the extent substantially consistent
with the executive’s business travel obligations as in existence
at the time of the change in control. If the executive is party
to an employment agreement, offer letter or any other agreement
for services with Alliance Data that contains a definition for
either “cause” or “good reason” and that agreement is in
effect at the time of termination of employment, the definition
in that agreement will prevail over the definition contained in
the Change in Control Agreement.

Payments and Benefits Following a Qualifying Termination

Upon a qualifying termination, the Change in Control Agreement
provides for payment of all earned and accrued salary due and
owing, a pro-rata portion of the current year’s target bonus,
continued medical, dental and hospitalization coverage for
twenty-four months, other benefits due under benefit plans, all
accrued and unpaid vacation and a severance amount. The severance
amount is equal to two and one half times the sum of current base
salary and target non-equity incentive compensation. Any entitled
severance amounts will be paid in a lump sum within thirty days
of execution of a general release, but only if such general
release becomes effective and irrevocable within 60 days
following the qualifying termination. The Change in Control
Agreement further provides that if any payments or benefits that
the executive is to receive constitute” parachute payments”
within the meaning of the Internal Revenue Code (“IRC”) Section
280G and otherwise subject to the excise tax imposed under IRC
Section 4999, then executive’s severance benefits may be
delivered either in full or to such lesser extent which would
result in no portion of such severance benefits being subject to
such excise tax, whichever rsults in executive’s receipt on an
after-tax basis of the greatest amount of severance.

Other General Terms of the Change in Control Agreement

The Change in Control Agreement provides a mechanism to resolve
disputes, does not constitute a contract of employment, and
terminates on December 13, 2019 subject to automatic renewal
every three years unless Alliance Data provides 90 days advance
written notice of its intent not to renew. If the executive
becomes entitled to a severance amount under the Change in
Control Agreement, he will not be entitled to severance payments
under any other agreement or arrangement, including any
employment agreement.

The information provided in Item 1.01 with respect to the
termination of Mr. Heffernan’s Change in Control Severance
Protection Agreement with Alliance Data entered into in September
2003 above is incorporated herein by reference.

The information provided in Item 1.01 above is incorporated
herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits