Agreement and Plan of Merger

April 18, 2008

VIA FACSIMILE, ELECTRONIC DELIVERY and
NATIONAL OVERNIGHT COURIER

Aladdin Holdco, Inc. (n/k/a Aladdin Solutions, Inc.)
Aladdin Merger Sub, Inc.
c/o The Blackstone Group
345 Park Avenue
New York, New York 10154
Attention: Paul C. Schorr IV

Re: Agreement and Plan of Merger dated as of May 17, 2007, among Alliance Data Systems Corporation (“ADS” or the “Company”), Aladdin Holdco, Inc. (n/k/a Aladdin Solutions, Inc.) (“Parent”) and Aladdin Merger Sub, Inc. (“Merger Sub”) (the “Merger Agreement”)

Dear Mr. Schorr:

We are in receipt of your purported notice of termination dated April 18, 2008 (the “Notice”). The Notice is ineffective because Section 8.1(b)(ii) of the Merger Agreement makes clear that the right to terminate the Merger Agreement pursuant to that section is not available to a party whose breach of any provision of the Merger Agreement has been the ca